Mark one:
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x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2010
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r
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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13-3145265
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(State or Other Jurisdiction of Incorporation)
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(IRS Employer Identification No.)
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Page
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PART I
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ITEM 1.
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4
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ITEM 1A.
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11
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ITEM 1B.
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21
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ITEM 2.
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21
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ITEM 3.
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21
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ITEM 4.
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||
PART II
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||
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ITEM 5.
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22
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ITEM 6.
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22
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ITEM 7.
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22
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ITEM 7A.
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32 | |
ITEM 8.
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33
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ITEM 9.
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33
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ITEM 9A.
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33
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ITEM 9B.
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33
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PART III
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||
ITEM 10.
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DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
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ITEM 11.
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EXECUTIVE COMPENSATION
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ITEM 12.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTAND RELATED STOCKHOLDER MATTERS
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ITEM 13.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
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ITEM 14.
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PRINCIPAL ACCOUNTING FEES & SERVICES
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PART IV
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||
ITEM 15.
|
35
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·
|
the volatility in commodity prices for oil and natural gas, including continued declines in prices;
|
·
|
the possibility that the industry may be subject to future regulatory or legislative actions (including any additional taxes and changes in environmental regulation);
|
·
|
the presence or recoverability of estimated oil and natural gas reserves and the actual future production rates and associated costs;
|
·
|
the possibility that production decline rates for some of our oil and gas producing properties are greater than we expect;
|
·
|
our ability to generate sufficient cash flow from operations, borrowings or other sources to enable us to fully develop our undeveloped acreage positions;
|
·
|
the ability to replace oil and natural gas reserves;
|
·
|
environmental risks;
|
·
|
drilling and operating risks;
|
·
|
exploration and development risks;
|
·
|
competition, including competition for acreage in oil and gas producing areas and for experienced personnel;
|
·
|
management’s ability to execute our plans to meet our goals;
|
·
|
our ability to retain key members of senior management and key technical employees;
|
·
|
our ability to obtain goods and services, such as drilling rigs and tubulars, and access to adequate gathering systems and pipeline take-away capacity, to execute our drilling and development programs;
|
·
|
general economic conditions, whether internationally, nationally or in the regional and local market areas in which we do business, may be less favorable than expected, including the possibility that the current economic recession in the United States will be severe and prolonged, which could adversely affect the demand for oil and natural gas and make it difficult, if not impossible, to access financial markets;
|
·
|
other economic, competitive, governmental, legislative, regulatory, geopolitical and technological factors that may negatively impact our business, operations or pricing.
|
Before Payout
|
After Payout
|
|||||||
Overriding Interest in the Med Yavne Lease (1)
|
0.1
|
%
|
1.3
|
%
|
||||
Overriding Interest in the Michal & Matan Licenses
|
1.5375
|
%
|
2.7375
|
%
|
Swap Contracts
|
||||||||||||||||
Natural Gas
|
Crude Oil
|
|||||||||||||||
Volume
(MMBTU)
(*)
|
Weighted
Average
Price
($/MMBTU)
|
Volume
(Bbl)
|
Weighted
Average
Price
($/Bbl)
|
|||||||||||||
2011
|
764,820
|
8.22
|
240,336
|
86.55
|
||||||||||||
2012
|
174,222
|
8.65
|
127,473
|
82.37
|
||||||||||||
2013
|
-
|
-
|
89,400
|
85.15
|
||||||||||||
2014
|
-
|
-
|
66,000
|
86.95
|
Notional amount (in thousands)
|
Start Date
|
Maturity Date
|
Weighted-Average
Interest Rate
|
||||||
2,000
|
April 2010
|
February 2011
|
3.63
|
%
|
|||||
6,000
|
April 2010
|
February 2011
|
2.90
|
%
|
·
|
the worldwide military and political environment, uncertainty or instability resulting from the escalation or additional outbreak of armed hostilities or further acts of terrorism in the United States, or elsewhere;
|
·
|
worldwide and domestic supplies of crude oil and natural gas;
|
·
|
actions taken by foreign oil and gas producing nations;
|
·
|
the level of global crude oil and natural gas inventories;
|
·
|
the price and level of foreign imports of oil, natural gas and NGLs;
|
·
|
the effect of worldwide energy conservation efforts;
|
·
|
the price and availability of alternative and competing fuels;
|
·
|
the availability of pipeline capacity and infrastructure;
|
·
|
the availability of crude oil transportation and refining capacity;
|
·
|
weather conditions;
|
·
|
electricity dispatch;
|
·
|
domestic and foreign governmental regulations and taxes; and
|
·
|
the overall economic environment.
|
·
|
limiting our financial condition, liquidity, ability to finance planned capital expenditures and results of operations;
|
·
|
reducing the amount of oil, natural gas and NGLs that we can produce economically;
|
·
|
causing us to delay or postpone some of our capital projects;
|
·
|
reducing our revenues, operating income and cash flows;
|
·
|
reducing the carrying value of our crude oil and natural gas properties;
|
·
|
reducing the amounts of our estimated proved oil and natural-gas reserves;
|
·
|
reducing the standardized measure of discounted future net cash flows relating to oil and natural-gas reserves; and
|
·
|
limiting our access to sources of capital, such as equity and long-term debt.
|
·
|
Climate Change.
In the recently concluded session of Congress, climate-change legislation establishing a “cap-and-trade” plan for green-house gases (GHGs) was approved by the U.S. House of Representatives.. The U.S. Environmental Protection Agency (EPA) has also taken recent action related to GHGs.
EPA has made findings and issued regulations that require the establishment and reporting of an inventory of greenhouse gas emissions and that could lead to the imposition of restrictions on greenhouse gas emissions from stationary sources such as ours. While it is not possible at this time to predict whether or when the Congress may act on climate-change legislation, legislative and regulatory proposals for restricting greenhouse gas emissions or otherwise addressing climate change could require us to incur additional operating costs and could adversely affect demand for the natural gas and oil that we sell. The potential increase in our operating costs could include new or increased costs to obtain permits, operate and maintain our equipment and facilities, install new emission controls on our equipment and facilities, acquire allowances to authorize our greenhouse gas emissions, pay taxes related to our greenhouse gas emissions and administer and manage a greenhouse gas emissions program. Moreover, incentives to conserve energy or use alternative energy sources could reduce demand for natural gas and oil.
|
·
|
Taxes.
The U.S. President’s Fiscal Year 2012 Budget Proposal includes provisions that would, if enacted, make significant changes to U.S. tax laws. These changes include, but are not limited to, (i) eliminating the immediate deduction for intangible drilling and development costs, (ii) eliminating the deduction from income for domestic production activities relating to oil and natural-gas exploration and development, and (iii) implementing certain international tax reforms.
|
·
|
Hydraulic Fracturing.
In the recently concluded session of Congress, legislation amending the federal Safe Drinking Water Act to require the disclosure of chemicals used by the oil and natural-gas industry in the hydraulic-fracturing process was considered. Currently, regulation of hydraulic fracturing is primarily conducted at the state level through permitting and other compliance requirements. It is not possible at this time to predict whether or when the current session of Congress may act on hydraulic-fracturing legislation. Such legislation, if adopted, could establish an additional level of regulation and permitting at the federal level.
|
·
|
the domestic and foreign supply of, and demand for oil and natural gas;
|
·
|
the ability of members of the Organization of Petroleum Exporting Countries (OPEC) and other producing countries to agree upon and maintain oil prices and production levels;
|
·
|
political instability, armed conflict or terrorist attacks, whether or not in oil or natural gas producing regions;
|
·
|
the growth of consumer product demand in emerging markets, such as India and China;
|
·
|
labor unrest in oil and natural gas producing regions;
|
·
|
weather conditions, including hurricanes and other natural occurrences that affect the supply and/or demand of oil and natural gas;
|
·
|
the price and availability of alternative and competing fuels;
|
·
|
the price and level of foreign imports of oil, natural gas and NGLs; and
|
·
|
worldwide economic conditions.
|
·
|
our actual production is less than hedged volumes;
|
·
|
there is a widening of price differentials between delivery points for our production and the delivery point assumed in the hedge arrangement; or
|
·
|
the counterparties to our hedging agreements fail to perform under the contracts.
