(4) Equity Investment in Savoy

9 Months Ended

Sep. 30, 2011

Equity Investment InSavoy

(4)           Equity Investment in Savoy

We own a 45% interest in Savoy Energy L.P., a private company engaged in the oil and gas business primarily in the State of Michigan. Savoy uses the successful efforts method of accounting.  We account for our interest using the equity method of accounting.

Below (in thousands) are a condensed balance sheet at September 30, 2011 and a condensed statement of operations for the nine months ended September 30, 2011 and 2010.

Condensed Balance Sheet

	2011
Current assets	$	12,474
Oil and gas properties, net		20,250
	$	32,724
Total liabilities	$	7,951
Partners' capital		24,773
	$	32,724

Condensed Statement of Operations

	2011			2010
Revenue	$	22,802		$	8,921
Expenses		(13,755	)		(10,190	)
Net  income (loss)	$	9,047		$	(1,269	)

	2011		2010
Revenue:
Oil	$	18,816	$	6,623
Gas		437		591
NGLs (natural gas liquids)		490		113
Contract drilling		2,573		1,069
Other		486		525
Total revenue		22,802		8,921
Costs and expenses:
LOE (lease operating expenses)		2,920		1,554
Contract drilling costs		1,985		1,347
DD&A (depreciation, depletion & amortization)		2,692		1,700
G&G (geological and geophysical) costs		1,326		2,148
Dry hole costs		1,358		513
Impairment of unproved properties		2,507		2,064
Other exploration costs		255		136
G&A (general & administrative)		712		728
Total expenses		13,755		10,190
Net income (loss)	$	9,047	$	(1,269	)
Oil production in barrels		206		92
Average oil prices/barrel for the period	$	90.93	$	71.68