For the first nine months of 2014 and 2013, total revenues were $1,071,647 and $1,711,903, respectively. During the third quarter of 2014, total revenues included a $663,044 loss emanating from the Company’s investment in B&L Exploration, LLC (B&L). This compares to a loss of $512,178 from B&L for the third quarter of 2013. Correspondingly, total revenue for the nine months ending September 30, 2014 includes a net loss of $983,057 generated by B&L compared to a net loss of $737,813 from B&L for the first nine months of 2013. During the current quarter, B&L’s results included deductions for intangible drilling costs associated with its Lago Verde drilling program. 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 $671,872 and $706,472 for the first nine months of 2014 and 2013, respectively.
Dividend and interest income for the first nine months of 2014 was $157,977. This compares to $126,726 for the first nine months of 2013. During the third quarter of 2014, the Company realized a cumulative gain from the sale of investment securities of $406,910 compared to a cumulative gain in the amount of $361,108 for the same period in 2013. For the first nine months of 2014, the cumulative gain from the sale of investment securities was $1,520,555 compared to $1,857,999 for the first nine months of 2013. Meanwhile, total expenses for the third quarter were $195,509 compared to $187,487 for the same period of the prior year. Total expenses for the first nine months of 2014 and 2013 were $652,088 and $637,549, respectively. The Company had a net loss of $170,432 or $.07 per share for the third quarter of 2014 compared to a net loss of $109,972 or $.04 per share in 2013. Meanwhile, for the first nine months of 2014, net income was $266,042 or $.10 per share compared to net income of $932,933 or $.34 per share for the same period of 2013.
During the middle of September, the four wells operated by the Company’s mineral lessees were shut-in due to maintenance work conducted on Tennessee Gas Pipeline’s interstate sales pipeline. The wells were shut-in for twenty-seven days and returned to production during the third week of October. As of October 26, 2014, the combined daily gross production was approximately 3.9 million cubic feet of natural gas (mmcfg), with approximately .492 mmcfg accruing to the Company. Meanwhile, as of September 30, 2014, B&L’s gross production was approximately 3.666 mmcfg and 636 barrels of oil from five wells with .523 mmcfg and 68 barrels of oil per day (BOPD) accruing to B&L. As of September 30, 2014, the SL 19061 No. 1 well was shut-in for maintenance work conducted on Tennessee Gas Pipeline’s interstate sales pipeline and is anticipated to be returned to production during the beginning of November.
As previously reported, B&L has been assigned and is contractually entitled to a 1.5% of 8/8ths overriding royalty interest (ORRI) in the Freeport-McMoRan Oil and Gas (FM O&G) Lomond North discovery well and in all mineral leases obtained by FM O&G in its Highlander project area located in Iberia, St. Martin, Assumption and Iberville Parishes, Louisiana. FM O&G is a wholly owned subsidiary of Freeport-McMoRan Copper and Gold Inc. (NSYE: FCX). In its October 28, 2014 press release, FM O&G stated the following: “The Highlander discovery well is currently being completed to test Cretaceous/Tuscaloosa objectives found below the salt weld and flow testing is anticipated in fourth-quarter 2014. The Highlander onshore exploratory well, in which FM O&G is the operator and has a 72 percent working interest, located in St. Martin Parish, Louisiana, encountered gas pay in several Wilcox and Cretaceous/Tuscaloosa sands between 24,000 feet and 29,000 feet in January 2014. As previously reported, the wireline log and core data obtained from the Wilcox and Cretaceous sand packages indicated favorable reservoir characteristics with approximately 150 feet of net pay. FM O&G has identified multiple exploratory prospects in the Highlander area where it controls rights to more than 60,000 gross acres.”
During the third quarter, drilling operations commenced with the drilling of the first three wells within B&L’s Lago Verde project in Calhoun and Victoria Counties, Texas. All three wells encountered natural gas pay at the anticipated and targeted depths. The first well, the Welder No. 1, has been completed as a natural gas well. Unfortunately, the thickness of the pay sands encountered in the two subsequent wells did not dictate completing these two wells. We anticipate that the Welder No. 1 well should be placed on production during the fourth quarter of 2014 and should be significantly additive to B&L’s net daily production. We have additional prospects that are currently scheduled to be drilled within this project area and anticipate that a second round of drilling should commence during the first quarter of 2015.
B&L has assembled a 2,600 acre mineral lease position in Allen and Beauregard Parishes, Louisiana, targeting the Wilcox sand interval which in the past using conventional well completion techniques has been a prolific oil producing interval in the area. Based on technical information, B&L believes that reservoir stimulation using hydraulic fracturing could result in the recovery of significant oil reserves that were not accessible in the past using conventional well completion techniques. To assist in development of this Wilcox project, B&L recently placed the majority of the working interest with Petro Harvester, headquartered in Plano, Texas. Petro Harvester has experience in drilling and stimulating Wilcox wells in neighboring parishes. B&L retained a 15.75% working interest in the Wilcox project.
