Metairie, LA., March 9, 2012 (BUSINESS WIRE) – Biloxi Marsh Lands Corporation (PINK SHEETS:BLMC) announces results for the year ending December 31, 2011 and provides update. The Company’s annual revenue breakdown is as follows: 2011 revenue from oil and gas production for its fee lands was $1,503,056 compared to revenue of $7,030,933 in 2010. During 2010, the Company received $5,205,463 in nonrecurring oil and gas revenue which was the result of the settlement of all cases involving disputed ownership of water-bottoms between the Company and the State of Louisiana.
During 2011, total revenues included a $3,423,042 loss emanating from the Company’s investment in B&L Exploration, LLC (B&L). This compares to a loss of $764,018 from B&L in the prior year. As an operating oil and gas entity, B&L’s results included deductions for depreciation, depletion and amortization (DD&A) costs relating to its ongoing drilling and production activities. BLMC’s share of these DD&A expenses was $1,801,797 and $733,934 for 2011 and 2010, respectively. While the Company had the option to capitalize its portion of intangible drilling costs (IDC) incurred by B&L in its 2010 and 2011 drilling programs, the Company elected to expense one hundred percent (100%) of its share of IDC for the years 2010 and 2011. By fully expensing its portion of B&L’s IDC for calendar year 2011, the Company is able to carry back the current year generated loss to prior years and obtain significant refunds of income taxes paid in 2008 and 2009. During 2012, the Company will file carryback claims which will likely result in income tax refunds totaling $742,136.
Meanwhile, dividend and interest income for 2011 was $254,128, compared to $327,475 for 2010. In 2011 the Company realized a cumulative gain from the sale of investment securities of $1,600,569 compared to a cumulative gain in the amount of $218,149 in 2010. Meanwhile, expenses for the year totaled $1,439,114 compared to $1,649,451 for the prior year. For the year, the Company incurred a net loss of $695,955 or $.25 per share compared to a net profit of $3,934,262 or $1.44 per share in 2010. It should be noted that the Company’s basis of accounting is the accrual method of tax accounting used for federal income tax reporting purposes.
As of December 31, 2011 the combined gross daily production rate from 6 wells operated by the Company’s mineral Lessees was approximately 6.9 million cubic feet (mmcf) of natural gas with net daily production accruing to the Company of approximately .894 mmcf. Meanwhile, B&L’s net daily production was approximately 4.0 million cubic feet of natural gas equivalents (mmcfge) (15:1 oil to gas ratio) as of December 31, 2011 compared to approximately 3.0 mmcfge per day as of December 31, 2010. As of December 31, 2011, B&L’s net production breakdown was approximately 2.4 mmcfg and 100 barrels of oil per day. Combining this daily production with the Company’s proportional share of the daily production from the B&L wells makes the total net daily production accruing to the Company as of December 31, 2011 approximately 4.3 mmcfge per day compared to 4.02 mmcfge as of December 31, 2010. This increased daily production was due solely to the increase in B&L’s daily production. It should be noted that B&L has a non-operated working interest in three wells which have been drilled, completed and successfully flow tested, but are yet to be placed on production. All three of these wells, SL 19706 No. 1, CL&F No.1 and the Goodrich Land and Energy No. 1 are expected to be placed on production during the first half of 2012.
In February of 2012 the Goodrich Land and Energy No. 1 well located in St. Martin Parish, Louisiana and operated by Linder Oil Company was drilled, successfully completed and partially flow tested. Electric logs indicated approximately 47 net feet of pay in 4 sand intervals. The lowest most interval, the “J” Sand, was successfully flow tested at a maximum rate of 849 mcfg per day with flowing tubing pressure of 3,135 psi on a 10/64th choke. Based on production history in the field, the Operator anticipates that this “J” sand zone should turn to oil after the natural gas cap is produced. Linder Oil Company advises this well should be placed on production by April 30, 2012. B&L has as 15% non-operated working interest in this well.
Meanwhile, the SL 19706 No. 1 Well operated by Clayton William Energy (CWE) and in which B&L has a 15% non-operated working interest is scheduled to be placed on production by April 15, 2012. This well was originally scheduled to be placed on production as of January 1, 2012, but has been delayed due to weather and problems in constructing the sales pipeline tie-in.
The CL&F No. 1 Well which was flow tested on September 27, 2011 and operated by Forza Operating Company is scheduled to be placed on production by June 15, 2012. B&L has a 9.375% non-operated working interest in this well.
