Our revenue in revenues from oil sales generated both from wells in which we are the operator as well as those in which we have a working interest, as well as from non-recurring well services and sales of interest in oil and gas leases to third parties. Our revenues from all sources were significantly lower in 2011 than 2010 which was directly related to the natural depletion of wells and downtime, and the sales of oil and gas leases. During the Second Quarter 2012 and 2011, the average sales price (including transfers) per unit of oil extracted from wells drilled by us was approximately $90.60 and approximately $99.30, respectively, for the three months ended June 30, 2012 and 2011 and approximately $94.83 and approximately $94.66, respectively, for the six months ended June 30, 2012 and 2011.
Our total operating expenses during the Second Quarter 2012, increased approximately 142% from the comparative period in 2011 and increased approximately 54% for the six months ended June 30, 2012 from the comparable period 2011. These increases are directly related to the cost of goods the oil and gas leases we sold during the periods and the impairment of the developed properties, offset by a decline in selling, general and administrative expense. Oil lease operating expenses, which include our portion of the cost of contract drillers, and other expenses associated with the drilling operations and depletion expense, were 98% and 109% of oil sales revenues for the three and six months ended June 30, 2012 as compared to 49% and 39% for the three and six months ended June 30, 2012 and 2011, respectively. The declines in margins for our oil sales are attributable to our sale of the Clark oil lease.
Our sales, general and administrative expenses decreased approximately 28% in the three months ended June 30, 2012 from the comparable period in 2011. Sales, general and administrative expenses decreased approximately 5% in the six months ended June 30, 2012 from the comparable period in 2011This decrease is primarily attributable to a decrease in outsourcing professional services. We anticipate our operating expenses will increase during the balance of 2012 which will be reflective of our increased operations. We are not able at this time, however, to quantify the amount of the expected increase.
During Second Quarter 2012 and 2011, we recognized an impairment expense of $21,936 and $56,996 , respectively, and $142,128 and $199,924, respectively, for the six months ended June 30, 2012 and 2011. These impairment expenses are related to impairment of developed properties as we have determined that the carrying value of these assets is likely not recoverable. Given the nature of our operations it is likely we will recognize comparable expenses in future periods.
Included in our total other income during the Second Quarter 2012 and 2011, are non-cash gains on derivatives of $0 as compared to $155,000. We also recognized non-cash gains of $1.17 million and $760,000 for the six months ended June 30, 2012 and 2011, respectively. These gains on derivatives consists of non-cash gains related to the write-off of the Alloy Marketing promissory note in the first quarter of 2012 based upon the statute of limitations on the enforceability of this obligation and are associated with the change in the fair value of derivative liabilities. The difference in fair value of the derivative liabilities between the date of their issuance and their measurement date has been recognized as other income in those periods.
Also included in our total other income for the three and six months ended June 30, 2012 is a non-cash gain of $360,000 $1.7 million, respectively, from the write-off of aged accounts payable. We also recognized non-cash gains associated with the write-off of aged accounts payable of $1.38 million in the comparable periods in 2011. Under the state laws of both Tennessee and Delaware, jurisdictions in which our company previously had operations prior to the discontinuation of all operations in April 2005 or currently operate from, based upon opinions of counsel we received we are permitted to write-off these payables. These gains are one-time and not related to our operating performance.
During the Second Quarter 2012 and the six months ended June 30, 2012, we recognized a gain of $0 and $743,000 on liquidated damages associated with the interest accrued for the conversion note of the Woods note and the gain as a result of the write-off of the Alloy Marketing promissory note. During the Second Quarter 2011 and the six months ended June 30, 2011 we recognized expenses of $27,000 and $54,000, respectively. Liquidated damages are related to registration rights granted by our prior management.
Our interest expense during Second Quarter 2012 and 2011 was $3,366 and $35,280; respectively, and $8,700 and $70,000, respectively, for the six months ended June 30, 2012 and 2011. The decreased in both periods is the result of the decreased amounts outstanding principle under the line of credit provided by a related party which provides funding for our operations.
"My well came in big, so big, Bick and there's more down there and there's bigger wells. I'm rich, Bick. I'm a rich 'un. I'm a rich boy." - Jett Rink
Don't believe anything I say. Do your own DD. Insert huge disclaimer here ____________.
