CALCASIEU REAL ESTATE & OIL CO INC (Form: 10-K, Received: 03/19/2004 16:16:51)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K

Annual Report Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934


For Fiscal Year Ended December 31, 2003		Commission File Number 0-9669

CALCASIEU REAL ESTATE AND OIL CO., INC.

(Exact Name of registrant as specified in its charter)


Louisiana		72-0144530
(State of other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

One Lakeside Plaza Lake Charles, Louisiana		70601
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (337) 494-4256

Securities registered pursuant to Section 12(b) of the Act:

Common Stock with no par value

American Stock Exchange

(Title of each class)

(Name of exchange

on which registered)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 of 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes ¨ No x

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12-b2 of the Act). Yes ¨ No x

As of June 30, 2003, the aggregate market value of the common equity held by non-affiliates (based on the most recent sale prior to June 30, 2003) was approximately $10,737,617.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date. Common Stock, No Par Value, 1,942,495 shares outstanding at February 18, 2004.

Documents Incorporated by Reference

Portions of the Registrant’s definitive Proxy Statement prepared in connection with the 2004 Annual Meeting of Stockholders are incorporated by reference into Part III, Items 10, 11, 12, 13 and 14 of this Annual Report on Form 10-K.

PART I

Item 1. BUSINESS

Calcasieu Real Estate & Oil Co., Inc., a Louisiana corporation incorporated in 1930 and headquartered in Lake Charles, Louisiana, is a company which owns and operates real estate holdings that generate oil and gas royalties, timber sales and agriculture rents. Originally formed to receive mineral royalties spun off by a bank to its shareholders, the Company has pursued a goal of acquiring land-holdings in Southwest Louisiana.

Operations

The Company’s income is derived from the acreage and mineral interests it owns either totally or as an undivided owner of land managed as a unit under the name Walker Louisiana Properties. The largest source of income is from oil and gas production from these properties. The next largest sources are from agriculture and timber grown on the Company’s land. The Company is not involved in exploration and production. The Company has a small working interest in one field, which occurred as a back-in under the original mineral lease, but has no control over the operations. The Company does not anticipate taking a working interest in any future production of oil and gas. The Company does not consider itself to be involved in oil and gas producing activities inasmuch as: (1) it does not search for crude oil or natural gas in their natural states; (2) it does not acquire property for the purpose of exploration or the removing of oil or gas; and (3) it is not involved in construction, drilling and production activities necessary to retrieve oil and gas. All of the Company’s oil and gas income is derived from leases on Company owned lands or mineral rights deeded to the Company at its inception in 1930. The Company receives royalties from 23 different operators each with a different lease. The largest mineral participation by Calcasieu in any of these units is 4.339%. The Company is a part owner in Walker Louisiana Properties lands which receives oil and gas income from 29 different operators each with a different lease. The largest mineral participation by Calcasieu in any of these units is 2.858%. Calcasieu has no reserve information on any of these properties and it would be uneconomical and unpractical to acquire this information.

Of the Company’s net 13,941 acres, there are 6,134 acres planted in trees with the remainder being primarily agriculture land. There is approximately 870 acres of marsh land whose only economic use is for hunting, trapping and prospective mineral production. Income from oil and gas royalties and mineral leasing comes from both agriculture and timber lands.

Oil and gas royalties are paid by the operators who own the wells. Timber income is paid by the highest bidder of the timber. There are several mills in the immediate area who compete for timber. All of the agriculture income comes from tenants who pay annual rents. The prices paid for oil, gas and timber depend on national and international market conditions.

We do not separate financial information in the enclosed financial statements because neither agriculture nor timber produce as much as 15% of total receipts.

Employees

The Company currently employs a total of five persons, including officers, in a part-time capacity. The Company is subject to no union contracts nor does the Company have any hospitalization, pension, profit sharing or deferred compensation plans. Walker Louisiana Properties employs its own staff, none of whom are Company officers or directors. One employee of Walker is devoted full-time to Agriculture and one employee of Walker is devoted full-time to Timber.

Customers

The Company had two customers, the sales to which equal or exceed 10% of the Company’s total oil and gas revenues. In 2003, sales to Cox & Perkins accounted for 41% of revenues, sales to Kerr-McGee accounted for 13% of revenues and sales to Riceland Petroleum accounted for 9% of oil and gas revenues. All income is derived from domestic customers.

Item 2. PROPERTIES

The Company owns a total of 13,941 net acres of agricultural, timber and marsh land in fee in the Parishes of Allen, Beauregard, Calcasieu, Cameron, Jefferson Davis, LaFourche, Sabine, St. Landry and Vermilion in Louisiana. Of this total 6,431 acres represents the Company’s one-sixth undivided ownership in 35,088 acres which is managed by an entity called Walker Louisiana Properties, a joint venture, for the benefit of the six owners. The remainder of the Company’s acreage is managed by the Company’s officers. All amounts on the financial statements included herein reflect the combined totals of the two operations.

The table below shows, for the years ended December 31, 2003, December 31, 2002, and December 31, 2001, net gas produced in thousands of cubic feet (MCF) and net oil (including condensate and natural gas liquids) produced in barrels (Bbl), average sales prices and average production costs, relating to oil and gas attributable to the royalty interests and working interest held by the Company.


	Year Ended 12/31/03		Year Ended 12/31/02		Year Ended 12/31/01
Net gas produced (MCF)		153,046		157,180		189,254
Average gas sales price (Per MCF)(1)	$	5.11	$	3.04	$	5.66
Net Oil Produced (Bbl)		25,618		33,069		13,225
Average Oil Sales price (Per Bbl)(1)	$	30.04	$	26.02	$	25.40

(1)	Before deduction of production and severance taxes.

Item 3. LEGAL PROCEEDINGS

There are no material pending legal proceedings to which the Company is a party. There are no proceedings known to be contemplated by governmental authorities. The Company was notified by the United States Department of Justice during 2003 that it was not going to pursue a bill from the National Pollution Funds Center that the Company protested as not being owed.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to security holders during the fourth quarter.

PART II

Item 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

As of February 18, 2004, the common stock of Calcasieu Real Estate and Oil Co., Inc. was owned by approximately 671 stockholders and the stock price was $7.35. During the three years prior to December 8, 2003, there was no established public trading market for the common stock and there had been only limited and sporadic trading in the common stock, principally among its shareholders. On December 8, 2003, the Company began trading on the American Stock Exchange under the symbol CKX. The following table sets forth the high and low sales prices for the common stock by quarter during 2003 and 2002.


	2003
Common Stock Market Price	Q1		Q2		Q3		Q4
High	$	7.00	$	5.70	$	6.05	$	7.40
Low	$	5.00	$	4.75	$	5.00	$	5.50

	2002
Common Stock Market Price	Q1		Q2		Q3		Q4
High	$	6.50	$	6.25	$	6.25	$	6.00
Low	$	6.20	$	5.12	$	4.60	$	4.80

The Company has paid cash dividends each year since 1990. A summary of cash dividends declared each quarter for the last two years is set forth in the table on page 37 of this Annual Report on Form 10-K.

Item 6. SELECTED FINANCIAL DATA


	Ended 12/31/99		Ended 12/31/00		Ended 12/31/01		Ended 12/31/02		Ended 12/31/03
Revenues	$	2,646,491	$	2,497,118	$	1,618,587	$	1,462,205	$	2,111,141
Income from operations		2,274,903		2,094,098		1,195,601		1,015,916		1,524,968
Net Income		1,545,060		1,436,029		872,606		736,538		1,093,005
Earnings per common share (1)		.78		.73		.45		.38		.56
Total assets	$	5,212,540	$	6,035,717	$	6,407,663	$	6,623,665	$	7,124,504
Stockholders equity	$	4,931,003	$	5,794,517	$	6,179,065	$	6,424,727	$	6,922,509
Cash Dividends declared per common share		.08		.25		.25		.25		.29

(1)	Earnings per common share presented are based on the weighted average outstanding shares of 1,948,307 in 2003, 1,955,044 in 2002, 1,955,044 in 2001, 1,956,000 in 2000 and 1,979,000 in 1999.

