EARNINGS / Cotton Valley Announces Strong Results for First Half
Fiscal Year 1998
AMEX SYMBOL: KTN
FEBRUARY 24, 1998
DALLAS, TEXAS-- Cotton Valley Resources Corporation (AMEX - KTN)
announced financial results today for the six months ended
December 31, 1997.
The condensed consolidated net income after tax was $54,403 on
revenue of $1,157,985. This compares very favorably with a net
loss of $602,116 on revenue of $41,365 for the comparable period
in the previous fiscal year. The Company reported revenue of
$532,784 and net loss of $78,919 for the second quarter.
"The slight drop in revenue and slight increases in general and
administrative expenses from the first quarter to second quarter
were due mainly to the concentration of efforts to bring
additional equipment and facilities on-line at the Mustang
Companies," stated Gene Soltero, CEO and chairman of Cotton
Valley. "Of key importance to the Company's strategy, we
completed the organization of our Mustang oilfield services
operating subsidiaries including Mustang Oilfield Equipment
Company, Mustang Horizontal Services, Inc. and, most recently,
Mustang Well Servicing Company."
"As a result, our well workover program has begun and is
progressing rapidly. Currently, we are now operating our own
workover rigs in the Means (Queen) Unit purchased in the first
quarter and the Sears Ranch property which we purchased during the
second quarter. While it is premature to quantify, initial
development is resulting in increased production, revenues and
income from oil and gas."
"Finally," concluded Soltero, "we are quite pleased with the
progress of our Mustang operating companies. In one quarter,
these subsidiaries have put together technical personnel
equipment and are really moving forward with our development
programs. While that is our primary motivation, Cotton Valley is
also poised to benefit from increasing incremental revenue from
third-party equipment sales and oilfield servicing. For the
Company as a whole, we expect our third quarter and fourth
quarter of this fiscal year to show materially increasing gains
over the results of the first half. The condensed consolidated
statement of operations for the first half of FY 1998 and the
condensed consolidated balance sheet for December 31, 1997, are
attached."
Cotton Valley Resources Corporation concentrates on acquiring and
improving Texas and Oklahoma oil and gas properties using new
technologies and its own service companies. There are
approximately 17 million common shares outstanding.
/T/
COTTON VALLEY RESOURCES CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Expressed in U.S. Dollars)
(Unaudited)
Period from Period from
July 1, 1997 to July 1, 1996 to
December 31, 1997 December 31, 1996
----------------- -----------------
REVENUE:
Oil and gas sales $ 435,289 $ 41,365
Equipment sales 713,622
Interest Income 8,140
Other Income 934
----------- -----------
Total Revenue 1,157,985 41,365
----------- -----------
EXPENSES:
Oil and gas production 225,925
Equipment purchase and rework 259,573
General and administrative 515,944 903,319
Interest 27,388 35,162
Depreciation and Depletion 56,618
----------- -----------
Total Expenses 1,085,448 938,481
----------- -----------
PROFIT (LOSS) BEFORE INCOME TAXES 72,537 (897,116)
INCOME TAX BENEFIT (PROVISION) (18,134) 295,000
----------- -----------
NET PROFIT (LOSS) $ 54,403 $ (602,116)
=========== ===========
NET PROFIT (LOSS) PER SHARE $ 0.00 $ (0.05)
(Basic and Diluted) =========== ===========
WEIGHTED AVERAGE SHARES 15,457,000 13,390,524
=========== ===========
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
COTTON VALLEY RESOURCES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
December 31, 1997
(Unaudited)
ASSETS
------
CURRENT ASSETS: (U.S. Dollars)
Cash $ 405,430
Accounts receivable 542,425
Prepaid expenses 94,138
Cash deposits 329,750
------------
Total Current Assets 1,371,743
RESTRICTED CASH 2,570,280
OIL AND GAS PROPERTIES 20,120,591
OILFIELD EQUIPMENT INVENTORY 2,614,069
OFFICE EQUIPMENT 71,742
------------
Total Assets $ 26,748,425
============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES: (U.S. Dollars)
Accounts payable and accrued liabilities $ 1,172,548
Current portion of long-term debt $ 150,250
------------
Total Current Liabilities 1,322,798
LONG TERM DEBT 4,564,710
DEFERRED INCOME TAXES 2,486,812
STOCKHOLDERS' EQUITY:
Preferred Stock, no par value,
authorized-unlimited, none issued
Common Stock, no par value,
authorized-unlimited, 17,283,248 issued 21,513,857
Deficit accumulated in development stage (2,769,155)
Treasury Stock (270,000 shares) (425,000)
Accumulated Earnings 54,403
------------
Total Stockholders' Equity 18,374,105
------------
Total Liabilities and Stockholders' Equity $ 26,748,425
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