Business Context and Reporting Period
Company: Calcasieu Real Estate & Oil Co., Inc. (Note: Input metadata referenced "CKX Lands, Inc." but the filing text identifies Calcasieu Real Estate & Oil Co., Inc.)
Filing Type: Form 10-Q
Reporting Period: Quarter and nine months ended September 30, 2002
Business Overview: The company generates revenue primarily from oil and gas properties, agriculture, and timber. As of September 30, 2002, 1,955,044 shares of Common Stock were outstanding.
Key Financial Metrics
| Metric | Nine Months Ended Sep 30, 2002 | Nine Months Ended Sep 30, 2001 |
|---|---|---|
| Total Revenue | $1,051,315 | $1,361,981 |
| Net Income | $564,826 | $769,693 |
| Net Income Per Share | $0.29 | $0.39 |
| Cash from Operations | $435,509 | $587,664 |
| Cash and Equivalents (Ending) | $534,964 | $783,771 |
| Total Assets | $6,464,290 | $6,407,663 |
| Total Liabilities | $26,621 | $228,598 |
| Shareholders' Equity | $6,437,669 | $6,179,065 |
Revenue Breakdown (9 Months 2002): Oil & Gas ($800,108), Agriculture ($138,690), Timber ($112,517).
Material Changes vs. Prior Period
- Profitability Decline: Net income for the nine months ended September 30, 2002, decreased 26.6% compared to the same period in 2001. For the third quarter alone, net income dropped 32.5%.
- Revenue Drivers: All revenue sources declined. Oil and gas income fell 19% for the nine months due to the depletion of the North English Bayou field in 2002; current production relies on the North Gordon field (one well with a short life). Timber income dropped 44.9%, and agriculture income fell 18.7%.
- Expense Management: While oil, gas, agriculture, and forestry expenses increased, these were offset by lower general and administrative expenses and reduced depletion charges.
- Liquidity Position: Cash and cash equivalents decreased significantly from $1,419,084 at year-end 2001 to $534,964 at September 30, 2002, driven by a net cash outflow of $884,120.
- Investing Activities: The company utilized $1,033,960 in investing activities, primarily for the purchase of securities available for sale ($1,695,365) and land ($12,737).
Outlook, Risks, and Contingencies
- Future Revenue Outlook: Management does not project timber or agriculture income to reach 2001 levels in 2002. Oil and gas production is currently limited to a single well with a relatively short life.
- Environmental Contingency: The company received an invoice from the National Pollution Funds Center for approximately $100,000 regarding the cleanup of an old oil well site. The company is contesting the charges, asserting it is an innocent landowner as the spill occurred prior to ownership. Legal counsel believes defenses are strong.
- Capital Expenditures: The company is in the process of closing on the purchase of 280 acres of land for $157,000 plus expenses.
- Liquidity Assessment: Management believes current revenues are sufficient to meet existing and anticipated future needs and does not anticipate material additional liabilities. The company has no off-balance sheet entities.
Investor Verification Checklist
- Oil & Gas Sustainability: Verify the remaining productive life of the North Gordon field well, which is now the primary source of oil and gas income.
- Environmental Liability: Monitor the status of the $100,000 National Pollution Funds Center claim and the outcome of the legal contest.
- Cash Burn Rate: Assess the impact of the $884,120 decrease in cash on hand over the nine-month period against future dividend obligations and capital needs.
- Land Acquisition: Confirm the closing and total cost of the 280-acre land purchase mentioned in management commentary.
- Revenue Diversification: Evaluate the long-term viability of timber and agriculture segments given the significant year-over-year declines and management's lowered projections.