|
·
|
a sudden unexpected event materially impacts oil and natural-gas prices.
|
·
|
human error, accidents, labor force and other factors beyond our control that may cause personal injuries or death to persons and destruction or damage to equipment and facilities;
|
·
|
blowouts, fires, hurricanes, pollution and equipment failures that may result in damage to or destruction of wells, producing formations, production facilities and equipment;
|
·
|
unavailability of materials and equipment;
|
·
|
engineering and construction delays;
|
·
|
unanticipated transportation costs and delays;
|
·
|
unfavorable weather conditions;
|
·
|
hazards resulting from unusual or unexpected geological or environmental conditions;
|
·
|
environmental regulations and requirements;
|
·
|
accidental leakage of toxic or hazardous materials, such as petroleum liquids or drilling fluids, into the environment;
|
·
|
changes in laws and regulations, including laws and regulations applicable to oil and natural gas activities or markets for the oil and natural gas produced;
|
·
|
fluctuations in supply and demand for oil and natural gas causing variations of the prices we receive for our oil and natural gas production; and
|
·
|
the availability of alternative fuels and the price at which they become available.
|
·
|
from a well or drilling equipment at a drill site;
|
·
|
from gathering systems, pipelines, transportation facilities and storage tanks;
|
·
|
damage to oil and natural gas wells resulting from accidents during normal operations; and
|
·
|
blowouts, hurricanes and explosions.
|
·
|
war, terrorist acts and civil disturbances,
|
·
|
changes in taxation policies,
|
·
|
laws and policies of the US and Israel affecting foreign investment, taxation, trade and business conduct,
|
·
|
foreign exchange restrictions,
|
·
|
international monetary fluctuations and changes in the value of the US dollar, such as the decline of the US dollar and
|
·
|
other hazards arising out of Israeli governmental sovereignty over areas in which we own oil and gas interests.
|
High
|
Low
|
|||||||
2010
|
||||||||
First Quarter
|
$
|
80.10
|
$
|
49.00
|
||||
Second Quarter
|
70.50
|
45.05
|
||||||
Third Quarter
|
61.12
|
45.56
|
||||||
Fourth Quarter
|
90.36
|
55.96
|
||||||
2009
|
||||||||
First Quarter
|
$
|
66.10
|
$
|
28.00
|
||||
Second Quarter
|
124.86
|
32.00
|
||||||
Third Quarter
|
171.18
|
114.22
|
||||||
Fourth Quarter
|
132.42
|
67.05
|
As of December 31,
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
(In thousands except percentage)
|
||||||||||||
Senior Credit Facilities
|
$
|
22,725
|
$
|
32,950
|
$
|
43,200
|
||||||
Long – term debt – related party
|
76,354
|
79,354
|
80,354
|
|||||||||
Short – term debt – related party
|
-
|
-
|
-
|
|||||||||
Current maturities of long-term debt, short-term debt and bank overdraft
|
17,350
|
12,366
|
22,544
|
|||||||||
Total debt
|
116,429
|
124,670
|
146,098
|
|||||||||
Stockholders’ equity
|
18,537
|
13,733
|
25,034
|
|||||||||
Debt to capital ratio
|
86
|
%
|
90
|
%
|
85
|
%
|
Years Ended December 31,
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
(In thousands)
|
||||||||||||
Cash flows provided by operating activities
|
$
|
12,063
|
$
|
21,519
|
$
|
18,886
|
||||||
Cash flows used in investing activities
|
(1,437
|
)
|
(332
|
)
|
(97,753
|
)
|
||||||
Cash flows provided by (used in) financing activities
|
(7,876
|
)
|
(21,421
|
)
|
80,796
|
|||||||
Net increase (decrease) in cash
|
$
|
2,750
|
$
|
(234
|
)
|
$
|
1,929
|
Selected Data
|
||||||||||||
Years Ended December 31,
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
(In thousands except per share and MBOE amounts)
|
||||||||||||
Financial Results
|
||||||||||||
Oil and Gas sales
|
$
|
39,329
|
$
|
30,768
|
$
|
51,832
|
||||||
Other
|
2,871
|
956
|
365
|
|||||||||
Total revenues and other
|
42,200
|
31,724
|
52,197
|
|||||||||
Cost and expenses
|
41,059
|
42,024
|
63,619
|
|||||||||
Other expense (income)
|
5,784
|
13,369
|
(15,028
|
)
|
||||||||
Income tax expense (benefit)
|
(1,856
|
)
|
(10,090
|
)
|
377
|
|||||||
Net Income (loss)
|
(2,787
|
)
|
(13,579
|
)
|
3,229
|
|||||||
Earnings per common share – basic and diluted
|
$
|
(1.03
|
)
|
$
|
(5.00
|
)
|
$
|
1.19
|
||||
Weighted average number of shares outstanding-basic and diluted
|
2,717,691
|
2,717,691
|
2,717,691
|
|||||||||
Operating Results
|
||||||||||||
Adjusted EBITDAX (
1
)
|
$
|
22,472
|
$
|
26,796
|
$
|
22,548
|
||||||
Total proved reserves (MBOE)
|
9,031
|
8,565
|
8,213
|
|||||||||
Annual sales volumes (MBOE)
|
841
|
886
|
821
|
|||||||||
Average cost per MBOE:
|
||||||||||||
Production (excluding transportation and taxes)
|
$
|
18.32
|
$
|
12.99
|
$
|
17.59
|
||||||
General and administrative
|
$
|
6.09
|
$
|
4.64
|
$
|
3.31
|
||||||
Depletion
|
$
|
14.44
|
$
|
17.34
|
$
|
21.59
|
(1)
|
See Adjusted EBITDAX for a description of Adjusted EBITDAX, which is not a Generally Accepted Accounting Principles (GAAP) measure, and a reconciliation of Adjusted EBITDAX to income from operations before income taxes, which is presented in accordance with GAAP.
