March 29, 2021
To the Shareholders of Biloxi Marsh Lands Corporation:
The following is a discussion of the results of Company’s operations for the year ending December 31, 2020. The Company’s annual revenue breakdown is as follows: 2020 revenue from oil and gas production for its fee lands was $11,736 compared to revenue of $18,982 in 2019. The flow-through losses from the Company’s membership interests in limited liability companies was $2,174,183 in 2020 compared to $2,290,999 in 2019. Dividend and interest income for 2020 was $53,330, compared to $101,240 for 2019. In 2020, the Company realized a cumulative loss from the sale of investment securities of $124,341 compared to a cumulative loss in the amount of $191,428 in 2019. Fee land revenues from surface activities unrelated to oil and gas were $75,527 for 2020 compared to $143,322 for 2019. This reduction year over year was due to a cessation of harvesting of oysters from water-bottoms owned by the Company during 2020. Expenses for the year totaled $591,768 compared to prior year expenses of $812,005. For the year, the Company had a net loss of $988,189 or $.39 per share compared to a net loss of $3,030,888 or $1.21 per share in 2019.
During the third quarter, the Company received a settlement payment for its wetlands real property claim under the Halliburton Energy Service, Inc. / Transocean Settlements arising out of the Deepwater Horizon incident in the Gulf of Mexico beginning on April 20, 2010. These settlements are separate from the BP Deepwater Horizon Economic and Property Damages Settlement Program. The Company has been advised by our legal counsel that no additional recovery under the settlements is expected related to the BP Deepwater Horizon disaster.
As previously reported, on June 15, 2012, the Company filed a claim (Biloxi Marsh Lands Corp., et al. v. United States; Case No. 12-382L) in the U.S. Court of Federal Claims against the U.S. Army Corps of Engineers (The Biloxi Case) seeking monetary damages for property damage and losses caused by the Mississippi River Gulf Outlet (MR-GO). The U.S. Department of Justice filed a motion for summary judgment on the issue of statute of limitations, and our attorneys filed a cross motion on the same issue. On January 19, 2021 the Court issued an Opinion and Order on the cross motions. The Court granted-in-part and denied-in-part the government’s motion for summary judgement and denied the plaintiff’s cross-motion for summary judgment. The Court ruled that it cannot definitively say … landowners were justifiably uncertain without further evidence regarding what landowners knew about the proposed and complete projects, and how this relates to any uncertainty as to permanency of alleged takings. The Court also required that the parties submit a joint status report proposing a timeline. The joint status report must include whether the parties intend to submit motions to resolve plaintiffs’ contractual claims, or address those claims at trial, whether the parties will request further discovery before trial, and scheduling suggestions to begin planning trial proceedings… The Company cannot predict the timing of resolution or the outcome of this litigation process, but it is anticipated that this litigation process will continue to take time.
On January 14, 2021, the Company paid a dividend to its shareholders of record at the close of business on December 30, 2020. This represents a total cash dividend payment of $250,503 or $.10 per share. Since 2002, the Company has paid approximately $56,481,500 in total dividends.
The Company continues its efforts to make clear to State and Federal government agencies that the Biloxi Marsh Complex’s (BMC) has a sufficient geological platform to allow its long-term sustainability and we are working toward having additional coastal restoration projects completed in the BMC which will help sustain the Company’s property.
We encourage you to visit our website to obtain general information about the Company, its efforts in the coastal restoration arena, as well as historical annual reports and all press releases. We strongly recommend that all interested parties become familiar with the information available on the Company’s website: www.biloximarshlandscorp.com.
B&L Exploration, LLC (“BLX”), of which the Company owns a 75% membership interest, is contractually entitled to a 1.5% of 8/8ths overriding royalty interest (ORRI) in the mineral leases comprising the 9,000 acre – EOC-TUSC BL UDS SUA production unit from which the Highlander well is producing. This production unit is located in St. Martin Parish, Louisiana. A public meeting to consider the application by one of the mineral owners requesting that the size of the unit be reduced was held on October 6, 2020 and an order was issued denying the mineral owner’s request. Information reported by the Highlander well’s operator to LDNR is available on LDNR’s Strategic Online Natural Resources Information System (SONRIS – www.sonris.com).
