New Concept Energy, Inc. (NYSE MKT:GBR), (the “Company” or “NCE”) a Dallas-based oil and gas company, today reported a net income for the three months ended September 30, 2012 of $1.5 million or $0.78 per share, compared to a net loss of $57,000 or $(0.03) per share for the three months ended September 30, 2011.
In the fourth quarter of 2011 the Company had a $10.3 million note receivable and determined that the financial condition of the debtor had deteriorated and there could be no assurance that the amount owed would or could be collected. At that time the company recorded a loss and established a reserve of $10.3 million. In the third quarter of 2012 the Company recorded a $1,700,000 gain from the recovery of the previously reserved note receivable. The Company will continue to attempt to collect the balance of the receivable.
The Company recorded oil and gas revenues of $274,000 as compared to $313,000 for the comparable period of 2011. The changes in oil & gas revenue were principally due to a decrease of approximately $40,000 due to lower prices being received for the sale of our natural gas.
The Company recorded oil and gas operating expenses of $432,000 as compared to $325,000 for the comparable period of 2011. The increase was principally due to an increase in depletion, depreciation and amortization expense which was $168,000 in 2012 as compared to $86,000 in 2011.
For 2012, accretion of asset retirement costs was $0 as compared to $32,000 in 2011. During the third quarter of 2012 the company re-evaluated its method of plugging abandoned wells and determined by doing so in-house it could lower its costs. Based upon the Company’s current calculations, we have established a sufficient reserve, for accounting purposes, to plug the existing wells when it becomes necessary.