Business Context and Reporting Period
Company: Calcasieu Real Estate & Oil Co., Inc. (Note: Input metadata referenced "CKX LANDS, INC." but the filing text identifies the registrant as Calcasieu Real Estate & Oil Co., Inc.)
Reporting Period: Fiscal year ended December 31, 1995.
Business Overview: The Company is a Louisiana-based entity incorporated in 1930, primarily engaged in the ownership and preservation of real estate, mineral interests, and timberlands. Operations are concentrated in southwestern and central Louisiana. Revenue is derived principally from oil and gas royalties, with significant contributions from timber sales and agricultural leases. The Company employs five part-time persons and has no union contracts or pension plans.
Key Financial Metrics
| Metric | 1995 | 1994 | 1993 |
|---|---|---|---|
| Total Revenues | $812,137 | $378,982 | $558,338 |
| Net Income | $348,781 | $108,104 | $258,319 |
| Earnings Per Share (EPS) | $0.17 | $0.05 | $0.13 |
| Operating Cash Flow | $681,826 | ($1,903) | $281,826 |
| Total Assets | $3,018,542 | $2,587,082 | $2,657,021 |
| Cash and Equivalents | $289,180 | $36,544 | $241,604 |
| Long-Term Debt | $0 | $93,108 | $93,108 |
| Current Ratio | 1.39x | 0.91x | N/A |
Note: Current Ratio calculated as Total Current Assets / Total Current Liabilities.
Material Changes vs. Prior Period
- Revenue Surge: Total revenues increased 114% to $812,137 in 1995 compared to $378,982 in 1994. This was driven primarily by a 403% increase in timber property revenues ($466,757 vs. $92,836) and a 14% increase in oil and gas revenues.
- Profitability: Net income rose 223% to $348,781. Income before taxes increased from $120,775 to $518,093.
- Production Volume: Net gas production increased 18% (80,371 MCF vs. 68,154 MCF), and net oil production increased 19% (6,557 Bbl vs. 5,524 Bbl). However, average sales prices declined for gas (13% decrease) and increased slightly for oil (9% increase).
- Cost Reduction: Dry hole costs dropped significantly from $68,657 in 1994 to $2,843 in 1995.
- Liquidity Improvement: Cash and cash equivalents grew from $36,544 to $289,180, bolstered by strong operating cash flows of $681,826.
- Debt Repayment: The Company paid down its long-term debt, reducing the balance to zero (current maturities of $93,108 remain due in 1996).
Guidance, Outlook, and Risks
- Outlook: Management believes current revenues are sufficient to meet capital needs. Future long-term trends depend on the ability to find new production to replace the depletion of existing mineral reserves.
- Customer Concentration: The Company relies heavily on a few customers. In 1995, Riceland Petroleum Company (30%), Whitson (24%), and Coastal (13%) accounted for 67% of total revenues.
- Legal Contingency: The Company is a party to a lawsuit to recover disputed royalties. No estimate can be made regarding the timing or amount of ultimate recovery.
- Market Liquidity: Trading in the Company's common stock is limited and sporadic, with no readily established market value. The Company has a program to repurchase shares from small shareholders to reduce administrative expenses.
- Reserve Uncertainty: Due to the Company's small percentage ownership in oil and gas properties, specific reserve quantities are not available, and discounted future cash flow computations cannot be completed.
Investor Verification Checklist
- Timber Revenue Sustainability: Verify if the 403% increase in timber revenue is a one-time event or indicative of a new recurring revenue stream.
- Debt Maturity: Confirm the ability to service the $93,108 current debt maturity due in 1996, which is secured by timber sale proceeds.
- Customer Dependency: Assess the risk associated with the top three customers representing two-thirds of total revenue.
- Legal Exposure: Monitor the status of the disputed royalty lawsuit for potential financial impact.
- Stock Liquidity: Review the sporadic trading volume and the Company's share repurchase program for implications on shareholder value and exit strategy.