There are no factors that materially affect the comparability of the information shown above, other than fluctuations in volumes and prices of commodities sold.

Item 7. MANAGEMENT’S DISCUSSION

The following discussion of our results of operations and financial condition should be read together with the other financial information and the financial statements and related notes included elsewhere in this Annual Report on Form 10-K.

Forward Looking Statements

This Annual Report contains forward-looking statements relating to the Company’s operations that are based on management’s current expectations, estimates and projections about the Company’s business. Words such as “anticipates,” “expects,” “intends,” “plans,” “targets,” “projects,” “believes,” “seeks,” “estimates” and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control and are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this report. Unless legally required, the Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Among the factors that could cause actual results to differ materially are:

•

changes in the prices of oil, gas, and forest and agricultural products;

•

our ability to attract customers to perform exploration and development for oil and gas on our land, or the potential failure of our customers to discover or extract additional oil and gas deposits;

•

technological developments;

•

the potential failure by customers to achieve expected production from existing and future oil and gas development projects, or potential delays in the development, construction or start-up of planned projects;

•

competition in the oil and gas industries and the competitiveness of alternate energy sources or product substitutes;

•

potential liability for remedial actions under existing or future environmental regulations and litigation, or significant investment or product changes under existing or future environmental regulations; and

•

the effects of changed accounting rules under generally accepted accounting principles promulgated by rule-setting bodies.

In addition, such statements could be affected by general domestic in international economic and political conditions. Unpredictable or unknown factors not discussed herein also could have material adverse effects on forward-looking statements.

Overview

We own and receive income from land located in Southwest Louisiana. Over 70% of our income is derived from mineral activity conducted by others. It consists of oil and gas royalties, oil and gas leases and seismic leases. We also receive rental income from farm land and income from the sale of timber grown on our land.

Our future oil and gas income is dependent to some extent on future technological developments that could result in the discovery of oil and gas deposits that are currently unknown or uneconomical to recover. At some point in time current oil and gas production will be depleted. We do not conduct exploration, development or production activities. Our oil and gas income is derived from Company lands and has been discovered and produced by others under mineral leases from the Company. Consequently, the Company has little control over its oil and gas income.

We are placing more emphasis on growing timber for the future of the Company. We are also always looking to purchase additional land in our area at the right price.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The most significant accounting estimates inherent in the preparation of our financial statements include the following items:

Our accounts receivable consists of incomes received after year end for royalties produced prior to year end. When there are royalties that have not been received at the time of the preparation of the financial statements for months in the prior year, we estimate the amount to be received based on the last month’s royalties that were received from that particular company. We do not maintain an allowance for doubtful accounts because we can confirm virtually all of our receivables before they are booked as income.

Our past inventory was for harvested crops. Since all agricultural income is now from land rents we no longer have inventory.

The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes (SFAS 109)” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities.

Reforestation expenses are added to the timber asset account and depleted over seven years. As timber is sold the original cost is amortized based on the volume as compared to the original cost. When we purchase land that portion that represents the timber value is set up as an asset labeled timber.

Liquidity and Capital Resources

The Company has a current ratio of better than four to one and no long-term debt or contingencies. We have no off balance sheet liabilities. The only material current liability at December 31, 2003, was the dividend on our common stock declared in December and paid in January. Additional sources of liquidity are the Company’s securities available-for-sale and a bank line of credit for $1,000,000. We maintain our liquidity position in order to be able to purchase real estate that might come on the market.

We have no current commitments for capital expenditures. Unless an opportunity arises to purchase additional land, we will not need to make capital expenditures in the next twelve months other than normal reforesting expenditures.

We believe that our existing sources of liquidity, including expected cash flows from operating activities, existing cash balances and existing credit facility, will satisfy our cash requirements for at least the next twelve months.

Results of Operations

The following table shows, for the periods indicated, certain operating data expressed as a percentage of revenues.


	2003		2002		2001
Revenues	100.0	%	100.0	%	100.0	%
Costs and expenses:
Oil and gas production	9.6	%	7.1	%	3.9	%
Agricultural	.6	%	.7	%	.5	%
Timber	1.9	%	2.8	%	2.0	%
General and administrative	14.1	%	16.9	%	18.0	%
Depreciation, depreciation, amortization	1.6	%	2.7	%	1.8	%

Total costs and expenses	27.8	%	30.2	%	26.1	%

Income from operations	72.2	%	69.8	%	73.9	%
Other income	2.7	%	3.7	%	5.4	%

Income before income taxes	74.9	%	73.5	%	79.3	%
Provision for income taxes	23.1	%	22.9	%	25.4	%

Net Income	51.8	%	50.6	%	53.9	%

Oil and gas production costs were higher as a percentage of revenues in 2003 over 2002 due to the write-off of the remaining amount for minerals from 1998 purchase of real estate. Oil and gas production costs were higher as a percentage of revenue in 2003 over 2002 due to both the write-off but also because oil and gas properties income were a smaller proportion of total revenues in 2001 and agricultural and timber revenues were a larger proportion of total revenues in 2001. Other income as a percentage of revenues was higher in 2001 compared to 2002 and 2003 due to a realized gain on investments. Other income as a percentage of revenues was lower in 2003 compared to 2002 and 2001 partly due to greater total revenues.

Net income increased 48.4% in 2003 over 2002 due primarily to an increase in the average sales price of both oil and gas. Gas production was down 2.6% and oil production was down 22.5%. Oil and gas revenues peaked in 1999 and continued high in 2000 primarily due to the Company’s income from the North Indian Village Field. These wells were depleted, plugged and abandoned in 2002. In 2002 a well

was completed at South Gordon by Cox and Perkins which has been the largest source of income for 2002 and 2003. The operator believes there is a reasonable possibility this well will continue to produce at current rates through 2005. When production slows it will drop dramatically.

Although the Company does not have access to reserve information on the oil and gas wells from which the Company receives income, we engaged an independent geologist, Stanley N. Warburton, to make estimates as to the remaining life of our five largest income sources in 2003. Listed below are the operators, fields, 2003 income and the geologist’s assessment.


Cox & Perkins –		South Gordon Field - $736,700. One well. Began production in 2001. Declining life of 4 to 6 years.

Kerr, McGee –		Roanoke Field - $234,100. One well. Began production in 2000. Most of 2003 income was from prior years production. Production had declined 48% by the end of 2003 compared to its peak in 2001. Declining remaining life of 4 to 5 years.

Riceland –		South Jennings Field - $153,000. Currently 8 wells on a 1,920 acre unit. Been producing since 1940. Declining life of 8 to 10 years.

GulfMark –		Vinton Field - $130,000. Shallow salt dome production. Current income levels will decline sharply over next 2 years.

Meridian –		Lakeside Field - $107,500. One well. Production began in 2001. Production declined 20% between 2002 and 2003. Declining remaining life of 6 to 8 years.

The Company has a 2.083% royalty interest in one new gas well and a 4.167% royalty interest in a second new gas well both at Castor Creek. No income was received in 2003 from these wells and it is too early to determine their effect on future income.

Revenues include $189,722 in oil and gas royalties which were received in 2003, but were attributable to production in prior years. They were held by the operators pending determination of ownership. These revenues will not be recurring. Included in oil and gas expenses is $77,816 for the write-off of the amount remaining on Walker Louisiana Properties books for the purchase of minerals from Fina in 1998. This expense will not be recurring. The net effect of these items was to increase net income by $50,790.

Oil and gas expenses were up 98% due entirely to the above write off and higher severance taxes due to higher sales prices.

Agriculture income was off 10% from 2002 continuing a three year decline as the Company converted totally to cash rents. This income should stabilize at 2003’s level. Timber income was off 15% due to both lower demand and lower prices.

Administrative expenses were up $50,510 or 20.6% over 2002. Of this amount $39,600 was the cost of listing on the American Stock Exchange and $12,633 represents a gift of dirt from Company land to Cameron Parish.