As reported last year, during 2019 B&L Resources, LLC (“BLR”) was formed of which the Company owns a 50% membership interest. We also reported that during 2019 BLR acquired a 562.3 acre leasehold position in Heyser Field located in Calhoun County, Texas and that BLR was in the process of acquiring additional acreage contiguous to this lease. In April of 2020 BLR closed on its acquisition of an additional 3,073.71 acres located in Heyser Field from Frostwood Energy, LLC, bringing BLR’s total lease position to 3,636.01 acres. Due to the severe decline in oil prices in March of 2020, BLR was able to acquire this 3,073.71 acre portion of Heyser field and associated equipment for significantly lower cash consideration than was originally contemplated. This acquisition included leasehold improvements, infrastructure, production facilities and producing horizontal wells. This project’s goal is to use the same horizontal well technology implemented by Frostwood Energy to recover residual oil and natural gas in the historically prolific Heyser Field. After acquisition, BLR sold a portion of its working interest on a promoted basis to help finance additional leasehold improvements and drill its first horizontal well. As of December 31, 2020, BLR drilled its Welder 29H well. The Welder 29H well was completed during the first quarter of 2021 and is currently producing oil and natural gas in paying quantities.
Due to staffing and other issues related to COVID 19, B&L Exploration, LLC, in which the Company has a 75% membership interest, and B&L Resources, LLC, in which the company has a 50% membership interest, have delayed the completion of proved reserves studies until mid-year of 2021. As soon as it is available, we plan to post the proved reserve information as contained in our prior annual letter to shareholders.
As stated in last year’s annual President’s letter, attracting third parties interested in exploring for and developing the minerals beneath our fee lands in St. Bernard Parish, Louisiana continues to prove difficult. This is due to a combination of factors which include the depth of prospects beneath our property, the current price of natural gas and the difficult business environment for oil and gas operators in Louisiana’s Coastal Zone. Our management team’s experience in the oil and gas sector, and the Company’s investment in an oil and gas operating company uniquely positions the Company to take advantage of changes in the current business environment.
Management stated in last year’s annual letter to shareholders that the significant drop in commodity prices could create opportunities as we moved through the tumultuous period of lower commodity prices. BLR’s acquisition of the 3,073.71 acre Frostwood Lease and accompanying leasehold improvements in Heyser Field demonstrated BLR’s management’s ability to take advantage of opportunities when presented. Diversification by investment in assets outside of Louisiana should help position the Company in a positive manner over the long term.
William B. Rudolf
President and Chief Executive Officer
 This letter contains forward-looking statements regarding oil and gas discoveries, oil and gas exploration, development and production activities and reserves. Accuracy of the forward-looking statements depends on assumptions about events that change over time and is thus susceptible to periodic change based on actual experience and new developments. The Company cautions readers that it assumes no obligation to update or publicly release any revisions to the forward-looking statements in this report. Important factors that might cause future results to differ from these forward-looking statements include: variations in the market prices of oil and natural gas; drilling results; unanticipated fluctuations in flow rates of producing wells; oil and natural gas reserves expectations; the ability to satisfy future cash obligations and environmental costs; additional drilling, and general exploration and development risks and hazards. Readers are cautioned not to place undue reliance on forward-looking statements made by or on behalf of the Company. Each such statement speaks only as of the day it was made. The factors described above cannot be controlled by the Company. When used in this report, the words “hopeful”, “believes”, “estimates”, “plans”, “expects”, “could”, “should”, “outlook”, “possibly” and “anticipates” and similar expressions as they relate to the Company or its management are intended to identify forward-looking statements.