|
Years Ended December 31,
|
||||||||||||||||||||
In thousands except percentages
|
2010
|
2009
|
D
vs. 2010
|
2008
|
D
vs. 2009
|
|||||||||||||||
Gas sales
|
$
|
11,157
|
$
|
9,124
|
22
|
%
|
$
|
20,747
|
(56)
|
%
|
||||||||||
Oil sales
|
22,405
|
17,147
|
31
|
25,049
|
(32)
|
|||||||||||||||
Natural gas liquid sales
|
5,767
|
4,497
|
28
|
6,036
|
(25)
|
|||||||||||||||
Total
|
$
|
39,329
|
$
|
30,768
|
28
|
%
|
$
|
51,832
|
(41)
|
%
|
Years Ended December 31,
|
||||||||||||||||||||
2010
|
2009
|
D
vs. 2010
|
2008
|
D
vs. 2009
|
||||||||||||||||
Natural Gas
|
||||||||||||||||||||
Sales volumes Mmcf
|
2,368
|
2,623
|
(10)
|
%
|
2,507
|
5
|
%
|
|||||||||||||
Price per Mcf
|
$
|
4.71
|
$
|
3.48
|
35
|
$
|
8.28
|
(58)
|
||||||||||||
Total gas sales revenues (thousands)
|
$
|
11,157
|
$
|
9,124
|
22
|
%
|
$
|
20,747
|
(56)
|
%
|
||||||||||
Crude Oil
|
||||||||||||||||||||
Sales volumes MBbl
|
290
|
293
|
(1)
|
%
|
258
|
14
|
%
|
|||||||||||||
Price per Bbl
|
$
|
77.26
|
$
|
58.52
|
32
|
$
|
97.1
|
(40)
|
||||||||||||
Total oil sales revenues (thousands)
|
$
|
22,405
|
$
|
17,147
|
31
|
%
|
$
|
25,049
|
(32)
|
%
|
||||||||||
Natural gas liquids
|
||||||||||||||||||||
Sales volumes MBbl
|
156
|
156
|
0
|
%
|
145
|
8
|
%
|
|||||||||||||
Price per Bbl
|
$
|
36.97
|
$
|
28.83
|
28
|
$
|
41.6
|
(31)
|
||||||||||||
Total natural gas liquids sales revenues (thousands)
|
$
|
5,767
|
$
|
4,497
|
28
|
%
|
$
|
6,036
|
(25)
|
%
|
In thousands
|
Natural Gas
|
Oil
|
Natural gas liquids
|
|||||||||
2008 sales revenues
|
$
|
20,747
|
$
|
25,049
|
$
|
6,036
|
||||||
Changes associated with sales volumes
|
960
|
3,398
|
458
|
|||||||||
Changes in prices
|
(12,583
|
)
|
(11,300
|
)
|
(1,997
|
)
|
||||||
2009 sales revenues
|
9,124
|
17,147
|
4,497
|
|||||||||
Changes associated with sales volumes
|
(887
|
)
|
(176
|
)
|
-
|
|||||||
Changes in prices
|
2,920
|
5,434
|
1,270
|
|||||||||
2010 sales revenues
|
$
|
11,157
|
$
|
22,405
|
$
|
5,767
|
|
Years Ended December 31,
|
|||||||||||
In thousands except percentages
|
2010
|
2009
|
2008
|
|||||||||
Income from operations before income taxes
|
$
|
(4,643
|
)
|
$
|
(23,669
|
)
|
$
|
3,606
|
||||
Depreciation, depletion, amortization and impairment expense
|
13,893
|
21,119
|
39,816
|
|||||||||
Interest expense
|
7,646
|
9,219
|
9,855
|
|||||||||
Unrealized gain on derivative contract
|
4,727
|
19,298
|
(32,657
|
)
|
||||||||
Accretion Expenses
|
849
|
829
|
847
|
|||||||||
Other nonrecurring items - amortization of Inventory
|
-
|
-
|
1,081
|
|||||||||
Consolidated Adjusted EBITDAX
|
$
|
22,472
|
$
|
26,796
|
$
|
22,548
|
Years Ended December 31,
|
||||||||||||||||||||
In thousands except percentages
|
2010
|
2009
|
D
vs. 2010
|
2008
|
D
vs. 2009
|
|||||||||||||||
Lease operating expense, transportation and taxes
|
$
|
19,894
|
$
|
15,651
|
27
|
%
|
$
|
20,242
|
(23
|
)%
|
||||||||||
Depreciation, depletion and amortization
|
12,142
|
15,368
|
(21
|
)
|
17,723
|
(13
|
)
|
|||||||||||||
Impairments of oil and gas assets
|
1,751
|
5,751
|
(70
|
)
|
22,093
|
(74
|
)
|
|||||||||||||
Accretion expense
|
849
|
829
|
2
|
847
|
(2
|
)
|
||||||||||||||
Loss from plug and abandonment
|
1,300
|
312
|
317
|
-
|
-
|
|||||||||||||||
General and administrative
|
5,123
|
4,113
|
25
|
2,714
|
52
|
|||||||||||||||
$
|
41,059
|
$
|
42,024
|
(2
|
)%
|
$
|
63,619
|
(34)
|
%
|
·
|
Lease operating expense, transportation cost and taxes increased by 27%, or $4,243,000, in 2010 when compared to 2009. This increase was the result of the costs associated with a plan we initiated in January 2010 to workover a number of our wells, along with the incremental costs involved in operating older, more mature fields that require additional repair and maintenance as well as the increasing costs of environmental remediation expenditures. Finally, the higher oil and gas sale prices we received had the effect of increasing the taxes paid during 2010. On a per unit basis, lease operating expenses (excluding transportation and taxes) increased by $5.33 per MBOE to $18.32 per MBOE in 2010, from $12.99 per MBOE in 2009.
|
·
|
Depreciation, Depletion &Amortization (DD&A) of the cost of proved oil and gas properties is calculated using the unit-of-production method. Our DD&A rate and expense are the composite of numerous individual field calculations. There are several factors that can impact our composite DD&A rate and expense, including but not limited to field production profiles, drilling or acquisition of new wells, disposition of existing wells, and reserve revisions (upward or downward) primarily related to well performance and commodity prices, and impairments. Changes to these factors may cause our composite DD&A rate and expense to fluctuate from period to period. Our DD&A decreased by 21%, or $3,226,000, in 2010 when compared to 2009 primarily due to higher prices (per MBOE) that impacted our estimated total reserves, which are the basis for the depletion calculation and the impact of a 2009 impairment of $5,751,000 on the depletable base used to calculate DD&A. On a per unit basis, depletion expense decreased by $2.90 per MBOE to $14.44 per MBOE in 2010 from $17.34 per MBOE in 2009.
|
·
|
Impairments of oil and gas assets of $1,751,000 in 2010 were primarily a result of lower natural gas prices in general and the low volume of gas produced in a few of our Central Texas fields.
|
·
|
General and administrative expenses increased by 25%, or $1,010,000, in 2010 when compared to 2009, primarily due to attorney’s fees and expenses related to certain derivative litigation pending in Harris County, Texas.
|
·
|
Lease operating expense, transportation and taxes decreased by 23%, or $4,591,000, in 2009 when compared to 2008 primarily as a result of cost savings programs initiated in response to the reduction in oil and gas prices experienced from 2008 into 2009. Cost savings were achieved through operating efficiencies, deferral of certain workovers and vendor negotiations. Additional reductions were due to lower commodity prices that affected the taxes paid during 2009. This decrease was partially offset by the fact that, in 2008, we recorded only 9 months of operating expense, transportation and taxes associated with the properties acquired in GFB acquisition, compared to 12 months during 2009. On a per unit basis, lease operating expenses (excluding transportation and taxes) decreased by $4.60 per MBOE to $12.99 per MBOE in 2009 from $17.59 per MBOE in 2008.
|
·
|
Depreciation, Depletion &Amortization (DD&A) of the cost of proved oil and gas properties is calculated using the unit-of-production method. Our DD&A rate and expense are the composite of numerous individual field calculations. There are several factors that can impact our composite DD&A rate and expense, including but not limited to field production profiles, drilling or acquisition of new wells, disposition of existing wells, and reserve revisions (upward or downward) primarily related to well performance and commodity prices, and impairments. Changes to these factors may cause our composite DD&A rate and expense to fluctuate from period to period. DD&A decreased by 13%, or $2,355,000, in 2009 when compared to 2008 primarily due to higher prices (per MBOE) that impacted our estimated total reserves, which are the basis for the depletion calculation, and the impact of a 2008 impairment of $22,093,000 on the depletable base used to calculate DD&A, which was partially offset by higher production. On a per unit basis, depletion expense decreased by $4.25 per MBOE to $17.34 per MBOE in 2009 from $21.59 per MBOE in 2008.
|
·
|
Impairments of oil and gas assets of $5,751,000 in 2009 were primarily a result of lower natural gas prices in general and the low volume of gas produced in a few of our Central Texas fields.
|
·
|
General and administrative expenses increased by 52%, or $1,399,000, in 2009 when compared to 2008, primarily due to increases in compensation and benefit expenses associated with hiring additional employees required as a result of the GFB acquisition and assuming operation of approximately 350 additional wells in October 2008. The GFB acquisition also increased the volume of the activities and, as a result, the indirect expenses of the activities. In addition, the Company incurred increased legal expenses in 2009 due to a number of factors. The Company was required to pay an award of $288,000 in attorney’s fees as a result of an adverse court decision in a case filed by the Company in 2001. The Company was the subject of two derivative lawsuits filed in 2009. Also in 2009 the Company instituted lawsuits against several entities to recover damages relating to its investments in Barnett Shale operations and to the operation of the properties acquired in the Five States acquisition.
|
Years Ended December 31,
|
||||||||||||||||||||
In thousands except percentages
|
2010
|
2009
|
D
vs. 2010
|
2008
|
D
vs. 2009
|
|||||||||||||||
Interest expense net
|
$
|
7,646
|
$
|
9,219
|
(17
|
)%
|
$
|
9,855
|
(6
|
)%
|
||||||||||
Realized gain on sale of investment and other
|
-
|
(250
|
)
|
(100
|
)
|
(145
|
)
|
72
|
||||||||||||
Net loss (gain) on derivative contracts
|
(1,862
|
)
|
4,400
|
(142
|
)
|
(24,738
|
)
|
(118
|
)
|
|||||||||||
$
|
5,784
|
$
|
13,369
|
(57
|
)%
|
$
|
(15,028
|
)
|
(189
|
)%
|
3.1
|
Certificate of Incorporation of Registrant with all amendments filed as an Exhibit to the S-l Registration Statement, File No. 2-83574.