Item 7A. QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Significant Market Risk

The Company’s business and operations are subject to certain risks and uncertainties, including:

Reliance Upon Oil and Gas Discoveries

The Company’s most significant risk is its reliance upon others to perform exploration and development for oil and gas on its land. Future income is dependent on others finding new production on the Company’s land to replace present production as it is depleted. Oil and gas prices as well as new technology will affect the possibility of new discoveries.

Commodity Prices

All of the Company’s operating income comes from the sale of commodities produced from its real estate; oil and gas, forest products, agriculture products. Fluctuations in these commodity prices will directly impact net income.

Interest Rate Risks

The Company has no direct exposure to changes in foreign currency exchange rates and minimal direct exposure to interest rates. The Company has an unsecured line of credit with Bank One at their prime rate, but the Company hasn’t utilized this line and has no current plans to do so.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

All financial statements required by Regulation S-X are listed in the Table of Contents to Financial Statements and Supplemental Schedules appearing immediately after the signature page of this Form 10K and are included herein by reference. See Item 14.

Item 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable

Item 9A. CONTROLS AND PROCEDURES

The Company maintains disclosure controls and procedures that are designated to ensure that information required to be disclosed in the Company’s Securities Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

As of December 31, 2003, an evaluation was performed under the supervision and with the participation of the Company’s management, including the principal executive officer and principal financial officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on that evaluation, the Company’s management, including the principal executive officer and principal financial officer, concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2003. There have been no changes in the Company’s internal control over financial reporting during the fiscal quarter ended December 31, 2003 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by Item 10 as to directors and nominees for directors is included in the Registrant’s definitive proxy statement to be filed pursuant to Section 14(a) of the Securities Exchange Act of 1934 and is incorporated herein by reference.

Executive officers of Registrant as of February, 2004, are as follows:


Name	Age	Position with Registrant
Arthur Hollins, III	73	President & Director
William D. Blake	71	Vice President, Treasurer and Director
Charles D. Viccellio	70	Vice President, Secretary and Director

The occupations of such executive officers during the last five years and other principal affiliations are:


Name
Arthur Hollins, III		Director of the Company since 1975; President of the Company since 1979; Chairman of the Board and President of the First National Bank of Lake Charles from 1968 to 1998; President of Bank One, Southwest Louisiana, from 1998 to April, 1999. Mr. Hollins is a certified public accountant and a graduate of Washington & Lee University.

William D. Blake		Director of the Company since 1966; Secretary-Treasurer of the Company from 1966-1979; Vice-President and Treasurer of the Company since 1979; President of Lacassane Co., Inc. and Howell Industries, Inc. Mr. Blake is a graduate of Louisiana State University.

Charles D. Viccellio		Vice-President and Secretary of the Company since 1997 and Director of the Company since 1996. Partner in the law firm of Stockwell, Sievert, Viccellio, Clements & Shaddock, LLP. Mr. Viccellio received both his undergraduate and law degrees from Tulane University.

There are no family relationships between any of our directors (except Mrs. Leach and Mr. Alexander are brother and sister) and executive officers or any arrangement or understanding between any of our executive officers and any other person pursuant to which any executive officer was appointed to his office.

Item 11. EXECUTIVE COMPENSATION

The information required by Item 11 is included in the Registrant’s definitive proxy statement to be filed pursuant to Section 14(a) of the Securities and Exchange Act of 1934 and is incorporated herein by reference.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by Item 12 is included in the Registrant’s definitive proxy statement to be filed pursuant to Section 14(a) of the Securities Exchange Act of 1934 and is incorporated herein by reference.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by Item 13 is included in the Registrant’s definitive proxy statement to be filed pursuant to Section 14(a) of the Securities and Exchange Act of 1934 and is incorporated herein by reference.

Item 14. PRINCIPAL ACCOUNTANTS FEES AND SERVICES

The information required by Item 14 is included in the Registrant’s definitive proxy statement to be filed pursuant to Section 14(a) of the Securities and Exchange Act of 1934 and is incorporated herein by reference.

PART IV

Item 15. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-A & FORM 8-K

A-1.	Financial Statements

The financial statements of Calcasieu Real Estate & Oil Co., Inc. filed as part of this Annual Report on Form 10-K are indexed at page 18.

A-3. List of Exhibits


3.1		Restated/Articles of Incorporation of the Registrant is incorporated by reference to Exhibit (3)-1 to Form 10 filed April 29, 1981.

3.2		Amendment to Articles of Incorporation of the Registrant filed herewith.

3.3		By-Laws of the Registrant filed herewith.

23.1		Consent of McElroy, Quirk & Burch filed herewith.

31.1		Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 filed herewith.

31.2		Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 filed herewith.

32.1		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 filed herewith.

32.2		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 filed herewith.

B-1.	Reports on Form 8-A.

On November 20, 2003, Calcasieu Real Estate & Oil Co., Inc. filed a report on Form 8-A reflecting its listing on the American Stock Exchange, effective December 8, 2003.

B-2	Reports on Form 8-K.

None.

SIGNATURES

Pursuant to the requirement of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.


CALCASIEU REAL ESTATE AND OIL CO., INC.

BY:		/s/ Arthur Hollins III
		Arthur Hollins, III, President

Dated March 11, 2004

Pursuant to the requirements of the Securities Act of 1934, this report has been signed below by the following persons in the capacities with regard to Calcasieu Real Estate and Oil Co., Inc. and on the date indicated:



/s/ Arthur Hollins, III Arthur Hollins, III		President (Chief Executive Officer and Director)

/s/ William D. Blake William D. Blake		Vice President & Treasurer (Principal Financial Officer and Director)

/s/ Charles D. Viccellio Charles D. Viccellio		Vice President & Secretary, (Director)

/s/ Henry C. Alexander Henry C. Alexander		Director

/s/ Troy A. Freund Troy A. Freund		Director

/s/ Laura A. Leach Laura A. Leach		Director

/s/ Frank O. Pruitt Frank O. Pruitt		Director

/s/ James Reaves, III James Reaves, III		Director

/s/ Mary W. Savoy Mary W. Savoy		Director

Dated: March 11, 2004

CALCASIEU REAL ESTATE & OIL CO., INC.

Lake Charles, Louisiana

C O N T E N T S


		Page
REPORT OF INDEPENDENT AUDITORS ON THE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION		15

FINANCIAL STATEMENTS

Balance sheets		16
Statements of income		17
Statements of changes in stockholders’ equity		18-19
Statements of cash flows		20-21
Notes to financial statements		22-30

SUPPLEMENTARY INFORMATION

Property, plant and equipment		31
Accumulated depreciation, depletion and amortization		32
Quarterly financial data		33

SCHEDULE OMITTED

Schedules, other than those listed above, have been omitted because of the absence of the conditions under which they are required or because the required information is included in the financial statements or notes thereto.

LOGO

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors

Calcasieu Real Estate & Oil Co., Inc.

Lake Charles, Louisiana

We have audited the accompanying balance sheets of Calcasieu Real Estate & Oil Co., Inc. as of December 31, 2003 and 2002, and the related statements of income, changes in stockholders’ equity, and cash flows for the years ended December 31, 2003, 2002 and 2001. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Calcasieu Real Estate & Oil Co., Inc. as of December 31, 2003 and 2002, and the results of its operations and its cash flows for the years ended December 31, 2003, 2002 and 2001, in conformity with accounting principles generally accepted in the United States of America.

Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information on pages 35 through 37 is presented for the purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

LOGO

Lake Charles, Louisiana

March 1, 2004

CALCASIEU REAL ESTATE & OIL CO., INC.

