New Concept Energy Pre-Earnings Report
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New Concept Energy, Inc. (NYSE: GBR), through its subsidiaries, owns and operates oil and gas wells, and mineral leases primarily in the United States. Its oil and gas wells, and mineral leases are located in Athens and Meigs counties in Ohio; and Calhoun, Jackson, and Roane counties in West Virginia.
As of December 31, 2016, the Company had 153 producing gas wells; 31 non-producing wells and related equipment; and mineral leases covering approximately 20,000 acres.
GBR is expected to release their Q1 earnings report next week. After reporting Q4 2017 losses of $(1.39)
per share, due to non-cash expenses, investors may be looking for a better result in Q1 2018.
New Concept Energy, announced that, on April 23, 2018, the Company received notice from NYSE Regulation, indicating that the Company is currently below compliance with the NYSE American Exchange’s continued listing standards of reported stockholders’ equity at December 31, 2017 and losses from continuing operations in three of its four most recent fiscal years ended December 31, 2017. https://www.businesswire.com/news/home/20180426006929/en/New-Concept-Energy-Receives-NYSE-Regulation-Letter
About
New Concept Energy, Inc., through its subsidiaries, owns and operates oil and gas wells, and mineral leases primarily in the United States. Its oil and gas wells, and mineral leases are located in Athens and Meigs counties in Ohio; and Calhoun, Jackson, and Roane counties in West Virginia. As of December 31, 2016, the Company had 153 producing gas wells; 31 non-producing wells and related equipment; and mineral leases covering approximately 20,000 acres. The company was formerly known as CabelTel International Corporation and changed its name to New Concept Energy, Inc. in May 2008. The company was founded in 1978 and is based in Dallas, Texas. New Concept Energy, Inc. is a subsidiary of Arcadian Energy, Inc.
Financial review
During the three months ended December 31, 2017 the Company reported a net loss of $2,851,000 or ($1.39) per share, compared to a net income of $641,000 or $0.32 per share for the same period ended December 31, 2016.
For the full year ended December 31, 2017 the Company reported a net loss of $3,246,000 or ($1.59) per share, compared to a net income of $48,000 or $0.02 per share for the same period ended December 31, 2016.
Included in the 2017 loss are non-cash expenses of $3,047,000 including an impairment expense of $2,626,000 to reduce the carrying value of the Company’s oil and gas properties, depreciation, depletion and amortization expense of $396,000 and a $25,000 expense to write off assets from the operations at a retirement center that was discontinued in 2017.
Revenues: Total revenues from the oil & gas operation was $791,000 in 2017 and $764,000 in 2016. Net revenue for our oil and gas operation increased by $27,000 in 2017 as compared to 2016. Included in 2016 revenue is a onetime fee of $30,000. The increase in revenue in 2017 was principally due to an increase in the quantity of oil and gas produced.
Operating Expenses: Operating expenses for continuing oil & gas operations was $1,027,000 in 2017 and $1,181,000 in 2016. This decrease of $154,000 was principally due to a reduction of depreciation and depletion expense of $174,000. The remaining increase was the result of an overall reduction in operating expenses.
In 2017 pursuant to the requirements of the “full cost ceiling test” for oil & gas companies we recorded a non-cash charge to operations of $2,646,000 to write down its investment in Ohio and West Virginia. This charge to earnings was caused by a revaluation of the Company’s non-producing oil and gas reserves.
Corporate Expenses were $408,000 in 2017 and $352,000 in 2016. The increase is due to an overall increase in operating expenses.
Interest Expense: Interest Expense was $24,000 in 2017 as compared to $38,000 in 2016. The decrease was due to a reduction in the long-term debt.
Other Income & (Expense): Other income & (expense) was $28,000 for 2017 as compared to ($110,000) in 2016. In 2017 the most significant item was the receipt of $64,000 for a receivable the Company had previously written off. The expenses in 2016 were principally the write off assets pertaining to the termination of the lease at the retirement center.
Discontinued Operations: The Company leased and operated Pacific Pointe Retirement Inn (“Pacific Pointe”) a retirement community in King City, Oregon. The lease provided that should the property be sold the lease maintained by the Company would be terminated. The owners completed the sale of the building on March 30, 2017 and the lease terminated on that date. These financial statements reflect the operations of the retirement community as a discontinued operation. Net income (loss) from discontinued operations was ($5,000) and $4,000 in 2017 and 2016, respectively.
Stock influences and risk factors
Continuing increases in the prices of crude oil and natural gas may be a continuing catalyst for the company’s shares;
Their governing documents contain anti-takeover provisions that may make it more difficult for a third party to acquire control;
The oil & gas industry is highly competitive. Competition for leasehold interests, subcontractors and qualified employees are keen and they are competing against companies that are larger, more experienced;
The oil & gas industry faces exposure from changes in oil and gas prices due to market fluctuations beyond the Company’s control.
Stock chart
On Wednesday, May 9, 2018, GBR shares were at $1.42 on traded volume of 36K shares. The current RSI (14) is 54.47
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