The end of the year proved reserve study commissioned by the Company and completed by T. J. Smith & Company, Inc., an independent reservoir engineer, estimates that as of December 31, 2011 BLMC’s “Developed Producing” (PDP) reserves were .600 billion cubic feet (BCF) of natural gas and estimates that the “Developed Non-Producing” (PDNP) reserves were .521 BCF, totaling 1.121 BCF of estimated proved natural gas reserves. Additionally, this reserve study estimates that approximately 21% of the proved reserves will deplete by the end of 2012.
In addition to the foregoing estimated proved reserves, another reserve study completed by the same independent reservoir engineer estimates that B&L’s proved reserves as of December 31, 2011 were approximately 2.4 billion cubic feet of natural gas (BCFG) and 81 thousand barrels of oil (MBBL) which compares to 2.3 billion cubic feet (BCF) of natural gas and 25 thousand barrels of oil (MBBL) at the end of 2010.
The proved reserve studies referenced above include explanatory notes that are an integral part of each study. A copy of the 2012 President’s Report to Shareholders that includes these notes will be available on the Company’s website after March 30, 2012. The Company recommends that all interested parties refer to its website to view these notes and other relevant information: www.biloximarshlandscorp.com
B&L was organized as a limited liability Company (LLC) under the laws of Louisiana in July of 2006. B&L’s Class A members are BLMC and Lake Eugenie Land & Development, Inc. (LKEU), which have membership percentages of 75% and 25% respectively. The Operating Agreement was amended on November 16, 2009 to create a Class B membership to allow for certain future projects at the discretion of the board of managers to be participated by either Class A or Class B members or a combination of the respective Classes. B&L’s Class B members are BLMC and LKEU, which have membership percentages of 90% and 10%, respectfully.<\p> During its meeting held on December 6, 2011 the Board of Directors declared a dividend of $.55 per outstanding share of common stock payable on Wednesday, December 28, 2011 to shareholders of record at the close of business on Wednesday, December 14, 2011. This represents a total cash dividend payment of $1,505,420 or $.55 per share in 2011. Since 2002, the Company has paid approximately $51,500,000 in total dividends. With the Company’s fee land based production depleting and no new wells being drilling on its fee lands, it will be difficult to maintain the level of dividends paid since 2002. With this said, using 3D seismic data in our possession, we are constantly working on developing the minerals located below the Company’s fee lands. Meanwhile, the Company is focusing on developing reserves outside of its fee acreage and diversifying into oil production through its investment in B&L. In its current stage of growth and continued reinvestment in its successful drilling program, B&L should not be viewed as a dividend producing entity.
William B. Rudolf, President and CEO, commented: “We continue to be pleased with the results of B&L’s drilling program. B&L exceeded the five million dollar revenue threshold for first time since its inception and placed two new wells on production during 2011 with three additional wells awaiting the day of first production sales. As of December 31, 2011, B&L had working interests in ten wells to which proved reserves were assigned. B&L plans to continue its drilling program and currently has two additional wells scheduled to be drilled during 2012 and is evaluating additional prospects. Due to the large variance in price between oil and natural gas, B&L is focusing on oil prospects and natural gas prospects with potentially high natural gas liquid yields. While we continue to work on developing both shallow and deep prospects on the Company’s property, particularly our deep Tuscaloosa Project, the current depressed price of natural gas is making the marketing of these prospects difficult.”
The Company maintains a website, www.biloximarshlandscorp.com ,and strongly recommends that all investors and interested parties visit the website to view historical press releases, historical financial statements including President’s Report to Shareholders and general information about the Company.
Biloxi Marsh Lands Corporation owns approximately 90,000 acres of marsh lands located in St. Bernard Parish, Louisiana. As the landowner, it derives revenues from oil and gas exploration and production activities that take place on or near the Company’s land. The Company also derives revenues and expenses from its ownership interest in B&L Exploration, LLC and minimal revenues from surface rentals.
This news release 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; 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 “believes”, “estimates”, “plans”, “expects”, “should”, “outlook”, and “anticipates” and similar expressions as they relate to the Company or its management are intended to identify forward-looking statements.
The following Statements of Assets, Liabilities and Stockholders’ Equity and Statement of Revenues and Expenses have been derived from the Company’s end of the year financial statements, but do not include the information and footnotes that are an integral part of a complete financial statement. A complete copy of the audited Financial Statements and Schedule, Years Ended December 31, 2011 and 2010 along with the 2011 President’s Report to Shareholders and the Company’s Proxy Statement will be available after March 30, 2012 on the Company’s website www.biloximarshlandscorp.com or through requesting a copy in writing from the Company – Attention: Investor Relations, Biloxi Marsh Lands Corporation, One Galleria Blvd., Suite #902, Metairie, LA 70001.
Contact: Biloxi Marsh Lands Corporation
Colleen Starks: 504-837-4337
[email protected]