BALANCE SHEETS

December 31, 2003 and 2002


	2003		2002
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	527,219	$	583,327
Accounts receivable		239,815		152,373
Inventory-harvested crops		—		10,125
Prepaid income taxes		26,475		61,113
Prepaid expense and other		4,860		3,680

Total current assets		798,369		810,618

SECURITIES AVAILABLE-FOR-SALE		1,922,870		1,361,123

PROPERTY AND EQUIPMENT (less accumulated depreciation, depletion and amortization of $67,223 in 2003 and $448,521 in 2002)		12,680		91,949
Timber (less accumulated depletion of $343,459 in 2003 and $314,659 in 2002)		498,975		484,161
Land		3,891,610		3,904,851

		4,403,265		4,480,961

	$	7,124,504	$	6,652,702

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES
Trade payables and accrued expenses	$	13,256	$	8,863
Dividends payable		136,204		195,742
Income taxes payable:
Current		—		—
Deferred, net		52,535		23,370

Total current liabilities		201,995		227,975

STOCKHOLDERS’ EQUITY
Common stock, no par value; 3,000,000 shares authorized; 2,100,000 shares issued		72,256		72,256
Retained earnings		7,169,864		6,642,737
Accumulated other comprehensive income		55,905		16,563

		7,298,025		6,731,556
Less cost of treasury stock (2003 157,505 shares and 2002 144,956 shares)		375,516		306,829

		6,922,509		6,424,727

	$	7,124,504	$	6,652,702

See Notes to Financial Statements.

CALCASIEU REAL ESTATE & OIL CO., INC.

STATEMENTS OF INCOME

Years Ended December 31, 2003, 2002 and 2001


	2003		2002		2001
Revenues	$	2,111,141	$	1,454,498	$	1,618,587

Costs and expenses:
Oil and gas production		203,183		102,654		62,636
Agricultural		13,278		10,515		8,176
Timber		39,014		40,741		32,910
General and administrative		296,295		245,786		290,698
Depreciation, depletion and amortization		34,403		38,886		28,566

		586,173		438,582		422,986

Income from operations		1,524,968		1,015,916		1,195,601

Other income (expense):
Interest income		10,647		23,760		28,243
Dividends on stock		36,604		27,595		27,617
Realized gain on sale of investments in available-for-sale securities		5,187		—		27,654
Gain on sale of assets		3,931		2,167		4,991

		56,369		53,522		88,505

Income before income taxes		1,581,337		1,069,438		1,284,106

Federal and state income taxes:
Current		486,474		330,063		415,864
Deferred		1,858		2,807		(4,364	)

		488,332		332,870		411,500

Net income (per common share) - 2003 $.56; 2002 $.38; 2001 $.45	$	1,093,005	$	736,568	$	872,606

See Notes to Financial Statements.

CALCASIEU REAL ESTATE & OIL CO., INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Years Ended December 31, 2003, 2002 and 2001


	Comprehensive Income			Retained Earnings			Accumulated Other Comprehensive Income			Capital Stock Issued		Treasury Stock
Balance, January 1, 2001	$	—		$	6,004,642		$	24,448		$	72,256	$	306,829

Comprehensive income:
Net income		872,606			872,606			—			—		—

Other comprehensive income:
Unrealized gains on securities available for sale:
Unrealized holding gains occurring during period net of taxes of $3,212		5,464			—			—			—		—
Less reclassification adjustments for gains included in net income, net of taxes of $2,569		(3,853	)		—			—			—		—

Other comprehensive income, net of tax		1,611			—			1,611			—		—

Total comprehensive income	$	874,217			—			—			—		—

Dividends					(489,669	)		—			—		—

Balance, December 31, 2001					6,387,579			26,059			72,256		306,829

Comprehensive income:
Net income	$	736,568			736,568			—			—		—

Other comprehensive income:
Unrealized gains on securities available for sale:
Unrealized holding gains occurring during period net of taxes of $6,330		(9,496	)		—			—			—		—

Other comprehensive income, net of tax		(9,496	)		—			(9,496	)		—		—

Total comprehensive income	$	727,072			—			—			—		—

Dividends					(481,410	)		—			—		—

(continued on next page)

CALCASIEU REAL ESTATE & OIL CO., INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Years Ended December 31, 2003, 2002 and 2001

(Continued)


	Comprehensive Income			Retained Earnings			Accumulated Other Comprehensive Income		Capital Stock Issued		Treasury Stock
Balance, December 31, 2002					6,642,737			16,563		72,256		306,829

Comprehensive income:
Net income	$	1,093,005			1,093,005			—		—		—

Other comprehensive income:
Unrealized gains on securities available for sale:
Unrealized holding gains occurring during period net of taxes of $37,269		42,454			—			—		—		—
Less reclassification adjustments for gains included in net income, net of taxes of $2,075		(3,112	)		—			—		—		—

Other comprehensive income, net of tax		39,342			—			39,342		—		—

Total comprehensive income	$	1,132,347

Purchase of treasury stock					—			—		—		68,687

Dividends					(565,878	)		—		—		—

Balance, December 31, 2003				$	7,169,864		$	55,905	$	72,256	$	375,516

See Notes to Financial Statements.

CALCASIEU REAL ESTATE & OIL CO., INC.

STATEMENTS OF CASH FLOWS

Years Ended December 31, 2003, 2002 and 2001


	2003			2002			2001
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	1,093,005		$	736,568		$	872,606
Noncash (income) expenses included in net income:
Depreciation, depletion and amortization		34,403			38,886			29,566
Realized (gains) on sale of available-for-sale securities		(5,187	)		—			(27,654	)
(Gain) on sale of assets		(3,799	)		(2,572	)		(4,991	)
Loss on asset retirement		77,215			375			—
Deferred income tax		1,858			2,807			(4,365	)
Change in assets and liabilities:
(Increase) decrease in trade accounts and other receivables		(87,442	)		(58,625	)		35,471
(Increase) decrease in inventory		10,125			917			(6,616	)
(Increase) decrease in prepaid income taxes		34,638			110,030			(96,265	)
(Increase) in prepaid expenses		(1,180	)		(371	)		—
Increase (decrease) in trade payables		4,393			2,895			(8,879	)

Net cash provided by operating activities		1,158,029			830,910			788,873

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from rights of way		3,000			—			500
Proceeds from sale of timber and land		16,858			4,655			22,041
Available-for-sale securities:
Purchases		(2,143,912	)		(1,692,887	)		(590,114	)
Sales		1,654,000			700,000			1,300,000
Purchase of land, property and equipment		(49,980	)		(197,025	)		(250,610	)

Net cash provided by (used in) investing activities		(520,034	)		(1,185,257	)		481,817

CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid, net of refunds		(625,416	)		(481,410	)		(489,669	)
Payments to acquire treasury stock		(68,687	)		—			—

Net cash (used in) financing activities		(694,103	)		(481,410	)		(489,669	)

Net increase (decrease) in cash and cash equivalents		(56,108	)		(835,757	)		781,021

Cash and cash equivalents:
Beginning		583,327			1,419,084			638,063

Ending	$	527,219		$	583,327		$	1,419,084

(continued on next page)

CALCASIEU REAL ESTATE & OIL CO., INC.

STATEMENTS OF CASH FLOWS

Years Ended December 31, 2003, 2002 and 2001

(Continued)


	2003		2002			2001
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest	$	—	$	—		$	—
Income taxes		404,548		238,120			522,640

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Net change in unrealized and realized gains on available-for-sale securities		39,342		(9,496	)		1,611

See Notes to Financial Statements.

CALCASIEU REAL ESTATE & OIL CO., INC.

NOTES TO FINANCIAL STATEMENTS

Note 1. Nature of Business and Significant Accounting Policies

Nature of business:

The Company’s business is the ownership and management of land. The primary activities consist of leasing its properties for mineral (oil and gas) and agriculture and raising timber.

Significant accounting policies:

Cash and cash equivalents:

For purposes of the statement of cash flows, cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less.

Inventory:

Inventory consists of harvested crops valued at estimated selling price at the date of the balance sheet.