B&L was organized as a limited liability company (LLC) under the laws of Louisiana in July of 2006. B&L’s members are BLMC and Lake Eugenie Land & Development, Inc. (LKEU), which have membership percentages of 75% and 25%, respectively.
William B. Rudolf, President and CEO, commented: “Based on recent comments by FM O&G, B&L’s management continues to be cautiously optimistic that the Lomond North well in FM O&G’s Highlander area will undergo a commercially successful flow test during the fourth quarter of 2014. The initial round of drilling in B&L’s Lago Verde project area targeted stratigraphic traps that demonstrated classic AVO response using 3D seismic data. We are pleased with the results of the Welder No. 1 well and are disappointed that the other two wells encountered pay sands at anticipated depths but were not found in commercial quantities required to justify completions. The wells currently scheduled to be drilled during the second round have structural features and associated faulting that should increase the probability of trapping hydrocarbons, specifically oil. Meanwhile, B&L’s management is excited about the Wilcox project and placing the interest with Petro Harvester. B&L believes this project could be significant over time.
The Company is taking steps to further refine and delineate the Tuscaloosa prospect beneath the Company’s fee lands. Among other proactive steps taken, we have joined the University of Texas, Bureau of Economic Geology’s (BEG) Deep Shelf Gas Consortium. This Consortium is comprised mainly of major oil companies that retained the BEG to quantify chlorite coat formation in Tuscaloosa and Woodbine sandstones and its effect on preserving permeability thus creating favorable reservoir characteristics for the production of hydrocarbons. The multiphase study includes an analysis of conventional cores taken from the ARCO #P-2 Biloxi Marsh Lands well. We believe that the study by the BEG should have favorable implications on the exploration for the Tuscaloosa Trend on our fee lands. As previously reported, among other prospects, our Alpha and Beta Prospects, target the Tuscaloosa Trend.”
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, and other relevant information.
The Company continues to pursue a claim for damages against the US Army Corps of Engineers for property loss and damage related to the Mississippi River Gulf Outlet (MRGO).
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”, “could”, “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 “Statements of Revenues and Expenses” have been derived from interim un-audited financial statements which do not include the information and footnotes that are an integral part of a complete financial statement.
Biloxi Marsh Lands Corporation
Colleen Starks: 504-837-4337
BLMC Statements of Assets, Liabilities, and Stockholders' Equity - September 30, 2014 and 2013
|Cash and cash equivalents||2,427,437||814,351
|Accrued interest receivable||20,080||23,707
|Deferred tax asset||21,265||442,542
|Total current assets||2,617,884||1,409,774
|Investment in partnership||3,148,005||5,133,442
|Marketable debt and equity securities – at cost||7,754,801||9,047,705
|Levees and office furniture and equipment||315,160||307,746|
|Accumulated depreciation||(313,215) ||(304,975)
|Total other assets||11,139,690 ||14,418,857
|Liabilities and Stockholders’ Equity|
|Income taxes payable||104,888||52,859
|Other current liabilities||4,608||4,608|
|Total current liabilities||117,102||77,567
|Common stock, $.001 par value. Authorized, 20,000,000 shares; issued, 2,851,196 shares; outstanding, 2,535,028 and 2,716,028 shares in 2014 and 2013, respectively||47,520 ||47,520|
|Retained earnings||16,435,577 ||16,145,004
|Treasury stock - 316,168 and 135,168 shares in 2014 and 2013, respectively, at cost||(2,842,625) ||(441,460)
|Total liabilities and stockholders' equity||13,757,574||15,828,631
BLMC Statements of Revenues and Expenses, September 30, 2014 and 2013
|3 Months Ended||9 Months Ended|
|September 30||September 30|
|Oil and gas royalties||136,656||140,154||369,879||476,870|
|Severance taxes|| (7,657)|| (6,747)|| (16,652)|| (23,554)
|Oil and gas royalties, net|| 128,999||133,407|| 353,227|| 453,316
|Other income (loss):|
|Loss from investment in partnership|| (663,044)|| (512,178)|| (983,057)|| (737,813)
|Dividends and interest income|| 32,471|| 35,806|| 157,977|| 126,726
|Gain on sale of securities|| 406,910||361,108|| 1,520,555|| 1,857,999
|Surface Rentals|| 21,366||11,675||22,945||11,675
|Total other income||(202,297)||(103,589)|| 718,420|| 1,258,587
|Total revenues and income|| (73,298)||29,818|| 1,071,647|| 1,711,903
|Net income before income taxes||(286,807)||(157,669)||419,559||1,074,354
|Income tax expense||(98,375)||(47,697) ||153,517||141,421
|Net income||$(170,432)||$(109,972) || $266,042||$932,933
|Net income per share|| $(0.07)|| $(0.04) || $0.10 || $0.34