S1 FiledThe company recently filed an S1 to register 2MM+ shares for the listed selling shareholders. It is worth some very detailed study.
Link: https://www.sec.gov/Archives/edgar/data/1116927/000110465907073690/a07-24843_1s1.htm#ManagementsDiscussionAndAnalysisO_181711
The company produced 6,089 MCFD during the first six months of 07, substantially less than the existing 18,000 mcfd capacity of the the present sour gas treating facilities.
GPR receives the Houston Ship Channel spot prices less the stipulated $1.50 per mcf treating fee at the treating plant field gate, so their net gas receipts averaged $3.19 per mcf during Q107 and Q207. Lifting costs were $0.76 per Mcf.
Then account for deductions for royalties, taxes, net profit interests and G&A and earnings from operations totaled $180,708.
Given that net production was 1,108,338 Mcf of natural gas, that makes the net back of 0.16 per MCF.
The family has been producing oil and gas in this area for over 120 years [most recent well was completed this fall under Lake Houston]. So I've learned that one can track actual production almost real time on the Madisonville field by searching the Texas Railroad Commission website.
Obviously there is a big spread between actual production and the rates initially 'tested' for the wells reported on the company's website. Don't fall into the trap of extrapolating those rates into future projections.
I have not been able to identify where the production will come from to supply the recent sour gas treatment plant expansion.
If someone can identify the wells that are drilled and ready to feed the now expanded gas plant, or plans to drill such wells, I would be most appreciative. Otherwise its hard to get too excited about the Madisonville project.
This is just a note trying to record some of my DD findings and questions for future reference. This is the second time I've looked at this, and passed.
Good luck
Excerpts from the S-1 filing follow:
" Comparison of Results of Operations for six months ended June 30, 2007 and 2006
During the six months ended June 30, 2007, we had oil and natural gas revenues of $4,212,192. Our net production was 1,108,338 Mcf of natural gas at an average price of $3.80 per Mcf. During the six months ended June 30, 2006, we had oil and natural gas revenues of $3,467,517. Our net production for the six months ended June 30, 2006 was 1,084,684 Mcf at an average price of $3.19 per Mcf. Revenues increased in the six months ended June 30, 2007 as compared to the prior year period due to higher gas prices and 2% higher production volumes. Prices were approximately 19% higher for the six months ended June 30, 2007 versus the same period in 2006.
During the six months ended June 30, 2007, we incurred lease operating expense of $846,107. Our average lifting cost for the 2007 period was $0.76 per Mcf. During the six months ended June 30, 2006, we incurred lease operating expense of $717,929. Our average lifting cost for the 2006 period was $0.66 per Mcf. The higher average lifting cost for the six months ended June 30, 2007 was due to a workover performed on the Magness well and higher production taxes attributable to the Fannin and Mitchell wells.
During the six months ended June 30, 2007, we incurred net profits interest expense of $428,588 associated with the Magness, the Fannin, and the Mitchell wells as compared to $360,471 during the six months ended June 30, 2006. The 19% increase resulted from higher gas prices as well as slightly higher production volumes in the six months ended June 30, 2007 versus 2006.
General and administrative expenses for the six months ended June 30, 2007 were $1,526,919 compared to $1,287,620 for the six months ended June 30, 2006. This represents a $239,299 increase over the prior year period due primarily to U.S. and Canada public company filling fees, and costs associated with our SEC registration statement, listing on the American Stock Exchange and ongoing filing requirements.
Depreciation, depletion and amortization expense (“DD&A”) for the six months ended June 30, 2007 was $1,229,870 as compared to $1,106,162 in the same period of 2006, which amounts primarily represent amortization of the U.S. full cost pool for the six months ended June 30, 2007 and 2006, respectively. The increase was due to higher net production in the six months period of 2007 and an increase in the amount of capitalized cost in the U.S. full cost pool.
23
Earnings from operations totaled $180,708 for the six months ended June 30, 2007 as compared to loss from operations of $4,665 for the six months ended June 30, 2006. The increase in the income from operations was due primarily to higher gas prices as well as slightly higher production volumes in the six months ended June 30, 2007 versus 2006.
Other income for the six months ended June 30, 2007 and 2006 consisted of interest income in the amount of $56,201 and $91,894, respectively. The reason for the decreased interest income was lower average cash and cash equivalent balances during the 2007 period as compared to 2006 period.
During the six months ended June 30, 2007 and 2006, we incurred interest expense of $178,445 and $126,030, respectively. The higher interest expense in the current period was due to short-term borrowings which were incurred in 2007 to complete the Mitchell well as well as a workover performed on the Magness well.
Net income before taxes for the six months ended June 30, 2007 was $58,464 as compared to net loss before taxes of $38,801 for the six months ended June 30, 2006. The increase in net income during the six months ended June 30, 2007 was primarily due to higher gas prices as well as slightly higher production volumes in the six months ended June 30, 2007 versus 2006.
Income tax expense for the six months ended June 30, 2007 was $2,300 compared to $21,291 in the same period of 2006. Income tax expense in 2006 was more than 2007 due to estimated 2005 tax return recorded in 2006.