Pervasiveness of estimates:

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Investment securities:

The Company complies with the provisions of Financial Accounting Standards Board Statement No. 115, Accounting for Certain Investments in Debt and Equity Securities . Under the provisions of this statement, management must make a determination at the time of acquisition whether certain investments in debt and equity securities are to be held as investments to maturity, held as available for sale, or held for trading. Management, under a policy adopted by the board of directors of the Company, made a determination that all debt and equity securities owned at that date and subject to the provisions of the statement would be classified as held available-for-sale.

NOTES TO FINANCIAL STATEMENTS

Under the accounting policies provided for investments classified as held available-for-sale, all such debt securities and equity securities that have readily determinable fair value shall be measured at fair value in the balance sheet. Unrealized holding gains and losses for available-for-sale securities shall be excluded from earnings and reported as a net amount (net of income taxes) as a separate component of retained earnings until realized. Realized gains and losses and declines in value judged to be other than temporary on available-for-sale securities are included in income. The cost of securities sold is based on the specific identification method. Interest on debt securities is recognized in income as earned, and dividends on marketable equity securities are recognized in income when declared.

Property and equipment:

Property and equipment is stated at cost. Major additions are capitalized; maintenance and repairs are charged to income currently. Depreciation is computed on the straight-line and accelerated methods over the estimated useful lives of the assets.

Earnings per share:

Earnings per share is based on the weighted average number of common shares outstanding during the years.

Income taxes:

Deferred income tax assets and liabilities are determined using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the temporary differences between the book and tax bases of the various balance sheet assets and liabilities and gives current recognition to changes in tax rates and laws.

NOTES TO FINANCIAL STATEMENTS

Note 2. Securities Available-for-Sale

Debt and equity securities have been classified in the balance sheet according to management’s intent in the noncurrent asset sections under the headings securities available-for-sale. The carrying amount of securities and their approximate fair values at December 31, 2003 and 2002 follow:


	Gross Amortized Cost		Gross Unrealized Gains		Unrealized Losses		Fair Value
December 31, 2003

Available-for-sale securities:
Equity securities	$	155,861	$	46,689	$	—	$	202,550
Preferred equity securities		329,373		46,887		—		376,260
US government securities (maturing within one year)		1,344,861		—		801		1,344,060

	$	1,830,095	$	93,576	$	801	$	1,922,870

December 31, 2002

Available-for-sale securities:
Equity securities	$	155,861	$	22,446	$	17,778	$	160,529
Preferred equity securities		378,186		41,423		21,229		398,380
Corporate bonds (maturing within one year)		100,896		1,661		—		102,557
US government securities (maturing within one year)		699,657		—		—		699,657

	$	1,334,600	$	65,530	$	39,007	$	1,361,123

Gross realized gains and gross realized losses on sales of available-for-sale securities during 2003 and 2001 are presented below. There were no gross realized gains and gross realized losses on sales of available-for-sale securities during 2002.


2003	Gains		Losses
Gross realized gains:
Preferred equity securities	$	5,187	$	—


2001	Gains		Losses
Gross realized gains:
U.S. government and agency securities	$	27,654	$	—

NOTES TO FINANCIAL STATEMENTS

Note 3. Oil and Gas Properties

Results of operations for oil and gas producing activities at December 31, 2003, 2002 and 2001 is as follows:


	2003		2002		2001
Gross revenues:
Royalty interests	$	1,793,639	$	1,096,175	$	1,106,226
Working interests		1,806		22,573		40,396


		1,795,445		1,118,748		1,146,622

Less:
Production costs		203,183		102,654		62,636

Results before income tax expenses		1,592,262		1,016,094		1,083,986
Income tax expenses		484,950		316,266		347,370

Results of operations from producing activities (excluding corporate overhead)	$	1,107,312	$	699,828	$	736,616

Costs incurred in oil and gas activities:

There were no major costs incurred in connection with the Company’s oil and gas operations (which are conducted entirely within the United States) at December 31, 2003, 2002 and 2001.

Reserve quantities (unaudited):

Reserve information relating to estimated quantities of the Company’s interest in proved reserves of natural gas and crude (including condensate and natural gas liquids) is not available. Such reserves are located entirely within the United States. A schedule indicating such reserve quantities is, therefore, not presented. All oil and gas royalties come from Company owned properties that were developed and produced by other partners under lease agreements.

NOTES TO FINANCIAL STATEMENTS

Note 4. Income Taxes

The Company files federal income tax returns on a calendar year basis.

The net deferred tax liability in the accompanying balance sheet includes the following components at December 31, 2003 and 2002:


	2003			2002
Deferred tax assets	$	720		$	1,181
Deferred tax liabilities		(15,337	)		(13,939	)
Deferred tax liabilities on unrealized appreciation of securities available for sale		(37,918	)		(10,612	)

Net deferred tax liability	$	(52,535	)	$	(23,370	)

A reconciliation between income taxes, computed by applying statutory tax rates to income before income taxes and income taxes provided at December 31, 2003, 2002 and 2001 is as follows:


	2003			2002			2001
Tax at statutory rates	$	537,655		$	363,609		$	436,596

Tax effect of the following:
Statutory depletion		(86,281	)		(52,480	)		(52,305	)
Dividend exclusion		(1,673	)		(6,567	)		(6,573	)
State income tax		39,240			26,756			34,465
Investment tax credit		(1,000	)		(1,000	)		(167	)
Other		391			2,552			(516	)

	$	488,332		$	332,870		$	411,500

NOTES TO FINANCIAL STATEMENTS

Deferred income taxes result from timing differences in the recognition of revenue and expenses for tax and financial statement purposes. The effect of these timing differences at December 31, 2003 and 2002 is as follows:


	2003			2002
Conversion of investment from tax cash basis to accrual basis for financial reporting	$	(14,205	)	$	(12,546	)

Excess of depreciation and depletion expensed for tax purposes (under) amount expensed for financial statement purposes		(412	)		(212	)

Unrealized gain on marketable securities		(37,918	)		(10,612	)

	$	(52,535	)	$	(23,370	)

Note 5. Line of Credit

As of December 31, 2003, the Company had available an unsecured line of credit in the amount of $1,000,000. The balance on this line of credit was $-0- at December 31, 2003 and 2002.

Note 6. Company Operations

The Company’s operations are classified into one principal operating segment which is located in the United States: oil and gas properties. The Company’s reportable business segments are strategic business units that offer income from different products. They are managed separately due to the unique aspects of each area.

NOTES TO FINANCIAL STATEMENTS

Following is a summary of segmented information for 2003, 2002 and 2001:


	2003		2002		2001
REVENUES
Oil and gas properties	$	1,795,445	$	1,118,748	$	1,146,622
All other segments		315,696		335,750		471,965

	$	2,111,141	$	1,454,498	$	1,618,587

COSTS AND EXPENSES
Oil and gas properties	$	455,034	$	291,909	$	269,032
All other segments		131,139		146,673		153,954

	$	586,173	$	438,582	$	422,986

INCOME FROM OPERATIONS
Oil and gas properties	$	1,340,411	$	826,839	$	877,590
All other segments		184,557		189,077		318,011

		1,524,968		1,015,916		1,195,601

OTHER INCOME (EXPENSE)		56,369		53,522		88,505

INCOME BEFORE INCOME TAXES	$	1,581,337	$	1,069,438	$	1,284,106

IDENTIFIABLE ASSETS
Oil and gas properties	$	126,971	$	112,526	$	74,531
All other segments		6,997,533		6,540,176		6,156,712

TOTAL ASSETS	$	7,124,504	$	6,652,702	$	6,231,243

CAPITAL EXPENDITURES
Oil and gas properties	$	—	$	—	$	—
All other segments		43,614		191,766		250,473

	$	43,614	$	191,766	$	250,473

DEPRECIATION, DEPLETION AND AMORTIZATION
Oil and gas properties	$	—	$	—	$	—
All other segments		34,403		38,886		29,566

	$	34,403	$	38,886	$	29,566

NOTES TO FINANCIAL STATEMENTS

There are no intersegment sales reported in the accompanying income statements. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company evaluates performance based on profit or loss from operations before income taxes excluding nonrecurring gains and losses on securities held available for sale. Income before income tax represents net sales less operating expenses and other income and expenses of a general corporate nature. Identifiable assets by segment are those assets that are used in the Company’s operations within that industry.