|
|
3.2
|
Amendment to Certificate of Incorporation filed March 17, 1993, filed as an Exhibit with the S-l Registration Statement, File No. 33-57482.
|
|
3.3
|
By-laws of Registrant with all amendments, filed as an Exhibit to the S-l Registration Statement, File No. 2-83570.
|
|
4.1
|
First Amended and Restated Promissory Note dated as of February 27, 2007, issued to NAPHTHA ISRAEL PETROLEUM CORP., LTD. in the principal amount of $18,500,000 filed as an Exhibit to the 10-K for the year ended December 31, 2009 and incorporated herein by reference.
|
|
4.2
|
First Amended and Restated Promissory Note dated as of February 27, 2007, issued to NAPHTHA ISRAEL PETROLEUM CORP., LTD. in the principal amount of $11,500,000 filed as an Exhibit to the 10-K for the year ended December 31, 2009 and incorporated herein by reference.
|
|
4.3
|
First Amended and Restated Promissory Note dated as of February 27, 2007, issued to and I.O.C. ISRAEL OIL COMPANY, LTD. in the principal amount of $12,000,000 filed as an Exhibit to the 10-K for the year ended December 31, 2009 and incorporated herein by reference.
|
|
4.4
|
Promissory Note dated as of February 27, 2007, issued to and J.O.E.L JERUSALEM OIL EXPLORATION, LTD. in the principal amount of $7,000,000, filed as an Exhibit to the 10-Q for the quarter ended March 31, 2007 and incorporated herein by reference.
|
|
4.5
|
Promissory Note dated as of May 25, 2008, issued to and J.O.E.L JERUSALEM OIL EXPLORATION, LTD. in the principal amount of $48,900,000 filed as an Exhibit to the 10-K for the year ended December 31, 2009 and incorporated herein by reference.
|
|
10.1
|
Purchase and Sale Agreement, dated as of February 16, 2007, among Five States Energy Company, L.L.C. and each of the other parties listed as a party "Seller" on the signature pages thereof and ISRAMCO, Inc., filed as an Exhibit to the 10-Q for the quarter ended March 31, 2007 and incorporated herein by reference.
|
|
10.2
|
LOAN AGREEMENT, dated as of February 27, 2007, between ISRAMCO, INC., and NAPHTHA ISRAEL PETROLEUM CORP., LTD., filed as an Exhibit to the 10-Q for the quarter ended March 31, 2007 and incorporated herein by reference.
|
|
10.3
|
LOAN AGREEMENT, dated as of February 27, 2007, between ISRAMCO, INC., and NAPHTHA ISRAEL PETROLEUM CORP., LTD., filed as an Exhibit to the 10-Q for the quarter ended March 31, 2007 and incorporated herein by reference.
|
|
10.4
|
LOAN AGREEMENT, dated as of February 27, 2007, Between ISRAMCO, INC., and I.O.C. ISRAEL OIL COMPANY, LTD., filed as an Exhibit to the 10-Q for the quarter ended March 31, 2007 and incorporated herein by reference.
|
|
10.5
|
LOAN AGREEMENT, dated as of February 26, 2007, between ISRAMCO, INC., and J.O.E.L JERUSALEM OIL EXPLORATION, LTD., filed as an Exhibit to the 10-Q for the quarter ended March 31, 2007 and incorporated herein by reference.
|
10.6
|
CREDIT AGREEMENT dated as of March 2, 2007 among ISRAMCO ENERGY, L.L.C., each of the lenders that is a signatory hereto or which becomes a signatory hereto; and WELLS FARGO BANK, N. A., a national banking association, as agent for the Lenders., filed as an Exhibit to the 10-Q for the quarter ended March 31, 2007 and incorporated herein by reference.
|
10.7
|
GUARANTY AGREEMENT, dated as of March 2, 2007 by ISRAMCO, Inc. in favor of Wells Fargo Bank, N.A., as administrative agent (the "ADMINISTRATIVE AGENT") for the lenders that are or become parties to the Credit Agreement referred to in Item 10.6., filed as an Exhibit to the 10-Q for the quarter ended March 31, 2007 and incorporated herein by reference.
|
|
10.8
|
PLEDGE AGREEMENT, dated as of March 2, 2007 by Isramco, Inc. in favor of Wells Fargo Bank, N.A., as administrative agent for itself and the lenders (the "LENDERS") which are parties to the Credit Agreement referred to in Item 10.6, filed as an Exhibit to the 10-Q for the quarter ended March 31, 2007 and incorporated herein by reference.
|
|
10.9
|
Employment Agreement dated as of September 1, 2007 between Isramco Inc. and Edy Francis, filed as an Exhibit to the 10-Q for the quarter ended September 30, 2007 and incorporated herein by reference.+
|
|
10.10
|
Agreement dated as of December 31, 2007 between Isramco Inc. and I.O.C. Israel Oil Company Ltd and addendum dated January 1, 2008, filed as an Exhibit to the 10-Q for the quarter ended March 31, 2008 and incorporated herein by reference.
|
|
10.11
|
Amended and restated credit agreement dated on April 28, 2008 between Isramco Resources, LLC and The Bank of Nova Scotia and Capital One, N.A., filed as an Exhibit to the 10-Q for the quarter ended March 31, 2008 and incorporated herein by reference.
|
|
10.12
|
Amended and Restated Loan Agreement dated as of May 25, 2008 between Isramco Inc. and J.O.E.L. Jerusalem Oil Explorations Ltd. filed as an Exhibit to the 10-K for the year ended December 31, 2009 and incorporated herein by reference.
|
|
10.13
|
Amended and Restated Agreement dated as of November 17, 2008 between Isramco Inc. and Goodrich Global Ltd. filed as an Exhibit to the 10-K for the year ended December 31, 2009 and incorporated herein by reference.
|
|
10.14
|
First Amendment to Loan Agreement dated as of February 1, 2009, between Isramco, Inc. and I.O.C. Israel Oil Company, Ltd.($18.5 million)
|
|
10.15
|
First Amendment to Loan Agreement dated as of February 1, 2009, between Isramco, Inc, and Naphtha Israel Petroleum Corp., Ltd.($11.5 million)
|
|
10.16
|
Loan Agreement dated as of July 14, 2009 between Isramco, Inc. and I.O.C. – Israel Oil Company, Ltd.($6.0 million)
|
|
10.17
|
First Amendment to Loan Agreement dated as of February 1, 2009 between Isramco, Inc. and I.O.C. Israel Oil Company, Ltd.($12.0 million)
|
|
10.18*
|
||
14.1
|
Code of Ethics, filed as an Exhibit to Form 10-K for the year ended December 31, 2003.
