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, 1997
Business Overview: The company operates in oil and gas, agriculture, and timber sectors. As of September 30, 1997, 1,997,252 shares of common stock were issued and outstanding.
Key Financial Metrics
| Metric | Nine Months Ended Sep 30, 1997 | Nine Months Ended Sep 30, 1996 |
|---|---|---|
| Total Revenues | $582,973 | $419,835 |
| Net Income | $314,499 | $664,504 |
| Net Income Per Share | $0.16 | $0.33 |
| Operating Cash Flow | $96,563 | $774,010 |
| Cash and Equivalents (Ending) | $443,450 | $429,765 |
| Total Assets | $3,341,491 | $3,312,051 |
| Total Liabilities | $89,068 | $289,415 |
| Shareholders' Equity | $3,252,423 | $3,022,636 |
Revenue Breakdown (9 Months 1997): Oil and Gas ($516,736), Agriculture ($56,794), Timber ($9,443).
Other Income: Significant non-operating income in 1996 included a $752,087 gain on sale of assets, compared to $11,401 in 1997.
Material Changes vs. Prior Period
- Net Income Decline: Net income decreased significantly from $664,504 to $314,499. This is primarily attributable to the absence of a large one-time gain on the sale of assets ($752,087 in 1996 vs. $11,401 in 1997).
- Operating Revenue Growth: Core operating revenues increased. Oil and gas income rose 76.5% due to higher production, prices, and mineral lease income. Agricultural income increased 64.7% due to higher prices and lease contract changes.
- Timber Income Drop: Timber income fell to $9,443 from $96,594 due to timing differences; sales are scheduled for the fourth quarter of 1997.
- Expense Increases: Oil and gas production costs rose 133.6% due to reworking costs and severance taxes. General and administrative expenses increased 12.1% due to higher salaries.
- Liquidity: Operating cash flow decreased from $774,010 to $96,563, largely driven by the prior year's asset sale proceeds and changes in income tax payables.
Outlook, Risks, and Management Commentary
- New Assets: Two gas wells were completed in the quarter; royalty income is expected in Q4 1997 or Q1 1998, though amounts cannot be projected.
- Recent Acquisition: On October 29, 1997, the company purchased 3,496 acres of farmland from Amoco Production Company for $1,663,000.
- Financial Outlook: Management believes revenues will be sufficient to meet existing and anticipated future needs. No material additional liabilities are anticipated.
- Risks/Contingencies: The filing does not explicitly detail specific risk factors beyond the timing of timber sales and the inability to project income from new wells.
Investor Verification Checklist
- Verify the impact of the $1,663,000 farmland acquisition on future liquidity and debt levels.
- Confirm the timing and volume of timber sales scheduled for the fourth quarter of 1997.
- Monitor the actual royalty income generated from the two new gas wells completed in Q3 1997.
- Review the sustainability of the 76.5% increase in oil and gas income, specifically regarding mineral leases and seismic permits.
- Assess the company's ability to maintain dividend payments given the reduction in operating cash flow compared to the prior year.