The following summarizes major customer information at December 31, 2003, 2002 and 2001 from oil and gas revenues:


	Sales to Purchaser as a Percentage of Total Revenues
Purchaser	2003		2002		2001
Cox and Perkins	41	%	41	%	1	%
Riceland Petroleum Company	9	%	8	%	14	%
Neumin Production	4	%	3	%	24	%
Kerr-McGee	13	%	1	%	1	%

Note 7. Related Party Transactions

In 1990, the Company purchased interests in properties managed by Walker Louisiana Properties (WLP), such properties being subject to a management agreement.

Note 8. Supplementary Income Statement Information

Taxes, other than income taxes, of $195,687, $138,451 and $98,116, were charged to expense during 2003, 2002 and 2001, respectively.

Note 9. Concentration of Credit Risk

The Company maintains its cash balances in one financial institution. The amount on deposit in the financial institution is insured by the Federal Deposit Insurance Corporation up to $100,000.

NOTES TO FINANCIAL STATEMENTS

Note 10. Disclosures About Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it was practical to estimate that value:

Cash and cash equivalents:

For these short-term instruments, the carrying amount is a reasonable estimate of fair value.

Securities available-for-sale:

Debt and equity securities were valued at fair value, which equals quoted market price.

The estimated fair value of the Company’s financial instruments at December 31, 2003 and 2002 are as follows. Amounts are presented in thousands.


	2003				2002
	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial Assets
Cash and cash equivalents	$	527	$	527	$	583	$	583
Securities available for sale		1,923		1,923		1,361		1,361

	$	2,450	$	2,450	$	1,944	$	1,944

CALCASIEU REAL ESTATE & OIL CO., INC.

PROPERTY, PLANT AND EQUIPMENT

Years Ended December 31, 2003, 2002 and 1999


	Balance, Beginning of Period		Additions		Adjustments and Retirements		Balance, End of Period
2003
Oil and gas properties-proved	$	456,751	$	—	$	456,751	$	—

Other property:
Buildings and equipment		83,718		—		3,814		79,904
Timber		798,820		43,614		—		842,434
Land		3,904,851		—		13,241		3,891,610

	$	5,244,140	$	43,614	$	473,806	$	4,813,948


2002
Oil and gas properties-proved	$	456,751	$	—	$	—	$	456,751

Other property:
Buildings and equipment		86,825		6,999		10,106		83,718
Timber		779,912		18,908		—		798,820
Land		3,738,992		165,859		—		3,904,851

	$	5,062,480	$	191,766	$	10,106	$	5,244,140


2001
Oil and gas properties-proved	$	456,751	$	—	$	—	$	456,751

Other property:
Buildings and equipment		89,776		4,675		7,626		86,825
Timber		673,426		122,206		15,720		779,912
Land		3,615,900		123,592		500		3,738,992

	$	4,835,853	$	250,473	$	23,846	$	5,062,480

CALCASIEU REAL ESTATE & OIL CO., INC.

ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION

Years Ended December 31, 2003, 2002 and 2001


	Balance, Beginning of Period		Additions		Adjustments and Retirements		Balance, End of Period
2003
Oil and gas properties-proved	$	379,535	$	—	$	379,535	$	—
Other property:
Buildings and equipment		68,985		5,603		7,364		67,224
Timber		314,659		28,800		—		343,459

	$	763,179	$	34,403	$	386,899	$	410,683


2002
Oil and gas properties-proved	$	379,535	$	—	$	—	$	379,535
Other property:
Buildings and equipment		69,999		5,570		6,584		68,985
Timber		281,343		33,316		—		314,659

	$	730,877	$	38,886	$	6,584	$	763,179


2001
Oil and gas properties-proved	$	379,535	$	—	$	—	$	379,535
Other property:
Buildings and equipment		69,889		7,191		7,081		69,999
Timber		258,968		22,375		—		281,343

	$	708,392	$	29,566	$	7,081	$	730,877

CALCASIEU REAL ESTATE & OIL CO., INC.

QUARTERLY FINANCIAL DATA

(UNAUDITED)

Amounts in thousands, except per share:


	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total Year
Total revenues:
2003	$	450	$	363	$	587	$	711	$	2,111
2002		227		453		371		403		1,454

Operating income:
2003		351		275		468		431		1,525
2002		122		371		286		237		1,016

Net income:
2003		252		199		333		309		1,093
2002		90		264		210		173		737

Net income per share:
2003		.13		.10		.17		.16		.56
2002		.05		.13		.11		.09		.38

Cash dividends per share:
2003		.05		.10		.07		.07		.29
2002		.05		.05		.05		.10		.25

Shares outstanding:
2003		1,955		1,952		1,945		1,945		1,945
2002		1,955		1,955		1,955		1,955		1,955

Exhibit 3.2

CALCASIEU REAL ESTATE & OIL CO., INC.

AMENDMENT TO ARTICLES OF INCORPORATION

STATE OF LOUISIANA :

PARISH OF CALCASIEU :

BE IT KNOWN that on this 18 ^th day of August , 1988, before me, Daphne Knapp , Notary Public, duly commissioned and qualified in and for the Parish and State aforesaid, therein residing, and in the presence of the witnesses hereinafter named and undersigned,

PERSONALLY CAME AND APPEARED:

ARTHUR HOLLINS, III and CARL G. PATTON, residents of Calcasieu Parish, Louisiana,

who do declare that:

CALCASIEU REAL ESTATE & OIL CO., INC. is a Louisiana corporation domiciled in Lake Charles, Louisiana. Your appearer, ARTHUR HOLLINS, III, is President of said corporation, and your appearer, CARL G. PATTON , is Secretary of the said corporation.

Your appearers declare that they appear and make this authentic act setting forth an amendment to the Restated Articles of Incorporation by adding Article VIII thereto. Your appearers do certify that a resolution amending the Restated Articles of Incorporation was duly adopted pursuant to LSA-R.S. 12:31, et seq., by the shareholders at a duly called and convened meeting on April 25, 1988 by the affirmative vote of in excess of two-thirds of the voting power present at said meeting, and the notice of said meeting set forth the proposed amendment. At the meeting 1,294,814 shares of the corporation were represented and 1,127,647 shares were voted in favor of the amendment, and 94,982 shares were voted against the amendment, and 72,185 shares were abstained from voting.

At the meeting, upon motion by Mr. Trimble and seconded by Mr. Musser, the shareholders approved the amendment to add Article VIII to the Restated Articles of Incorporation which amendment is hereinafter stated in full.

Accordingly, the Restated Articles of Incorporation of CALCASIEU REAL ESTATE & OIL CO., INC. are amended by adding Article VIII thereto, to-wit:

“ARTICLE VIII

No director or officer of this Corporation shall be personally liable to this Corporation or its shareholders for monetary damages for breach of fiduciary duty as a director or officer, except for liability (i) for breach of the director’s or officer’s duty or loyalty to this Corporation or its shareholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 92(D) of the Louisiana Business Corporation Law, or (iv) for any transaction from which the director of officer derived an improper personal benefit. If the Louisiana Business Corporation Law is hereafter amended to authorize corporate action further limiting or eliminating the personal liability of directors and officers, then the liability of each director and officer of this Corporation shall be limited or eliminated to the full extent permitted by the Louisiana Business Corporation Law as so amended from time to time. Neither the amendment nor appeal of this Article, nor the adoption of any provision of this Corporation’s Articles of Incorporation inconsistent with the Article, shall eliminate or reduce the effect of this Article, in respect of any matter occurring, or any cause of action, suit or claim that, but for this Article, would accrue or arise, prior to such amendment, repeal or adoption of an inconsistent provision.”