|
|
23.1*
|
||
31.1*
|
||
31.2*
|
||
32.1*
|
||
32.2*
|
||
99.1*
|
Signature
|
Title
|
Date
|
||
/s/ Haim Tsuff
|
Chairman of the Board &
|
March 11, 2011
|
||
Haim Tsuff
|
Chief Executive Officer
|
|||
/s/ Josef From
|
Director
|
March 11, 2011
|
||
Josef From
|
||||
/s/ Max Pridgeon
|
Director
|
March 11, 2011
|
||
Max Pridgeon
|
||||
/s/ Mark Kalton
|
Director
|
March 11, 2011
|
||
Mark Kalton
|
||||
/s/ Asaf
Yarkoni
|
Director
|
March 11, 2011
|
||
Asaf Yarkoni
|
Page
|
|
F-1
|
|
F-2
|
|
F-3
|
|
F-4
|
|
F-5
|
|
F-6
|
|
F-7
|
As of December 31
|
2010
|
2009
|
||||||
ASSETS
|
||||||||
Current Assets:
|
||||||||
Cash and cash equivalents
|
$
|
5,657
|
$
|
2,907
|
||||
Accounts receivable, net
|
6,110
|
7,424
|
||||||
Restricted and designated cash
|
889
|
827
|
||||||
Deferred tax assets
|
3,368
|
3,644
|
||||||
Derivative asset
|
2,156
|
3,421
|
||||||
Prepaid expenses and other current assets
|
715
|
656
|
||||||
Total Current Assets
|
18,895
|
18,879
|
||||||
Property and Equipment, at cost – successful efforts method:
|
||||||||
Oil and Gas properties
|
222,122
|
220,138
|
||||||
Other
|
922
|
672
|
||||||
Total Property and Equipment
|
223,044
|
220,810
|
||||||
Accumulated depreciation, depletion and amortization
|
(91,208
|
)
|
(77,315
|
)
|
||||
Net Property and Equipment
|
131,836
|
143,495
|
||||||
Marketable securities, at market
|
16,099
|
4,713
|
||||||
Debt cost
|
70
|
322
|
||||||
Derivative asset
|
343
|
2,158
|
||||||
Deferred tax assets and other
|
4,635
|
6,751
|
||||||
Total assets
|
$
|
171,878
|
$
|
176,318
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable and accrued expenses
|
$
|
9,316
|
$
|
9,798
|
||||
Short term debt and bank overdraft
|
335
|
336
|
||||||
Current maturities of long-term debt
|
14,350
|
12,000
|
||||||
Derivative liability
|
1,133
|
693
|
||||||
Accrued interest and due to related party
|
9,371
|
4,677
|
||||||
Total current liabilities
|
34,505
|
27,504
|
||||||
Long-term debt
|
22,725
|
32,950
|
||||||
Accrued interest - related party
|
778
|
4,832
|
||||||
Long-term debt - related party
|
76,354
|
79,354
|
||||||
Other Long-term Liabilities:
|
||||||||
Asset retirement obligations
|
16,577
|
16,248
|
||||||
Derivative liability – non-current
|
2,402
|
1,697
|
||||||
Total other long-term liabilities
|
18,979
|
17,945
|
||||||
Commitments and contingencies (Note 13)
|
||||||||
Shareholders’ equity:
|
||||||||
Common stock $0.0l par value; authorized 7,500,000 shares; issued 2,746,958 shares; outstanding 2,717,691 shares
|
27
|
27
|
||||||
Additional paid-in capital
|
23,194
|
23,194
|
||||||
Retained earnings (accumulated deficit)
|
(14,149
|
)
|
(11,362
|
)
|
||||
Accumulated other comprehensive income
|
9,629
|
2,038
|
||||||
Treasury stock, 29,267 shares at cost
|
(164
|
)
|
(164
|
)
|
||||
Total shareholders’ equity
|
18,537
|
13,733
|
Total liabilities and shareholders’ equity
|
$
|
171,878
|
$
|
176,318
|
Year Ended December 31
|
2010
|
2009
|
2008
|
|||||||||
Revenues
|
||||||||||||
Oil and gas sales
|
$
|
39,329
|
$
|
30,768
|
$
|
51,832
|
||||||
Office services to other
|
655
|
845
|
191
|
|||||||||
Gains on divestitures and other
|
2,216
|
111
|
174
|
|||||||||
Total revenues
|
42,200
|
31,724
|
52,197
|
|||||||||
Operating expenses
|
||||||||||||
Lease operating expense, transportation and taxes
|
19,894
|
15,651
|
20,242
|
|||||||||
Depreciation, depletion and amortization
|
12,142
|
15,368
|
17,723
|
|||||||||
Impairments of oil and gas assets
|
1,751
|
5,751
|
22,093
|
|||||||||
Accretion expense
|
849
|
829
|
847
|
|||||||||
Loss from plug and abandonment
|
1,300
|
312
|
-
|
|||||||||
General and administrative
|
5,123
|
4,113
|
2,714
|
|||||||||
Total operating expenses
|
41,059
|
42,024
|
63,619
|
|||||||||
Operating income (loss)
|
1,141
|
(10,300
|
)
|
(11,422
|
)
|
|||||||
Other expenses (income)
|
||||||||||||
Interest expense, net
|
7,646
|
9,219
|
9,855
|
|||||||||
Realized gain on sale of investment and other
|
-
|
(250
|
)
|
(145
|
)
|
|||||||
Net loss (gain) on derivative contracts
|
(1,862
|
)
|
4,400
|
(24,738
|
)
|
|||||||
Total other expenses (income)
|
5,784
|
13,369
|
(15,028
|
)
|
||||||||
Income (loss) from continuing operations before income taxes
|
(4,643
|
)
|
(23,669
|
)
|
3,606
|
|||||||
Income tax benefit (expense)
|
1,856
|
10,090
|
(377
|
)
|
||||||||
Net income (loss)
|
$
|
(2,787
|
)
|
$
|
(13,579
|
)
|
$
|
3,229
|
||||
Earnings (loss) per share – basic and diluted:
|
$
|
(1.03
|
)
|
$
|
(5.00
|
)
|
$
|
1.19
|
||||
Weighted average number of shares outstanding-basic and diluted
|
2,717,691
|
2,717,691
|
2,717,691
|
Common stock
|
||||||||||||||||||||||||||
Number of shares
|
Amount
|
Additional Paid-In
Capital
|
Accumulated other comprehensive income (loss)
|
Retained Earnings
(Accumulated Deficit)
|
Treasury stock
|
Total Shareholders’Equity
|
||||||||||||||||||||
$ in thousands, except share amounts
|
||||||||||||||||||||||||||
Balances at January 1, 2008
|
2,717,691
|
27
|
23,194
|
3,426
|
$
|
(1,012
|
)
|
(164
|
)
|
25,471
|
||||||||||||||||
Net income
|
3,229
|
3,229
|
||||||||||||||||||||||||
Net unrealized loss on available for sale marketable securities, net of taxes of $1,568
|
(3,044
|
)
|
(3,044
|
)
|
||||||||||||||||||||||
Net gain (loss) on derivative contracts, net of taxes $321
|
(622
|
)
|
(622
|
)
|
||||||||||||||||||||||
Total comprehensive loss
|
(437
|
)
|
||||||||||||||||||||||||
Balance of December 31, 2008
|
2,717,691
|
$
|
27
|
$
|
23,194
|
$
|
(240
|
)
|
$
|
2,217
|
$
|
(164
|
)
|
$
|
25,034
|
|||||||||||
Net loss
|
(13,579
|
)
|
(13,579
|
)
|
||||||||||||||||||||||
Net unrealized gain on available for sale marketable securities, net of taxes of $1,035
|
2,011
|
2,011
|
||||||||||||||||||||||||
Net gain (loss) on derivative contracts, net of taxes $138
|
267
|
267
|
||||||||||||||||||||||||
Total comprehensive loss
|
2,278
|
|||||||||||||||||||||||||
Balance of December 31, 2009
|
2,717,691
|
$
|
27
|
$
|
23,194
|
$
|
2,038
|
$
|
(11,362
|
)
|
(164
|
)
|
13,733
|
|||||||||||||
Net loss
|
(2,787
|
)
|
(2,787
|
)
|
||||||||||||||||||||||
Net unrealized gain on available for sale marketable securities, net of taxes of $3,965
|
7,258
|
7,258
|
||||||||||||||||||||||||
Net gain (loss) on derivative contracts, net of taxes $171
|
333
|
333
|
||||||||||||||||||||||||
Total comprehensive gain
|
7,591
|
|||||||||||||||||||||||||
Balance of December 31, 2010
|
2,717,691
|
$
|
27
|
$
|
23,194
|
$
|
9,629
|
$
|
(14,149
|
)
|
(164
|
)
|
18,537
|
Year Ended December 31
|
2010
|
2009
|
2008
|
|||||||||
Cash Flows From Operating Activities:
|
||||||||||||
Net income (loss)
|
$
|
(2,787
|
)
|
$
|
(13,579
|
)
|
$
|
3,229
