Note 7 - Supplemental Information Relating to Oil and Gas Producing Activities (Unaudited)

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Oil and Gas Exploration and Production Industries Disclosures [Text Block]

Note 7 . Supplemental Information Relating to Oil and Gas Producing Activities (Unaudited)

The following supplemental unaudited oil and gas information is required by generally accepted accounting principles.

The tables on the following pages set forth pertinent data with respect to the Company's oil and gas properties, all of which are located within the continental United States.

CAPITALIZED COSTS RELATING TO OIL AND GAS

PRODUCING ACTIVITIES

	Years ended December 31,
	2019		2018
Proved oil and gas properties	$	174,633,910	$	175,062,777
Pipeline and support equipment		791,756		762,440
Gross capitalized costs		175,425,666		175,825,217
Accumulated depreciation, depletion, amortization and write down		167,541,207		167,611,775
Net capitalized costs	$	7,884,459	$	8,213,442

COSTS INCURRED IN OIL AND GAS PRODUCING ACTIVITIES

	Years ended December 31,
	2019		2018
Property acquisition costs	$	23,018	$	49,855
Development costs		125,071		277,899

The Company had

no

purchases of producing oil and gas properties in

2019

or

2018.

RESULTS OF OPERATIONS FOR OIL AND

GAS PRODUCING ACTIVITIES

	Years ended December 31,
	2019			2018
Crude oil and natural gas sales	$	7,298,279		$	9,547,117
Production costs		(2,612,507	)		(3,256,946	)
Depreciation, depletion and amortization		(600,180	)		(637,642	)
Accretion expense		(273,023	)		(313,641	)
Results of operations before income tax expense (benefit)		3,812,569			5,338,888
Income tax expense (benefit)		30,000			(60,000	)
Results of operations for oil and gas producing activities (excluding corporate overhead and financing costs)	$	3,782,569		$	5,398,888

Income tax expense was computed using statutory tax rates and reflects permanent differences that are reflected in the Company's consolidated income tax expense for the year.

ESTIMATED QUANTITIES OF PROVED OIL AND GAS RESERVES

	Oil			Gas
	(BBLS)			(MCF)
Balance, January 1, 2018		290,000			11,244,000
Production		(55,000	)		(2,301,000	)
Revision of previous estimates		151,000			7,415,000
Balance, December 31, 2018		386,000			16,358,000
Extensions, discoveries and other additions		20,000			95,000
Production		(42,000	)		(1,840,000	)
Revision of previous estimates		(35,000	)		(1,578,000	)
Balance, December 31, 2019		329,000			13,035,000

The Company has

not

determined proved reserves associated with its proved and other undeveloped properties, including its deep property interests. The Company had less than

100

net proved undeveloped acres at

December 31, 2019

and

2018,

respectively. The net carrying cost of the proved undeveloped acreage that is included in proved properties amounted to approximately

$33,300

at

December 31, 2019

and

2018,

respectively.

STANDARDIZED MEASURE OF DISCOUNTED FUTURE

NET CASH FLOWS

	December 31,
	2019			2018
	(Thousands of Dollars)
Future cash inflows from sales of oil and gas	$	45,488		$	67,050
Future production and development costs		(26,931	)		(36,575	)
Future asset retirement obligations, net of salvage		(15,828	)		(15,871	)
Future income tax expense		(170	)		(321	)
Future net cash flows		2,559			14,283
Effect of discounting future net cash flows at 10% per annum		(5,061	)		(9,839	)
Standardized measure of discounted future net cash flows	$	(2,502	)	$	4,444

CHANGES IN THE STANDARDIZED MEASURE OF

DISCOUNTED FUTURE NET CASH FLOWS

	Years Ended December 31,
	2019			2018
	(Thousands of Dollars)
Balance, beginning of year	$	4,444		$	(5,054	)
Extensions, discoveries and other additions		551			-
Revision of quantity estimates		(1,650	)		8,543
Sales of crude oil and natural gas, net of production costs		(4,686	)		(6,290	)
Net change in income taxes		88			(112	)
Net changes in prices and production costs		(5,161	)		4,096
Accretion of discount		444			(505	)
Other		3,468			3,766
Balance, end of year	$	(2,502	)	$	4,444

There are numerous uncertainties inherent in estimating quantities of proved reserves and in projecting future rates of production and timing of development expenditures, including many factors beyond the control of the Company. The estimated future cash flows are determined based on crude oil and natural gas pricing parameters established by generally accepted accounting principles, adjusted for contract terms within contract periods, estimated production of proved crude oil and natural gas reserves, estimated future production and development costs of reserves and future retirement obligations (net of salvage), based on current economic conditions, and the estimated future income tax expense, based on year-end statutory tax rates (with consideration of future tax rates already legislated) to be incurred on pretax net cash flows less the tax basis of the properties involved. Such cash flows are then discounted using a

10%

rate.

The methodology and assumptions used in calculating the standardized measure are those required by generally accepted accounting principles and United States Securities and Exchange Commission reporting requirements. It is

not

intended to be representative of the fair market value of the Company's proved reserves. The valuation of revenues and costs does

not

necessarily reflect the amounts to be received or expended by the Company. In addition to the valuations used, numerous other factors are considered in evaluating known and prospective oil and gas reserves.

Average adjusted natural gas prices used in the estimation of proved reserves were

$2.17

and

$2.63

per MCF at

December 31, 2019

and

2018,

respectively, and the average adjusted crude oil prices used in the estimation of proved reserves were

$52.14

and

$62.12

per BBL at

December 31, 2019

and

2018,

respectively.