THUS DONE, READ AND SIGNED in Lake Charles, Louisiana, on the day, month and year first above written, in the presence of Rebecca M. Meche and Cathy Reeves , competent witnesses, who hereunto sign their names with said parties and me, Notary, after due reading of the whole.


WITNESSES:

/s/ Rebecca M. Meche		/s/ Arthur Hollins III
		ARTHUR HOLLINS, III

/s/ Cathy Reeves		/s/ Carl G. Patton
		CARL G. PATTON


BEFORE ME:		/s/ Daphne Knapp
		NOTARY PUBLIC

Exhibit 3.3

BY-LAWS

CALCASIEU REAL ESTATE & OIL CO., INC.

Section 1. OFFICES

1.1 The principal office shall be located at One Lakeside Plaza, Lake Charles, Louisiana 70601.

1.2 The corporation may have such offices at such other places as the Board of Directors may from time to time determine or the business of the corporation may require.

Section 2. SHAREHOLDERS’ MEETING

2.1 Unless otherwise required by law or these By-laws, all meetings of the shareholders shall be held at the principal office of the corporation or at such other place, within or without the State of Louisiana, as may be designated by the Board of Directors.

2.2 An annual meeting of the shareholders shall be held on the second Monday of April in each year, or if said day be a legal holiday, then on the next succeeding day not a legal holiday, at 10:00 o’clock A.M., or on such other date or at such other time as the Board of Directors shall designate, for the purpose of electing directors and for the transaction of such other business as may properly be brought before the meeting.

2.3 Special meetings of the shareholders, for any purpose or purposes, may be called by the President or Board of Directors. At any time, upon the written request of any two directors or of any shareholder or shareholders holding in the aggregate one-fifth of the total voting power, the Secretary shall call a special meeting of shareholders to be held at the registered office of the corporation at such time as the Secretary may fix, not less than fifteen nor more than sixty days after the receipt of said request, and if the Secretary shall neglect or refuse to fix such time or to give notice of the meeting, the shareholder or shareholders making the request may do so.

2.4 Except as otherwise provided in Section 2.3 hereof, or by law, the authorized person or persons calling a shareholders’ meeting shall cause written notice of the time, place and purpose of the meeting to be given to all shareholders entitled to vote at such meeting, at least ten days and not more than sixty days prior to the day fixed for the meeting. Notice of the annual meeting need not state the purpose thereof, unless action is to be taken at the meeting as to which notice is required by law.

2.5 At every meeting of shareholders, a list of shareholders entitled to vote, arranged alphabetically and certified by the Secretary or by the agent of the corporation having charge of transfers of shares, showing the number and class of shares held by each such shareholder on the record date for the meeting, shall be produced on the request of any shareholder.

2.6 Except as otherwise provided by law, the presence, in person or by proxy, of the holders of a majority of the total voting power shall constitute a quorum at all meeting of the shareholders.

2.7 When a quorum is present at any meeting, the vote of the holders of a majority of the voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which, by express provision of law or the Articles of Incorporation, a different vote is required, in which case such express provision shall govern and control the decision of such question. Directors shall be elected by plurality vote.

2.8 At any meeting of the shareholders, every shareholder having the right to vote shall be entitled to vote in person, or by proxy appointed by an instrument in writing subscribed by such shareholder and bearing a date not more than eleven months prior to said meeting, unless said instrument provides for a longer period. The aforesaid proxy need not be a shareholder of the corporation. Each shareholder shall have one vote for each share of stock having voting power, registered in his name on the books of the corporation at the time of the said meeting or on the record date for the determination of shareholders entitled to vote at the said meeting if the Board of Directors shall have fixed such a record date. Except as the Board may provide otherwise, if no record date is fixed for the purpose of determining shareholders (a) entitled to notice of and to vote at a meeting, the close of business on the day before the notice of the meeting is mailed, or if notice is waived, the close of business on the day before the meeting, shall be the record date for such purpose, or (b) for any other purpose, the close of business on the day on which the Board of Directors adopts the resolution relating thereto shall be the record date for such purpose.

2.9 Adjournments of any annual or special meeting of shareholders may be taken without new notice being given unless a new record date is fixed for the adjourned meeting, but any meeting at which directors are to be elected shall be adjourned only from day to day until such directors shall have been elected.

2.10 The shareholders present or represented at a duly organized meeting shall constitute a quorum and may continue to do business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum as fixed in Section 2.6 of these By-laws, or the refusal of any shareholders present to vote.

2.11 If a meeting cannot be organized because a quorum has not attended, those present may adjourn the meeting to such time and place as they may determine, subject, however, to the provisions of Section 2.9 hereof. In the case of any meeting called for

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the election of directors, those who attend the second of such adjourned meetings, although less than a quorum as fixed in Section 2.6 hereof, shall nevertheless constitute a quorum for the purpose of electing directors.

Section 3. DIRECTORS

3.1 All of the corporate powers shall be vested in, and the business and affairs of the corporation shall be managed by a Board of Directors of ten natural persons. The Board may exercise all such powers of the corporation and do all such lawful acts and things which are not by law, the Articles of Incorporation or these By-laws directed or required to be done by the shareholders. The directors shall be elected at the annual meeting of the shareholders and shall hold office for one year and until their successors are chosen and have qualified. No director need be a shareholder.

3.2 The remaining directors, even though not constituting a quorum, may, by a majority vote, fill any vacancy on the Board (including any vacancy resulting from an increase in the authorized number of directors, or from failure of the shareholders to elect the full number of authorized directors) for an unexpired term, provided that the shareholders shall have the right, at any special meeting called for the purpose prior to such action by the Board, to fill the vacancy.

Section 4. COMPENSATION OF DIRECTORS

4.1 Directors as such, shall receive such salary for their services as may be fixed by resolution of the Board of Directors and shall receive their actual expenses of attendance, if any, for each regular or special meeting of the Board; provided that nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity and receiving compensation therefore.

Section 5. MEETINGS OF THE BOARD

5.1 The meetings of the Board of Directors may be held at such place within or without the State of Louisiana as a majority of the directors may from time to time appoint.

5.2 The first meeting of each newly elected Board shall be held immediately following the annual shareholder’s meeting and at the same place as the annual meeting, and no notice of such first meeting shall be necessary to the newly elected directors in order legally to constitute the meeting.

5.3 Regular meetings of the Board may be held, upon five day’s written notice from the President or the Secretary at such time and place either within or without the State of Louisiana as shall from time to time be determined by the Board, provided that

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notice of such determination shall be given to all Directors. Directors present at any regular or special meeting shall be deemed to have received due, or to have waived, notice thereof, provided that a director who participates in a meeting by telephone shall not be deemed to have received or waived due notice if, at the beginning of the meeting, he objects to the transaction of any business because the meeting is not lawfully called.

5.4 Special meetings of the Board may be called by the President on two days’ notice given to each director, either personally or by telephone, mail or by telegram. Special meetings shall be called by the President or Secretary in like manner and on like notice on the written request of two directors and if the President and Secretary fail or refuse, or are unable to call a meeting when requested by any two directors, then the two directors may call the meeting on two days’ written notice given each director.

5.5 A majority of the Board shall be necessary to constitute a quorum for the transaction of business, and except as otherwise provided by law, the acts of a majority of the directors present at a meeting at which a quorum is present shall be the acts of the Board.

5.6 If a quorum is present when the meeting is convened, the directors present may continue to do business, taking action by vote of a majority of a quorum as fixed in Section 5.5 hereof, until adjournment, notwithstanding the withdrawal of enough directors to leave less than a quorum as fixed in Section 5.5 hereof or the refusal of any director present to vote.

5.7 Any action which may be taken at a meeting of the Board or any committee thereof, may be taken by a consent in writing signed by all of the directors or by all members of the committee, as the case may be, and filed with the records of proceedings of the Board or committee.

5.8 Members of the Board may participate at and be present at any meeting of the Board or any committee thereof by means of conference telephone or similar communications equipment if all persons participating in such meeting can hear and communicate with each other.