|
||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
||||||||||||
Depreciation, depletion, amortization and impairment
|
13,893
|
21,119
|
39,816
|
|||||||||
Accretion expense
|
849
|
829
|
847
|
|||||||||
Unrealized and realized gain on marketable securities
|
(250
|
)
|
(76
|
)
|
||||||||
Changes in deferred taxes
|
(1,856
|
)
|
(9,841
|
)
|
468
|
|||||||
Net unrealized loss (gain) on derivative contracts
|
4,727
|
19,298
|
(32,657
|
)
|
||||||||
Amortization of debt cost
|
252
|
252
|
189
|
|||||||||
Realized gain on sale of investment and capital gain
|
(2,160
|
)
|
(3
|
)
|
(68
|
)
|
||||||
Changes in components of working capital and other assets and liabilities
|
||||||||||||
Accounts receivable
|
1,314
|
(2,008
|
)
|
1,179
|
||||||||
Prepaid expenses and other current assets
|
(59
|
)
|
(167
|
)
|
408
|
|||||||
Due to related party
|
(592
|
)
|
305
|
288
|
||||||||
Increase (decrease) in accrued interest - related party
|
(1,768
|
)
|
3,561
|
1,885
|
||||||||
Accounts payable and accrued expenses
|
250
|
2,003
|
3,378
|
|||||||||
Net cash provided by operating activities
|
12,063
|
21,519
|
18,886
|
|||||||||
Cash flows from investing activities:
|
||||||||||||
Addition to property and equipment
|
(3,611
|
)
|
(645
|
)
|
(99,042
|
)
|
||||||
Proceeds from sale of oil and gas properties
|
2,236
|
1
|
68
|
|||||||||
Decreased (increased) in restricted deposit, net
|
(62
|
)
|
(70
|
)
|
745
|
|||||||
Purchase of marketable securities
|
(370
|
)
|
-
|
|||||||||
Proceeds from sale of marketable securities
|
752
|
476
|
||||||||||
Net cash used in investing activities
|
(1,437
|
)
|
(332
|
)
|
(97,753
|
)
|
||||||
Cash flows from financing activities:
|
||||||||||||
Payments on loans – related parties, net
|
-
|
(963
|
)
|
43,773
|
||||||||
Proceeds from long-term debt
|
-
|
2,000
|
54,000
|
|||||||||
Repayment of long-term debt
|
(7,875
|
)
|
(21,250
|
)
|
(16,800
|
)
|
||||||
Payments for financing cost
|
-
|
-
|
(1,015
|
)
|
||||||||
Borrowings (repayments) of short - term debt, net
|
(1
|
)
|
(1,208
|
)
|
838
|
|||||||
Net cash provided by (used in) financing activities
|
(7,876
|
)
|
(21,421
|
)
|
80,796
|
|||||||
Net increase (decrease) in cash and cash equivalents
|
2,750
|
(234)
|
1,929
|
|||||||||
Cash and cash equivalents at beginning of year
|
2,907
|
3,141
|
1,212
|
|||||||||
Cash and cash equivalents at end of year
|
$
|
5,657
|
$
|
2,907
|
$
|
3,141
|
As of December 31
|
2008
|
|||
(In thousands)
|
||||
Oil and gas properties (after adjustments)
|
$
|
105,982
|
||
Asset retirement obligation
|
(8,480
|
)
|
||
Net asset acquired
|
$
|
97,502
|
As of December 31
|
2010
|
2009
|
||||||||||||||
Cost
|
Market Value
|
Cost
|
Market Value
|
|||||||||||||
$
|
1,200
|
$
|
16,099
|
$
|
1,087
|
$
|
4,713
|
Period
|
Swaps
|
|||||||||||
Volume in
MMbtu’s
|
Price /
Price Range
|
Weighted
Average Price
|
||||||||||
January 2011 – December 2011
|
764,820
|
8.22
|
8.22
|
|||||||||
January 2012 – March 2012
|
174,222
|
8.65
|
8.65
|
Period
|
Swaps
|
|||||||||||
Volume in
Bbls
|
Price /
Price Range
|
Weighted
Average Price
|
||||||||||
January 2011 – December 2011
|
240,336
|
79.50-91.05
|
86.55
|
|||||||||
January 2012 – December 2012
|
127,473
|
80.20-88.20
|
82.37
|
|||||||||
January 2013 – December 2013
|
89,400
|
85.15
|
85.15
|
|||||||||
January 2014 – December 2014
|
66,000
|
86.95
|
86.95
|
Period
|
Swaps
|
|||||||||||
Volume in
Bbls
|
Price /
Price Range
|
Weighted
Average Price
|
||||||||||
March 2011 – December 2011
|
223,164
|
88.55-103.51
|
94.31
|
|||||||||
January 2012 – December 2012
|
127,473
|
88.20-103.51
|
99.67
|
|||||||||
January 2013 – December 2013
|
89,400
|
103.51
|
103.51
|
|||||||||
January 2014 – December 2014
|
66,000
|
103.51
|
103.51
|
Notional amount (in thousands):
|
Start Date
|
Maturity Date
|
Weighted-Average
Interest Rate
|
||||||
2,000
|
April 2010
|
February 2011
|
3.63
|
%
|
|||||
6,000
|
April 2010
|
February 2011
|
2.90
|
%
|
2010
|
2009
|
|||||||
Libor + 2% Bank Revolving Credit Facility due 2011
|
9,450
|
14,950
|
||||||
Libor + 2% Bank Revolving Credit Facility due 2012
|
27,625
|
30,000
|
||||||
Libor + 6% Related party Debt
|
12,000
|
12,000
|
||||||
Libor + 5.5% Related party Debt
|
954
|
954
|
||||||
Libor + 6% Related party Debt
|
11,500
|
11,500
|
||||||
Libor + 6% Related party Debt
|
6,000
|
6,000
|
||||||
Libor + 6% Related party Debt
|
48,900
|
48,900
|
||||||
116,429
|
124,304
|
|||||||
Less: Current Portion of Long-Term Debt
|
(17,350
|
)
|
(12,000
|
)
|
||||
Total
|
99,079
|
112,304
|
2011
|
17,350
|
|||
2012
|
37,950
|
|||
2013
|
18,100
|
|||
2014
|
24,100
|
|||
2015
|
15,100
|
|||
Thereafter
|
3,829
|
|||
Total
|
$
|
116,429
|
|
Years Ended December 31,
|
|||||||||||
|
2010
|
2009
|
2008
|
|||||||||
|
(In thousands)
|
|||||||||||
Current debt, long-term debt and other - banks
|
|
$
|
1,719
|
$
|
2,658
|
$
|
3,369
|
|||||
Long-term debt – related parties
|
5,927
|
6,561
|
6,486
|
|||||||||
|
||||||||||||
|
$
|
7,646
|
$
|
9,219
|
$
|
9,855
|
|
December 31, 2010
|
|||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Assets
|
||||||||||||||||
Marketable securities
|
$
|
16,099
|
$
|
—
|
$
|
—
|
$
|
16,099
|
||||||||
Commodity derivatives
|
—
|
2,499
|
—
|
2,499
|
||||||||||||
Total
|
$
|
16,099
|
$
|
2,499
|
$
|
—
|
$
|
18,598
|
||||||||
Liabilities
|
||||||||||||||||
Commodity derivatives
|
$
|
—
|
$
|
3,501
|
$
|
—
|
$
|
3,501
|
||||||||
Interest rate derivatives
|
—
|
34
|
—
|
34
|
||||||||||||
Total
|
$
|
—
|
$
|
3,535
|
$
|
—
|
$
|
3,535
|
|
December 31, 2009
|
|||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Assets
|
||||||||||||||||
Marketable securities
|
$
|
4,713
|
$
|
—
|
$
|
—
|
$
|
4,713
|
||||||||
Commodity derivatives
|
—
|
5,579
|
—
|
5,579
|
||||||||||||
Total
|
$
|
4,713
|
$
|
5,579
|
$
|
—
|
$
|
10,292
|
||||||||
Liabilities
|
||||||||||||||||
Commodity derivatives
|
$
|
—
|
$
|
1,852
|
$
|
—
|
$
|
1,852
|
||||||||
Interest rate derivatives
|
—
|
538
|
—
|
538
|
||||||||||||
Total
|
$
|
—
|
$
|
2,390
|
$
|
—
|
$
|
2,390
|
|
Years Ended December 31,
|
|||||||||||
|
2010
|
2009
|
2008
|
|||||||||
|
(In thousands)
|
|||||||||||
Expected tax (benefit) expense
|
|
$
|
(1,632
|
)
|
$
|
(8,285)
|
$
|
1,262
|
||||
State income taxes, net
|
|
18
|
4
|
(164
|
)
|
|||||||
Foreign income taxes
|
|
-
|
-
|
(659)
|
||||||||
Change in estimate of income tax basis
(1)
|
|
-
|
(1,637
|
)
|
-
|
|||||||
Other
|
(242
|
)
|
(172
|
)
|
(62
|
)
|
||||||
Total tax expense (benefit)
|
|
$
|
(1,856
|
)
|
$
|
(10,090
|
)
|
$
|
377
|
(1)
|
Changes in estimated income tax basis in connection with the preparation of 2006 and 2008 amended federal income tax returns.
