I like EERG at these prices. Recent insider buys indicate confidence in the 2012 development plan. Are you still researching or playing this one?
Here is the most recent financial data I found:
Results of Operations for the Six-Month Period Ended June 30, 2011 vs. 2010
We recognized net income of $2,348,363 for the six-month period ended June 30, 2011, compared to $3,713,044 for the six-month period ended June 30, 2010. A discussion of the key components of our statements of operations and material fluctuations for the six-month periods ended June 30, 2011 and 2010 is provided below.
Revenues associated with the sale of oil and gas totaled $52,805 for the six-month period ended June 30, 2011, compared to $74,485 for the six-month period ended June 30, 2010. A comparison of the 2011 and 2010 oil sales is as follows:
The 2011 sales relate primarily to our 50% working interest in the Hardy 7-9 well, which was acquired in June 2010 and placed on production in September 2010. In January 2011, the well encountered mechanical problems and was taken off of production due to a parted rod string. The well was repaired and returned to production in March 2011. The well was once again taken off of production in mid-April due to mechanical issues. The well bore was repaired in May 2011, but the well remained shut-in through June 30, 2011 due to inclement weather conditions.
In January 2011, we began recognizing revenue associated with our small, working interest position in the Aarestad 4-34 well, which was completed in December 2010.
The 2010 sales relate to revenues received from our 5% overriding royalty interests in certain properties located in Saskatchewan, Canada. We sold our overriding royalty interests to Ryland in June 2010.
In April 2010, we sold our gross overriding royalty interest in approximately 264,000 net acres within an area of mutual interest located in southeastern Saskatchewan to Ryland. In addition to cash consideration totaling $2.9 million, we received 2,145,883 shares of Ryland’s common stock, which were valued at approximately $874,973 as of the date of sale, and an assignment of Ryland’s 100% working interest in the Hardy Property (approximately 4,480 net acres located in Saskatchewan and related equipment). At the time of the sale, the Hardy Property had an estimated fair market value of $238,681. We recognized a gain in the amount of $4,735,253 during the six-month period ended June 30, 2010 related to the sale.
Also in April 2010, we sold our working interest in approximately 700 net acres located within the Pebble Beach prospect to Rover Resources Inc. for cash consideration totaling $1 million. Because the sale represented a significant reduction of the full-cost pool that is not subject to amortization, the Company reallocated the costs of the pool among the properties included within the pool based on relative fair market value at the time of the sale. The Company recognized a $509,934 gain on the sale of the Pebble Beach acreage during the six-month period ended June 30, 2010.
In May 2011, we sold half of our working interest in our Spyglass Prospect to a third party. Net proceeds from the sale totaled $3,777,793, of which $320,833 was receivable as of June 30, 2011. The receivable was collected in August 2011. Because our working interest in the Spyglass Prospect represented a significant portion of our full-cost pool that is not subject to amortization, we reallocated the aggregate cost of the full-cost pool, not subject to amortization, among the various properties included within the pool, based on their estimated relative fair market values at the time the sale occurred, and recognized a gain in the amount of $3,402,000.
Also in May 2011, we sold a portion of our working interest in the Pebble Beach Prospect for net cash consideration totaling $227,079. The net cash consideration was recorded as a receivable as of June 30, 2011 and collected in August 2011. Because the sale did not represent the disposal of a significant portion of non-amortizable full-cost pool at the time of the sale, the net proceeds received were recorded as a reduction of the full-cost pool, not subject to amortization.
Lease operating expenses associated with the Hardy 7-9 well totaled $115,691for the six-month period ended June 30, 2011. We did not recognize any lease operating expenses during the six-month period ended June 30, 2010 as the Hardy 7-9 well had not yet been re-worked and returned to production.
General and administrative expenses decreased from $452,402 for the six-month period ended June 30, 2010 to $344,906 for the six-month period ended June 30, 2011. The net decrease is primarily due to the following:
Payroll and benefits related expenses decreased by $156,359, as a result of staff reductions that occurred in November 2010.
Land management fees for the six-month period ended June 30, 2011 declined by $23,910 from the same period in 2010, as a result of switching from a full-time resource to a shared we share with AEE.
We recognized foreign exchange losses totaling $28,584 relating to currency fluctuations between the US Dollar and the Canadian Dollar. The majority of our transactions related to our Hardy Property are transacted in Canadian Dollars. No such losses were incurred during the comparable period in 2010.
In May 2011, we paid fees totaling $17,595 to a certain director as compensation for serving on the Special Committee that was formed to review the proposed merger transaction with AEE. This is the only time that we have ever compensated any of our directors through a cash payment.
Insurance expense increased by $16,120 related to the operation of the Hardy 7-9 well. We incurred no such cost during the six-month period ended June 30, 2010 as the well had not yet been returned to production.
Travel related expenses increased by 10,403 from 2010 to 2011 in connection with our proposed merger with AEE and related activities.
Professional fees increased from $238,426 for the six-month period ended June 30, 2010 to $649,154 for the six-month period ended June 30, 2011. Professional fees increased due to the following reasons:
We incurred legal fees totaling $390,266 during the six-month period ended June 30, 2011, primarily related to our proposed merger with AEE. Legal fees for the six-month period ended June 30, 2010 totaled $153,875. The 2010 fees related to a proposed merger with Ryland. The merger with Ryland was never completed.
We also incurred consulting fees totaling $153,192 during the six-month period ended June 30, 2011, the majority of which related to business valuation services obtained in connection with our proposed merger with AEE. Consulting fees for the six-month period ended June 30, 2010 totaled $52,550 and consisted of fees associated with the obtaining of a fairness opinion related to our contemplated merger with Ryland in March 2010. The Ryland merger transaction was never completed.
Accounting fees for the six-month period ended June 30, 2011 totaled $105,696, compared to $32,000 for the six-month period ended June 30, 2010. The increase is primarily due to additional auditing services obtained in connection with our proposed merger with AEE, and related SEC filings, as well as fees incurred as a result of outsourcing of all accounting related activities beginning in November 2010.
Depreciation, depletion, and amortization expense for the six-month period ended June 30, 2011 consisted almost entirely of depletion expense related to the Hardy 7-9 well, which was returned to production in September 2010. No such depletion expense was recognized during the six-month period ended June 30, 2010. Depreciation expense decreased from $23,580 for the six-month period ended June 30, 2010 to $4,406 for the same period in 2011, primarily due to the fact that the majority of our office equipment, furniture, and leasehold improvements became fully depreciated in December 2010.
We recognized dividend income totaling $34,532 related to our holdings of Crescent Point common stock, which were acquired in June 2010. No such dividend income was recognized for the comparable period in 2010, as we had not yet acquired the Crescent Point stock.
We recognized Canadian income taxes totaling $892,112 in connection with the sale of certain gross overriding royalties to Ryland in June 2010.
AI
