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Microcap & Penny Stocks : The Microcap Kitchen: Stocks 5¢ to $5 -- Ignore unavailable to you. Want to Upgrade?

To: Scooter who wrote (20120)	5/17/2004 7:32:47 AM
From: GARY P GROBBEL	Read Replies (3) \| Respond to of 120405

TREK 1.60...here is a domestic oil and gas producer that is making a considerable amount of money...6mo results are rev $4.1m vs $4m and net inc for 6mo ended 3-31-04 $873,000 vs $603,000 or $.25 per sh vs $.18 per sh. 3.5m shares outstanding. Rev for the 2nd qtr was down slightly only due to lifting schedules...I have had TREK out here many times...Sooner or later.....: Overview We are an independent energy company engaged in oil and natural gas exploitation, acquisition and exploration activities in conventional producing areas of the United States. Our reserves and production operations are primarily concentrated in Texas and Oklahoma. Our business strategy emphasizes refurbishing and improving the production potential of properties that already produce oil and natural gas, along with exploitation through development of non-producing and undeveloped reserves on existing properties. We focus on maintaining a balanced portfolio of lower-risk reserves to provide a cash flow foundation for our exploitation, acquisition and exploration activities. We generate revenues by the sale of the oil and natural gas that we produce from our reserves. Our results of operations are significantly impacted by the prices of oil and natural gas, which are volatile. The prices we receive for our oil vary from New York Mercantile Exchange ("NYMEX") prices based on the location and quality of the crude oil. The prices we receive for our natural gas are based on Henry Hub prices reduced by transportation expenses, regional basis differentials and processing fees. Our primary expenses consist of lease operating expenses, general and administrative expenses and depreciation, depletion and amortization expenses. Lease operating expenses include pumpers' salaries, utilities, maintenance, workovers, production taxes, transportation fees and other costs necessary to operate our producing properties. General and administrative expenses consist primarily of salaries and related benefits, office rent, accounting and legal fees, consultants, systems costs and other administrative costs incurred in our Dallas, Texas headquarters. Depreciation, depletion and amortization expenses relate to the realization of the capitalized costs of our oil and natural gas properties as each unit of production is produced. During the three months ended March 31, 2004, we continued to experience a favorable price environment for our production. Cash flow from operations served as our primary source of liquidity during this period, and we were able to make additional principal repayments on our credit facility. For the remainder of fiscal 2004, we plan to evaluate additional drilling and expansion activities to the extent that we have sufficient cash flow to do so. Our Results of Operations Comparison of the Three Months Ended March 31, 2004 and 2003 Net income for the three months ending March 31, 2004 was $504,320, or $0.10 per diluted share, compared to a net income of $419,749 or $0.08 per diluted share for the same period of the prior year. Our results of operations for the second quarter of fiscal 2004 were favorably impacted by the absence of derivative losses, higher oil prices, lower lease operating expenses and lower interest expense. Offsetting those effects were lower natural gas prices, lower oil and natural gas volumes, higher general and administrative expenses and higher depletion expense. Revenues Oil and natural gas sales were $2.1 million during the three months ended March 31, 2004, compared to $2.4 million for the comparable period in 2003. This decrease was mainly due to lower oil and natural gas volumes, and slightly lower gas prices, offset in part by increased oil prices. Average quarterly prices were $34.44 per barrel ("Bbl") of oil and $5.52 per thousand cubic feet ("Mcf") of natural gas for this three-month period in fiscal 2004, compared to $33.23 per Bbl and $5.79 per Mcf during the corresponding period in fiscal 2003. We sold approximately 34.4 thousand barrels of oil ("MBbls") during the three months ended March 31, 2004, a slight decrease from the 35.0 MBbls of oil we sold for the same period in 2003. Natural gas sales for these periods were 168 million cubic feet ("MMcf") in 2004 and 196 MMcf in 2003. The decrease in oil production was due to the natural production decline of our oil reserves. The decrease in natural gas production was primarily a result of off-line wells in the AWP field of south Texas, as well as the natural decline of several of the wells in King and Cottle Counties in west Texas. The AWP wells have now been repaired and are expected to show improvement in the third quarter of fiscal 2004. During the three months ended March 31, 2004, our production was 55% oil and 45% natural gas on a barrel of oil equivalent basis.