If it wasn't for this, the net income would have looked great but it looks like they are concentrating on opening more wells for future growth. It makes sense to me. I was lookin for a nice net income but we can't blame the company for using the income to open/fix more wells.
This one is really exciting to watch when volume comes in since the float is so small. I bought a ticket to the show Friday.
The Company’s second primary source of liquidity was cash flow from operations. For the quarter, the Company’s average monthly cash flow from operating activities was $149,760. This figure compares to average monthly cash flow from operating activities of $51,930 for the quarter ended March 31, 2005.
Of the $448,608 in costs of refracturing during the quarter, approximately $341,000 was incurred on wells refractured during the last two weeks of March. Consequently, the revenues associated with this work will be realized in subsequent periods. There was also a small increase in operating expenses associated with an increase in the number of wells that had reached payout under the 1996 Drilling Agreement with Prima Oil & Gas Company (the “Unioil/Prima Agreement”). See, Exhibits 10.1, 10.2, 10.3 and 10.4.
Results of Operations
The Company holds up to a 27.5% after-payout working interest in 43 wells drilled under the Unioil/Prima Agreement. At March 31, 2006, 27 of the 43 wells had reached payout. At March 31, 2005, 22 of the 43 wells had reached payout.
The Company’s revenues from oil and gas sales increased by $265,205 to $603,555 from $338,350 (as restated) for the quarters ended March 31, 2006 and 2005, respectively. This increase in revenues was attributable primarily to the increase in production resulting from the Company’s completion of a previously uncompleted zone in an existing well and to the refracturing of an existing zone in a second well in late 2005. In addition, the revenues increased because the Company participated in the drilling and completion of a well with Petro-Canada, which acquired Prima Oil & Gas Company in November, 2004, although that well was not subject to the original Unioil/Prima Agreement. Revenues also increased as a result of: (1) the refracturing of five wells operated by Petro-Canada; (2) the wells drilled in previous years that had reached payout under the Unioil/Prima Agreement; and (3) increases in the prices of oil and natural gas.
Costs of production increased by $500,523 to $585,359 from $84,836 for the quarters ended March 31, 2006 and 2005, respectively. This increase in production costs is primarily attributable to the Company’s expenditure of $448,608 in the refracturing of five existing oil-and-gas wells during the first quarter of 2006. Of these amounts, $341,157 was expended on the refracturing of two Unioil operated wells and $107,451 on refracturing of wells operated by another operator.
The Company’s general and administrative expenses decreased by $37,536 to $114,858 from $152,394 (as restated) for the quarters ended March 31, 2006 and 2005, respectively. The decrease is attributable primarily to decreases in consulting fees.
Depreciation, depletion and amortization expenses increased by $15,974 to $61,962 from $45,988 (as restated) for the quarters ended March 31, 2006 and 2005, respectively. This increase is primarily a result of increases in the production from existing wells and the additional production from the wells that had reached payout under the Unioil/Prima Agreement.
Interest and other expenses were $102 compared to $133 for the quarters ended March 31, 2006 and 2005, respectively. The decrease in these expenses is attributable primarily to the reduction in the outstanding balance of the Company’s indebtedness to Ford Credit Corporation on a Company owned vehicle.
The Company realized a decrease in net income of $132,482 to a net loss of $96,147 for the quarter ended March 31, 2006, as compared to net income of $36,335 (as restated) for the corresponding period of 2005. The decrease in net income for the quarter ended March 31, 2006,
AI
