Spindletop Oil & Gas Co. (SPND)

[OilStockReport]

I am very impressed with their company after reading the last 10q.

Results of Operations

Six months ended June 30, 2010 compared to six months ended June 30, 2009

Oil and gas revenues for the first half of 2010 were $3,161,000, an increase of $715,000 or 29% from revenues of $2,446,000 during the same period in 2009.

Natural gas revenues for the first six months of 2010 were $2,042,000 compared to $1,840,000 for the same period in 2009, an increase of 202,000, or 11%. Natural gas volumes sold for the first half of 2010 were approximately 399,000 mcf compared to approximately 478,000 mcf during the first half of 2009, a
decrease of approximately 79,000 mcf, or 17 %.

Average natural gas prices received were approximately $5.37 per mcf during the first half of 2010 as compared to approximately $3.85 per mcf in the first half of 2009, an increase of approximately $1.52 per mcf or 39%.

Oil sales for the first six months of 2010 were approximately $1,119,000 compared to approximately $606,000 in the first six months of 2009, an increase of approximately $513,000 or 85%. Oil volumes sold for the first six months of 2010 were approximately 15,000 bbls compared to approximately 14,000 bbls during the first six months of 2009, an increase of approximately 1,000 bbls,
or 7%.

Average oil prices received were $72.15 per bbl in the first half of 2010 compared to $43.57 per bbl in the first half of 2009, an increase of approximately $28.58 or 66%. This increase in the average sales price is the result of the overall improvement in crude oil pricing.

Revenue from lease operations for the first half of 2010 was approximately $133,000 compared to approximately $173,000 for the first half of 2009, a decrease of about $40,000 or 23%. This net decrease between periods resulted from a decrease of approximately $16,000 in field operations income, a decrease of approximately $28,000 in operator overhead income, and an increase of
approximately $4,000 in pumper service revenue.

Revenue from gas gathering, compression and equipment rental for the first half of 2010 was approximately $71,000, compared to approximately $95,000, a net decrease of $24,000 or 25% for the same period in 2009. Gas gathering and compression revenue is generated from the volume of MCFs that are processed through the Company's gathering systems. Gas sales volumes for the first half
of 2010 were less than during the same period in 2009, causing the decrease in revenues.

Interest income for the first half of 2010 was approximately $84,000 as compared with approximately $111,000 for the same period in 2009, a decrease of about $27,000 or 24%. Interest earned on amounts in money market accounts and in certificates of deposit decreased between the two periods as interest rates
continued to decrease. During 2009, the Company moved amounts normally invested in certificates of deposit into business checking accounts at its primary banking institution to take advantage of the unlimited FDIC insurance coverage. The Company also moved money to take advantage of higher FDIC coverage of $250,000 at other banks in order to protect the Company's liquid
assets from risk of loss for bank failures.

Other income for the first half of 2010 was approximately $37,000 as compared with approximately $151,000 for the same period in 2009, a decrease of approximately $114,000 or 76%. Approximately $90,000 of this amount was for severance and ad valorem tax services provided by the Company to several of its leases. Approximately $18,000 was for divestitures of a non-operated lease
interest and land not associated with oil and gas interests in 2009. The remaining decrease was due to other miscellaneous items.

Lease operating expenses in the first half of 2010 were $643,000 as compared to $629,000 for the same period in 2009, an increase of approximately $14,000, or 2%.

Production taxes, gathering, transportation and marketing expenses for the first half of 2010 were approximately $347,000 as compared to $428,000 during the first half of 2009, a net decrease of approximately $81,000 or 19%. The decrease is due to timing differences of severance tax credits on high cost wells drilled and placed on line during 2008. The credits were accrued as of
December 31, 2008 and reversed in January 2009. A portion of the credits were utilized in May, 2009 with the remaining $169,000 being utilized in July, 2009. As a result, the six months ended June 30, 2009 production taxes were approximately $169,000 higher. The remaining increase in this line item of approximately $88,000 relates to the overall increase in revenues subject to severance tax.

For presentation purposes, the Company split out amounts for production taxes, gathering, transportation, and marketing expenses separately from lease operations. In prior years, these amounts were presented together under the line item description of lease operating expenses. There have been no changes to the expenses for 2009 but the presentation for 2009 has been restated to conform to the new presentation. The Company feels the separate reporting of amounts gives a better look at the results of the Company's expenses to operate its leases.

Real estate expenses during the first six months of 2010 were approximately $99,000 compared to approximately $95,000 for the same period in 2009, an increase of $4,000 or 4%. The Company's real estate expenses have been consistent for the period with no significant differences.

Depreciation, depletion, and amortization for the first half of 2010 was $424,000 as compared to $609,000 for the same period in 2009, a decrease of $185,000, or 30%. $361,000 of the amount for the first half of 2010 was for amortization of the full cost pot of capitalized costs compared to $372,000 for the second half of 2009, a decrease of $11,000 or 3%. The Company re-evaluated
its proved oil and gas reserve quantities as of December 31, 2009. This re-evaluated reserve base was adjusted at the end of each quarter for the estimated addition and disposition of reserves during the first six months of 2010 and reduced for oil and gas reserves that were produced or sold during the period. A depletion rate of 1.866% for the first quarter of 2010 and a
depletion rate of 1.546% for the second quarter of 2010 was calculated and applied to the Company's full cost pot of capitalized oil and gas properties compared to a total depletion rate of 3.475% for the first six months of 2009.