|
2010
|
2009
|
|||||||
Deferred current tax assets:
|
||||||||
Unrealized hedging transactions
|
$
|
385
|
$
|
242
|
||||
Accrued interest
|
3,738
|
4,357
|
||||||
Deferred current tax assets
|
$
|
4,123
|
$
|
4,599
|
||||
Deferred current tax liabilities:
|
||||||||
Unrealized hedging transactions
|
$
|
(755
|
)
|
$
|
(955
|
)
|
||
$
|
(755
|
)
|
$
|
(955
|
)
|
|||
Net current deferred tax assets
|
$
|
3,368
|
$
|
3,644
|
||||
Deferred noncurrent tax assets:
|
||||||||
Unrealized hedging transactions
|
$
|
841
|
$
|
595
|
||||
Book-tax differences in property basis
|
-
|
|||||||
Net operating loss carry-forwards
|
12,154
|
10,324
|
||||||
Other
|
33
|
565
|
||||||
Deferred noncurrent tax assets
|
$
|
13,028
|
$
|
11,484
|
||||
Deferred noncurrent tax liabilities:
|
||||||||
Unrealized hedging transactions
|
$
|
(120
|
)
|
$
|
(754
|
)
|
||
Book-tax differences in property basis
|
(1,344
|
)
|
(1,196
|
)
|
||||
Book-tax differences in marketable securities
|
(5,265
|
)
|
(1,232
|
)
|
||||
Other
|
(1,664
|
)
|
(1,664
|
)
|
||||
Deferred noncurrent tax liabilities
|
$
|
(8,393
|
)
|
$
|
(4,846
|
)
|
||
Net noncurrent deferred tax assets
|
$
|
4,635
|
$
|
6,638
|
2010
|
2009
|
2008
|
||||||||||
Current income tax:
|
||||||||||||
Federal
|
$
|
$
|
-
|
$
|
276
|
|||||||
Foreign
|
-
|
(659
|
)
|
|||||||||
State
|
-
|
114
|
||||||||||
Total current income tax
|
$
|
$
|
-
|
$
|
(269
|
)
|
||||||
Deferred income tax
|
||||||||||||
Federal
|
$
|
(1,874
|
)
|
$
|
(10,094
|
)
|
$
|
884
|
||||
Foreign
|
-
|
-
|
||||||||||
State
|
18
|
4
|
(238
|
)
|
||||||||
Total deferred income tax
|
$
|
(1,856
|
)
|
$
|
(10,090
|
)
|
$
|
646
|
||||
Provision for income tax
|
$
|
(1,856
|
)
|
$
|
(10,090
|
)
|
$
|
377
|
2010
|
2009
|
2008
|
||||||||||
Numerator for Basic and Diluted Earnings per Share -
|
||||||||||||
Net Income (loss)
|
$
|
(2,787
|
)
|
$
|
(13,579
|
)
|
$
|
3,229
|
||||
Denominator for Basic Earnings per Share -
|
||||||||||||
Weighted Average Shares
|
2,717,691
|
2,717,691
|
2,717,691
|
|||||||||
Potential Dilutive Common Shares -
|
-
|
-
|
-
|
|||||||||
Adjusted Weighted Average Shares
|
2,717,691
|
2,717,691
|
2,717,691
|
|||||||||
Net Income (Loss) Per Share Available to Common Stockholders – Basic and Diluted
|
$
|
(1.03
|
)
|
$
|
(5.00
|
)
|
$
|
1.19
|
||||
2010
|
2009
|
2008
|
||||||||||
Interest
|
$
|
9,160
|
$
|
6,263
|
$
|
7,014
|
||||||
Income taxes
|
$
|
-
|
$
|
-
|
$
|
80
|
·
|
Net unrealized gain on available for sale marketable securities of $7.258 million, net of taxes of $3.965 million
|
·
|
Asset retirement obligation from acquired properties and additional revision to current properties of $12.3 million included in the oil and gas properties
|
2010
|
2009
|
2008
|
||||||||||
Liability for asset retirement obligation at the beginning of the year
|
$
|
16,248
|
$
|
15,733
|
$
|
2,670
|
||||||
Liabilities Incurred
|
4
|
-
|
8,480
|
|||||||||
Liabilities settled and divested
|
(524
|
)
|
(314
|
)
|
(17
|
)
|
||||||
Accretion
expense
|
849
|
829
|
847
|
|||||||||
Revisions (*)
|
-
|
-
|
3,753
|
|||||||||
Liability for asset retirement obligation at the end of the year
|
$
|
16,577
|
$
|
16,248
|
$
|
15,733
|
As of December 31
|
2010
|
2009
|
||||||
United States
|
United States
|
|||||||
Unproved properties not being amortized
|
$
|
-
|
$
|
-
|
||||
Proved property being amortized
|
222,122
|
220,138
|
||||||
Accumulated depreciation, depletion amortization and impairment
|
(90,752
|
)
|
(77,116
|
)
|
||||
Net capitalized costs
|
131,370
|
143,022
|
As of December 31
|
2010
|
2009
|
2008
|
|||||||||
United States
|
||||||||||||
Property acquisition costs—proved and unproved properties
|
$
|
-
|
$
|
-
|
$
|
97,502
|
||||||
Exploration costs
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
Development costs
|
$
|
3,454
|
$
|
423
|
$
|
1,167
|
Oil BBls
|
Gas Mcf
|
NGL BBls
|
Equivalent
(BOE)
|
|||||||||||||
December 31, 2007
|
2,003,081
|
25,352,566
|
2,163,661
|
8,392,170
|
||||||||||||
Revisions of previous estimates
|
(2,276,616
|
)
|
(15,011,339
|
)
|
(766,418
|
)
|
(5,544,924
|
)
|
||||||||
Acquisition of minerals in place
|
3,210,496
|
17,862,776
|
-
|
6,187,625
|
||||||||||||
Sales of minerals in place
|
-
|
-
|
-
|
-
|
||||||||||||
Production
|
(257,967
|
)
|
(2,507,828
|
)
|
(145,240
|
)
|
(821,178
|
)
|
||||||||
December 31, 2008
|
2,678,994
|
25,696,175
|
1,252,003
|
8,213,693
|
||||||||||||
Revisions of previous estimates
|
616,674
|
1,378,468
|
391,115
|
1,237,534
|
||||||||||||
Acquisition of minerals in place
|
-
|
-
|
-
|
-
|
||||||||||||
Sales of minerals in place
|
-
|
-
|
-
|
-
|
||||||||||||
Production
|
(293,601)
|
(2,622,389
|
)
|
(155,793
|
)
|
(886,459
|
)
|
|||||||||
December 31, 2009
|
3,002,067
|
24,452,254
|
1,487,325
|
8,564,768
|
||||||||||||
Revisions of previous estimates
|
606,445
|
1,616,809
|
431,465
|
1,307,378
|
||||||||||||
Acquisition of minerals in place
|
-
|
-
|
-
|
-
|
||||||||||||
Sales of minerals in place
|
-
|
-
|
-
|
-
|
||||||||||||
Production
|
(290,589
|
)
|
(2,368,158
|
)
|
(155,640
|
)
|
(840,922
|
)
|
||||||||
December 31, 2010
|
3,317,923
|
23,700,905
|
1,763,150
|
9,031,224
|
Developed
|
|||||||||||||
Oil BBls
|
Gas Mcf
|
NGL BBls
|
Equivalent
(BOE)
|
||||||||||
December 31, 2010
|
3,317,923
|
23,700,905
|
1,763,150
|
9,031,224
|
|||||||||
December 31, 2009
|
3,002,067
|
24,452,254
|
1,487,325
|
8,564,768
|
|||||||||
December 31, 2008
|
2,678,994
|
25,696,175
|
1,252,003
|
8,213,693
|
|||||||||
December 31, 2007
|
1,808,317
|
23,338,079
|
1,873,949
|
7,571,947
|
Undeveloped
|
|||||||||||||
Oil BBls
|
Gas Mcf
|
NGL BBls
|
Equivalent
(BOE)
|
||||||||||
December 31, 2007
|
194,764
|
2,014,487
|
289,711
|
820,223
|
•
|
future costs and selling prices will probably differ from those required to be used in these calculations;
|
•
|
due to future market conditions and governmental regulations, actual rates of production in future years may vary significantly from the rate of production assumed in the calculations;
|
•
|
a 10% discount rate may not be reasonable as a measure of the relative risk inherent in realizing future net oil and natural gas revenues; and
|
•
|
future net revenues may be subject to different rates of income taxation.
