SUPPLEMENTARY FINANCIAL INFORMATION ON OIL AND NATURAL GAS EXPLORATION, DEVELOPMENT AND PRODUCTION ACTIVITIES (UNAUDITED)

12 Months Ended

Dec. 31, 2011

SUPPLEMENTARY FINANCIAL INFORMATION ON OIL AND NATURAL GAS EXPLORATION, DEVELOPMENT AND PRODUCTION ACTIVITIES (UNAUDITED)

SUPPLEMENTARY FINANCIAL INFORMATION ON OIL AND NATURAL GAS EXPLORATION, DEVELOPMENT AND PRODUCTION ACTIVITIES (UNAUDITED)

NOTE N - SUPPLEMENTARY FINANCIAL INFORMATION ON OIL AND NATURAL GAS EXPLORATION, DEVELOPMENT AND PRODUCTION ACTIVITIES (UNAUDITED)

The Company’s net ownership interests in estimated quantities of proved oil and natural gas reserves and changes in net proved reserves, all of which are located in the continental United States, are summarized below:

	2011
	Gas (MMCF)			Oil (MBBLS)
Proved developed and undeveloped reserves —
January 1, 2011		6,954			72
Purchase of oil and natural gas properties in place		-			-
Discoveries and extensions		-			37
Revisions		(4,227	)		-
Sales of oil and gas properties in place		-			-
Production		(176	)		(6	)
End of year		2,551			103
Proved developed reserves at beginning of year		1899			14
Proved developed reserves at end of year		1,105			57

	2010
	Gas (MMCF)			Oil (MBBLS)
Proved developed and undeveloped reserves —
January 1, 2010		7561			19
Purchase of oil and natural gas properties in place		-			-
Discoveries and extensions		-			55
Revisions		(415	)		-
Sales of oil and gas properties in place		-			-
Production		(192	)		(2	)
End of year		6,954			72
Proved developed reserves at beginning of year		2,867			19
Proved developed reserves at end of year		1,899			14

The following table presents the changes in our total proved undeveloped reserves.

	Gas			Oil
	(MMCF)			(MBBLS)
Proved undeveloped reserves as of December 31, 2009		4,694			-
Revaluation of undeveloped reserves		361			57
Proved undeveloped reserves as of December 31, 2010		5,055			57
Conversion to proved developed reserves		-			42
Revaluation of undeveloped reserves		(3,608	)		(52	)
Proved undeveloped reserves as of December 31, 2011		1,447			47

The following table reflects the capitalized costs relating to oil and gas producing activities.

	2011			2010
Property acquisition costs:
Proved properties	$	12,862		$	11,928
Unproved properties		-			-
Accumulated depreciation, depletion and amortization
and valuation allowance		(1,721	)		(703	)
Net capitalized costs	$	11,141		$	11,225

The following table reflects the costs incurred in oil and gas property acquisition, exploration and development activities.

	2011		2010
Property acquisition costs:
Proved properties	$	-	$	-
Unproved properties		-		-
Exploration costs		-		-
Development costs		934		219
Total cost incurred	$	934	$	-219

The following table reflects revenues and expenses directly associated with our oil and gas producing activities, including general and administrative expenses directly related to such producing activities.  They do not include any allocation of interest costs or general corporate overhead and, therefore, are not necessarily indicative of the contribution to net earnings of our oil and gas operations.  Income tax expense has been calculated by applying statutory income tax rates to oil and gas sales after deducting costs, including depreciation, depletion and amortization and after giving effect to permanent differences.

	2011			2010
Oil and gas sales	$	1,020 $			1,248
Production expenses		(1,095	)		(702	)
Exploration expenses		-
Depreciation, depletion and amortization		(335	)		(323	)
Impairment of oil and gas properties		(1,428	)		-
General and administrative expenses		(335	)		(390	)
Income tax benefit (expense)		-			-
Results of operations	$	(1,967	)	$	(167	)

The following table reflects the standardized measure of future net cash flows related to our proved reserves.

	2011			2010
Future oil and gas cash inflows	$	23,395		$	51,928
Future oil and gas operating expenses		(5,036	)		(12,265	)
Future development costs		(2,343	)		(15,123	)
Future tax expense		(370	)		(244	)
Future net cash flows		15,404			24,296
10% discount to reflect timing of cash flows		(4,505	)		(11.878	)
Standardized measure of discounted future net cash flows	$	11,141		$	12,418

The following table reflects the principal changes in the standardized measure of discounted future net cash flows attributable to our proved reserves.

	2011			2010
Beginning balance	$	12,418		$	11,372
Oil and gas sales, net of production costs		(75	)		(275	)
Purchase of reserves, net of future development costs		-			491
Net changes in prices and production costs		(1,202			569
Extensions and discoveries, net of future development costs-					261
Revisions of quantity estimates		-			-
Other changes		-			-
Ending balance	$	11,141		$	12,418