Biloxi Marsh Lands Corp (BLMC,pink sheets) which owns 90,000 acres in St. Bernard Parish, Louisiana, recently sent shareholders 2006 Financial Statements. Although the company is not required to file with the SEC, you can add BLMC to the list of such companies (BTCP, AVOA) that continue to keep shareholders well informed.
The majority of BLMC's revenue is from oil and gas exploration and production taking place on company land. Fiscal year 2006 revenue of $14.04 million was down from 2005s $21.26 million, primarily due to falling natural gas prices. Net income fell to $9.13 million, or $3.31 per share, from $16.31 million, or $5.04 per share.
Developments
Biloxi also reported the following developments:
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On December 15, 2006 we announced the formation of B & L Exploration, LLC (BLX) of which the company owns 75%. We also announced the placement of our first five well drilling package with the Manti Group. The Manti Group is obligated to drill at least three of the five prospects and hopes to commence drilling the first well located on company property by the end of March 2007. The agreement between the company and the Manti Group and the execution of two accompanying 400 acre oil, gas and mineral leases evidences the initial success of our marketing efforts. It should be noted the establishment of BLX signifies our more active management strategy employed in an effort to seek opportunities outside of the confines of our property’s physical boundaries. Our goal is to use all of our available assets to obtain revenue interests in newly drilled wells with minimal related cash expenditures.
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On January 25, 2007 we announced the company’s and BLX’s participation in the NAPE Expo in Houston, Texas. We presented our acreage position showing deep regional Tuscaloosa exploration opportunities developed over the past 12 to 18 months using existing geological well control and 3D seismic data. We also presented additional prospects targeting the Tex W, Big Hum and Cris I sand intervals. We are pleased with the interest expressed during the NAPE Expo and are hopeful that our ongoing efforts will result in future oil, gas and mineral agreements.
The company also completed a proven reserve study (conducted by TJ Smith and Company)with the following results:
Developed Producing Proven Reserves of Natural Gas: 1.5221 billion cubic feet
Developed Non Producing proven Reserves: .643 billion cubic feet Proven Un-Developed Reserves: .337 billion cubic feet
The Balance Sheet
As of 12/31/2006, the company had $1.23 million in cash,$4.73 million in short term marketable securities and $8.95 million in LT marketable securities, and other investments, along with no debt. With 2.85 million shares outstanding, that equates to about $5.23 per share in cash and securities. The land itself is carried at cost, a paltry $234,939, or $2.61 per acre. We don’t know its true value, but granted, the oil and gas beneath are worth significantly more than carrying value.
The Dividend
During 2006, the company paid 2 dividends, totaling of $4.00 per share, but warns that unless there is a substantial increase in the price of natural gas, the dividend will likely fall in 2007
Disclosure
Perhaps the most remarkable part of the compny report was a detailed listing of all the marketable securities the company owns, along with cost basis and current market value. We've never seen this level of detail offered before, and may disclose the portfolio in a future piece.
The Risks
Biloxi Marsh Lands will go the way natural gas prices go, it's about as simple as that, in terms of operating performance. Still, we believe there is additional value in the underlying assets, and continue to hold shares.
*The author has a position in BLMC. This is neither a recommendation to buy or sell this security. All information provided believed to be reliable and presented for information purposes only.
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