|
2010
|
2009
|
2008
|
||||||||||
Future cash inflows
|
$
|
429,260,906
|
$
|
294,721,432
|
$
|
277,008,941
|
||||||
Future development costs
|
(740,588
|
)
|
(556,810
|
)
|
(511,810
|
)
|
||||||
Future production costs
|
(208,228,155
|
)
|
(147,470,220
|
)
|
(146,421,245
|
)
|
||||||
Future income tax expenses
|
(33,475,234
|
)
|
-
|
-
|
)
|
|||||||
Future net cash flows before 10% discount
|
186,816,929
|
146,694,402
|
130,075,886
|
|||||||||
10%Annual discount for estimated timing of cash flows
|
(89,183,575
|
)
|
(68,284,971
|
)
|
(56,698,274
|
)
|
||||||
Standardized measure discounted future net cash flows
|
$
|
97,633,354
|
$
|
78,409,431
|
$
|
73,377,612
|
||||||
2010
|
2009
|
2008
|
||||||||||
Beginning of the year
|
$
|
78,409,431
|
$
|
73,377,612
|
$
|
96,765,740
|
||||||
Sales and transfers of oil and gas produced, net of production costs
|
(19,435,256
|
)
|
(15,116,990
|
)
|
(31,469,183
|
)
|
||||||
Net changes in prices and production costs
|
28,652,935
|
4,638,711
|
(144,454,304
|
)
|
||||||||
Net changes in income taxes
|
(17,494,664
|
)
|
-
|
28,376,801
|
||||||||
Changes in estimated future development costs, net of current development costs
|
(2,930,885
|
)
|
211,024
|
(3,546,457
|
)
|
|||||||
Purchase
of minerals in place
|
-
|
-
|
124,894,615
|
|||||||||
Revision of previous estimates
|
17,549,795
|
11,948,600
|
(45,059,969
|
)
|
||||||||
Accretion of discount
|
7,092,982
|
6,626,173
|
23,513,947
|
|||||||||
Change in production rates and other
|
5,789,016
|
(3,275,699
|
)
|
24,356,422
|
||||||||
End of year
|
$
|
97,633,354
|
$
|
78,409,431
|
$
|
73,377,612
|
Quarter Ended
|
March 31
|
June 30
|
September 30
|
December 31
|
||||||||||||
2010
|
||||||||||||||||
Total Revenues
|
$
|
10,165
|
9,527
|
9,928
|
12,580
|
|||||||||||
Net Income (loss) before taxes
|
$
|
2,057
|
1,464
|
(3,802
|
)
|
(4,362
|
)
|
|||||||||
Net Income (loss)
|
$
|
1,357
|
966
|
(2,510
|
)
|
(2,600
|
)
|
|||||||||
Earnings (loss) per Common Share
|
||||||||||||||||
-Basic and Diluted
|
$
|
0.50
|
$
|
0.36
|
$
|
(0.92
|
)
|
$
|
(0.96
|
)
|
||||||
2009
|
||||||||||||||||
Total Revenues
|
$
|
7,007
|
$
|
7,399
|
$
|
7,810
|
$
|
9,508
|
||||||||
Net Income (loss) before taxes
|
$
|
2,713
|
$
|
(12,223
|
)
|
$
|
(3,236
|
)
|
$
|
(10,923)
|
||||||
Net Income (loss)
|
$
|
1,790
|
$
|
(8,014
|
)
|
$
|
(2,018
|
)
|
$
|
(5,337
|
)
|
|||||
Earnings (loss) per Common Share
|
||||||||||||||||
-Basic and Diluted
|
$
|
0.66
|
$
|
(2.95
|
)
|
$
|
(0.74
|
)
|
$
|
(1.96
|
)
|
|||||
2008
|
||||||||||||||||
Total Revenues
|
$
|
7,730
|
$
|
18,873
|
$
|
17,866
|
$
|
7,728
|
||||||||
Net Income (loss) before taxes
|
$
|
(11,586
|
)
|
$
|
(47,905
|
)
|
$
|
51,572
|
$
|
11,525
|
|
|||||
Net Income (loss)
|
$
|
(7,646
|
)
|
$
|
(32,186
|
)
|
$
|
34,488
|
$
|
8,573
|
|
|||||
Earnings (loss) per Common Share
|
||||||||||||||||
-Basic and Diluted
|
$
|
(2.81
|
)
|
$
|
(11.84
|
)
|
$
|
12.69
|
$
|
3.15
|
9601 AMBERGLEN BLVD., SUITE 117 | 306 WEST SEVENTH STREET, SUITE 302 | 1000 LOUISIANA STREET, SUITE 625 |
AUSTIN, TEXAS 78729-1106
|
FORT WORTH, TEXAS 76102-4987 | HOUSTON, TEXAS 77002-5008 |
512-249-7000 | 817- 336-2461 | 713-651-9944 |
www.cgaus.com |
9601 AMBERGLEN BLVD., SUITE 117 | 306 WEST SEVENTH STREET, SUITE 302 | 1000 LOUISIANA STREET, SUITE 625 |
AUSTIN, TEXAS 78729-1106
|
FORT WORTH, TEXAS 76102-4987 | HOUSTON, TEXAS 77002-5008 |
512-249-7000 | 817- 336-2461 | 713-651-9944 |
www.cgaus.com |
Re:
|
Evaluation Summary - SEC Price
|
Isramco, Inc Interests
|
|
Total Proved Reserves
|
|
As of December 31, 2010
|
|
Pursuant to the Guidelines of the
|
|
Securities and Exchange Commission for
|
|
Reporting Corporate Reserves and
|
|
Future Net Revenue
|
Proved
|
Proved
|
|||
Producing
|
Developed
|
Total
|
||
Developed
|
Non-Producing
|
Proved
|
||
Net Reserves
|
||||
Oil
|
- Mbbl
|
3,168.1
|
149.8
|
3,317.9
|
Gas
|
- MMcf
|
23,055.6
|
645.3
|
23,700.9
|
NGL
|
- Mbbl
|
1,749.9
|
13.3
|
1,763.2
|
Revenue
|
||||
Oil
|
- M$
|
243,101.6
|
11,446.9
|
254,548.4
|
Gas
|
- M$
|
107,057.7
|
2,510.2
|
109,567.9
|
NGL
|
- M$
|
64,617.3
|
527.2
|
65,144.5
|
Other
|
- M$
|
0.0
|
0.0
|
0.0
|
Severance Taxes
|
- M$
|
25,220.8
|
754.4
|
25,975.2
|
Ad Valorem Taxes
|
- M$
|
13,745.6
|
488.8
|
14,234.4
|
Operating Expenses
|
- M$
|
166,000.4
|
2,018.2
|
168,018.6
|
Other Deductions
|
- M$
|
0.0
|
0.0
|
0.0
|
Investments
|
- M$
|
0.0
|
740.6
|
740.6
|
Net Cash Flows
|
- M$
|
209,809.9
|
10,482.3
|
220,292.1
|
Discounted @ 10%
|
- M$
|
109,462.8
|
5,593.7
|
115,056.5
|
(Present Worth)
|