Section 6. COMMITTEES OF THE BOARD

The Board may designate one or more committees, each committee to consist of two or more of the directors of the corporation (and one or more directors may be named as alternate members to replace any absent or disqualified regular members), which, to the extent provided by resolution of the Board or the By-laws, shall have and may exercise the powers of the Board in the management of the business and affairs of the corporation, and may have power to authorize the seal of the corporation to be affixed to documents. Such committee or committees shall have such name or names as may be stated in the By-laws, or may be determined, from time to time, by the Board. Any vacancy occurring in any such committee shall be filled by the Board, but the President

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may designate another director to serve on the committee pending action by the Board. Each such committee shall hold office during the term of the Board constituting it, unless otherwise ordered by the Board.

Section 7. REMOVAL OF BOARD MEMBERS

The shareholders, by vote of a majority of the total voting power at any special meeting called for the purpose, may remove from office any one or more of the directors, notwithstanding that his or their terms of office may not have expired, and may forthwith at such meeting proceed to elect a successor for the unexpired term. Whenever the holders of the shares of any class or series or of any obligations are entitled to elect one or more directors, and provisions of this Section 7 shall apply, in respect of the removal of a director or directors so elected, and the election of a successor or successors, to the vote of the holders of the outstanding shares of the class or series or of those obligations and not to the vote of the outstanding shares as a whole.

Section 8. NOTICES

8.1 Any written notice required or permitted by law, the Articles of Incorporation or the By-laws to be given to any shareholder or director shall be deemed to have given to such shareholder or director when such notice is served upon such shareholder or director or two business days after such notice is placed in the United States mail, postage prepaid, addressed to such shareholder or director at his last known address, whichever is earlier.

8.2 Whenever any notice is required to be given by law, the Articles of Incorporation or the By-laws, a waiver thereof in writing signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto.

Section 9. OFFICERS

9.1 The officers of the corporation shall be chosen by the directors and shall be a President, a Secretary and a Treasurer. The directors may elect one or more Vice Presidents. Any two offices may be held by one person, provided that no person holding more than one office may sign, in more than one capacity, any certificate or other instrument required by law to be signed by two officers.

9.2 The Board of Directors may appoint such other officers as it shall deem necessary, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board.

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9.3 The officers of the corporation shall hold office at the pleasure of the Board of Directors.

9.4 The President shall preside at all meetings of the shareholders and shall have general and active management of the business of the corporation. If a Chairman of the Board of Directors has not been elected, the President, if a director, shall preside at all meetings of the Board.

9.5 The Vice-President (if any) in the order specified by the Board or, if not so specified, in the order of their seniority shall, in the absence or disability of the President, perform the duties and exercise the powers of the President, shall perform such other duties as the President or the Board of Directors shall prescribe.

9.6 The Secretary shall attend all meetings of the Board of Directors and all meetings of the shareholders and record all votes and the minutes of all proceedings in a book to be kept for that purpose. He shall give, or cause to be given, notice of all meetings of the shareholders and special meetings of the Board, and shall perform such other duties as may be prescribed by the Board or President, under whose supervision he shall be. He shall keep in safe custody the seal of the corporation, if any, and affix the same to any instrument requiring it.

9.7 The Treasurer shall have the custody of the corporate funds and shall keep or cause to be kept full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all monies and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the Board of Directors. He shall keep a proper accounting of all receipts and disbursements and shall disburse the funds of the corporation only for proper corporate purposes or as may be ordered by the Board and shall render to the President and the Board at the regular meetings of the Board, or whenever they may require it, an account of all his transactions as Treasurer and of the financial condition of the corporation.

Section 10. STOCK

10.1 Certificates . The certificates for each class of stock of the corporation shall be numbered and shall be entered in the books of the corporation as they are issued. Every certificate of stock shall be signed by the President or a Vice-President and the Treasurer or the Secretary. If any stock certificate is signed by a transfer agent or by a registrar, other than the corporation itself or an employee of the corporation, the signature of any such officer may be a facsimile.

10.2 Missing Certificates . The officers of the corporation may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the officers

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of the Corporation shall, unless dispensed with by the Board, as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as such officers shall require and/or give the corporation a bond in such sum as they may deem appropriate as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen, or destroyed.

10.3 Transfers . Upon surrender to the corporation or the transfer agent of the corporation, of a certificate for share duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books.

Section 11. DETERMINATION OF SHAREHOLDERS

11.1 Record Date . For the purpose of determining shareholders entitled to notice of and to vote at a meeting, or to receive a dividend, or to receive or exercise subscription or other rights, or to participate in a reclassification of stock, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors may fix in advance a record date for determination of shareholders for such purpose, such date to be not more than sixty days and, if fixed for the purpose of determining shareholders entitled to notice of and to vote at a meeting, not less than ten days, prior to the date on which the action requiring the determination of shareholders is to be taken.

11.2 Registered Shareholders . Except as otherwise provided by law, the corporation, and its directors, officers and agents, may recognize and treat a person registered on its records as the owner of shares, as the owner in fact thereof for all purposes, and as the person exclusively entitled to have and to exercise all rights and privileges incident to the ownership of such shares, and rights under this Section shall not be affected by any actual or constructive notice which the corporation, or any of its directors, officers or agents, may have to the contrary.

Section 12. MISCELLANEOUS

12.1 Dividends . Except as otherwise provided by law or the Articles of Incorporation, dividends upon the stock of the corporation may be declared by the Board of Directors at any regular or special meeting. Dividends may be paid in cash, in property, or in shares of stock.

12.2 Checks . All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.

12.3 Fiscal Year . The Board of Directors may adopt for and on behalf of the corporation a fiscal or a calendar year.

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12.4 Seal . The Board of Directors may adopt a corporate seal, which seal shall have inscribed thereon the name of the corporation. Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. Failure to affix the seal shall not, however, affect the validity of any instrument.

12.5 Gender . All pronouns and variations thereof used in these By-laws shall be deemed to refer to the masculine, feminine or neuter gender, singular or plural, as the identity of the person, persons, entity or entities referred to require.

Section 13. INDEMNIFICATION

The Corporation shall indemnify its officers and directors, and may indemnify its employees and agents, and may procure insurance on behalf of its officers, directors, employees and agents to the full extent permitted by Section 83 of the Louisiana Business Corporation Law, as amended.

Section 14. AMENDMENTS

These By-laws may be amended or repealed by the Board of Directors at any regular or special meeting or by the shareholders at any annual or special meeting, provided notice of the proposed amendment or repeal be contained in the notice of such annual or special meeting of shareholders.

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LOGO

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT

We consent to the use in this Form 10-K of our report dated March 1, 2004, relating to the financial statements of Calcasieu Real Estate & Oil Co., Inc.

LOGO

Lake Charles, Louisiana

March 1, 2004

Exhibit 31.1

I, Arthur Hollins, III, certify that:

1.	I have reviewed this annual report on Form 10-K of Calcasieu Real Estate & Oil Co., Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


March 11, 2004		/s/ Arthur Hollins III
		Arthur Hollins, III
		President & Chief Executive Officer

Exhibit 31.2

I, William D. Blake, certify that:

1.	I have reviewed this annual report on Form 10-K of Calcasieu Real Estate & Oil Co., Inc.;

2	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


March 11, 2004		/s/ William D. Blake
		William D. Blake
		Vice-President and Treasurer Principal Financial Officer

Exhibit 32.1

Certification Required by 18 U.S.C. Sec. 1350

(Section 906 of the Sarbanes – Oxley Act of 2002)

In connection with the filing by Calcasieu Real Estate & Oil Co., Inc. (the “Company”) of the Annual Report on Form 10-K for the year ending December 31, 2003 (the “Report”), each of the undersigned hereby certifies, that:

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Arthur Hollins III

Arthur Hollins, III

President

March 11, 2004

Exhibit 32.2

Certification Required by 18 U.S.C. Sec. 1350

(Section 906 of the Sarbanes – Oxley Act of 2002)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ William D. Blake

William D. Blake

Vice-President and Treasurer

March 11, 2004