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, 2001
Business Overview: The company derives revenue primarily from oil and gas properties, agriculture, and timber. Operations are impacted by the depletion of the North English Bayou Field, offset by increasing income from agriculture and timber.
Key Financial Metrics
| Metric (Nine Months Ended Sep 30) | 2001 | 2000 |
|---|---|---|
| Total Revenue | $1,361,981 | $1,712,130 |
| Net Income | $769,693 | $1,003,000 |
| Net Income Per Share | $0.39 | $0.51 |
| Cash from Operating Activities | $587,664 | $1,074,189 |
| Cash and Cash Equivalents (Sep 30, 2001) | $783,771 | $638,063 (Dec 31, 2000) |
| Total Assets | $6,332,379 | $6,035,717 |
| Total Liabilities | $52,858 | $241,200 |
| Dividends Paid | $293,933 | $295,737 |
Note: The filing does not explicitly state profit margins or debt ratios; values are derived from the provided financial statements.
Material Changes vs. Prior Period
- Net Income Decline: Net income decreased 23.3% for the nine months ended September 30, 2001, compared to the same period in 2000. However, third-quarter net income declined only 2.7% year-over-year.
- Revenue Mix Shift: Oil and gas income dropped significantly from $1,392,159 to $987,438 due to field depletion. Conversely, timber income increased substantially from $156,103 to $204,053.
- Expense Increases: General and administrative expenses rose from $139,398 to $201,031. This was driven by a $44,000 increase in legal expenses (defending mineral ownership) and a $10,270 increase in insurance.
- Liquidity: Cash and cash equivalents increased by $145,708 during the nine-month period, despite significant investing outflows for land purchases ($228,910) and securities.
Outlook, Risks, and Contingencies
- Future Revenue: Management expects to begin receiving proceeds from small royalty interests in three new discoveries in the fourth quarter of 2001.
- Long-Term Strategy: Future trends depend on replacing depleting mineral production and increasing income from timber and agriculture.
- Legal Contingency: The company received an invoice from the National Pollution Funds Center for less than $65,000 regarding an oil well site cleanup. The company is contesting the charge as an innocent landowner, noting the spill occurred prior to their ownership and they did not participate in production.
- Liquidity Outlook: Management believes current revenues are sufficient to meet existing and anticipated future operational needs.
Investor Verification Checklist
- Verify the status of the $65,000 pollution cleanup claim and the likelihood of the "innocent landowner" defense succeeding.
- Confirm the timeline and expected revenue impact of the three new royalty interest discoveries mentioned for Q4 2001.
- Assess the sustainability of timber and agricultural income growth as a hedge against the continued depletion of the North English Bayou Field.
- Review the specific legal matters driving the $44,000 increase in legal expenses to ensure no further material liabilities exist.