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Show Tiri ' mnatBUn tfla 1 s ( t ; 1 The National Enterprise , ! Nine 27, 7976 i i i t i i 1 ; i . ! i. I 1 5 1 j ; ' i & Management Riddled by Shareholders Bronco Official Reveals Plans to Denver Group continued from page 3 well in New Mexico and 1.25 net gas wells in Colorado. .A shareholder said that in view of the firms successful drilling record, returns might accrue to shareholders more Cranor, because it didnt want to borrow in times of high interest rates. Debt financing currently is being considered by the firm, if it needs to raise money for drilling prospects. He said the firm had recently quickly if the company step- acquired 800 acres of leases close by producing wells. ped up its drilling program. But Cranor said that one of During the past fiscal year, the reasons the company has the company reported net slowed its drilling is that, if it income of $562,093, or 54 can contract drilling rigs dur- cents a share, on revenues of ing a down period, the firm $1.29 million, compared with can save $1.61 a foot in net income of $554,877, or 53 cents a share, on revenues of drilling costs. The company has between $1.24 million in the previous 20 and 25 reasonable loca- fiscal year. But,' according to tions on the Jicarilla Apache Cranor, the figures dont tell Indian reservation, he said, the whole story. Financial Accounting Board but, under the terms of the agreement with the tribe, it rules, w'hich established new can drill only five wells this standards for reporting by oil year. Terms will be negotiated and gas producing companies, again for next year, he added, had the effect of reducing the but he anticipates the com- apparent net income by about pany will be able to drill fewer one third, Cranor said. wells on the property next And, he added, part of the firms net income in the 1975 year. fiscal year had to be diverted for the completion of a gas Money gathering system and procesAnother reason the firm sing plant owned by Mandoesnt drill more wells, nings subsidiary, lone Gas Cranor said, is money. The Processing Co. at the Singlecost of development for the tree Field in northeastern companys San Juan Basin Colorado. During the 29 days the plant properties in New Mexico are estimated at $7 million, he operated during the 1975 fiscal year,' he said, it contriexplained. The company currently has buted $25,000 in net income to no outstanding debt, said the company. It added to the A Gram (HBOS) firms and DENVER-Bron- co Oil and nearly tripled gas production by allowing the hookup of Gas Co. of Casper, Wyo. (OTC some of the companys wells .15, .18), although a relatively new public firm, expects to to pipeline systems. In the first fiscal quarter of show profits within a year. Richard Chuman, company 1976, Cranor said, net income rose by more than 50 percent vice president, addressing a group of investors and stockand revenues by 92 percent. During the quarter, the brokers in Denver, said the company reported net income company plans to maintain a $219,653, or 21 cents a share, conservative stance in the on revenues of $509,892, industry. As an example, he still has compared with net income of said, the company $133,587, or 13 cents a share, $360,000 in cash from the on revenues of $308,410 dur- public offering that netted the ing the same period the year firm $460,000 in March 1975. During the first six months before. For the quarters, Cranor of public operations, he added said, the gas processing plant the company showed a net loss increased revenues by some of $19,480. Like many small oil and gas $79,000 from the sale of liquids removed from natural companies the company operates by acquiring oil and gas gas and by about $74,000 more from the sale of residue leases and working up an attractive drilling prospect. It gas. farms out the prospects then The second quarter, Cranor said, should be significantly to larger development firms who do the drilling for a lions higher than the second quarshare of the production, and ter of the 1975 fiscal year. also take the lion's share of the risks. of Bill Bronco makes its profits Cranor also described the ill from overriding royalty intereffect on the company if a bill ests or a small carried interest now before Congress, spon- The only money risked by the sored by U.S. Sen. Edward M. Kennedy, D- - Massachusetts, is passed. That bill, he said, would require the total capitalization of tangible and intangible continued from page 3 drilling costs, and that provifrom major corporations to the sion would dry up much of the American Economic Foundathird party financing for Mantion which totaled 65 percent oil for and the and ning gas of that organization's budget in 1960 now total only 1 industry. The bill would repeal the percent. This is partially attriremaining percentage deple- buted to the Foundations tion allowance for oil and gas, uncompromisingly he said, and it w'ould repeal position in educathe maximum 50 percent tax tion programs in an era when on earned income. many of those who control He asked shareholders to corporate contributions seem contact their representatives to prefer abasement of the in the Congress to oppose the system rather than defense of bill. He also urged them to ask it. A third reason for failure to legislators to support the deregulation of the price of advocate economic freedom is natural gas. that many businesses rely A shareholder asked if the upon the government to protect company had received any them from competition and, offers for acquisition by larger therefore, cannot endorse free firms. Cranor said that the enterprise without endangercompany had been approaching their own livelihood. coned but directors weren't These companies secure their offer time. at this sidering an profits largely by utilizing Shareholders, voting by political means such as goverthe four nment-granted proxy, monopolies incumbent directors and and rate regulation rather approved the selection of than the economic means of Peat, Marwick, Mitchell and competition. In doing so, they Co. as auditors. are embodiments of Albert Jay Nocks first law of human oil production -- Ill-Effe- in investigating the prospect and assembling the package. Kansas Project The companys best immediate prospect, Chuman said, is three producing leases on 240 acres in Neosho County, Kan. Bronco has an arrangement with Drilex Oil and Gas Co. of Denver for development of the prospect. He said that 10 wells in a program have been drilled so far in the Blaine lease prospect. From that property, he added, the company expects income of $12,000 to $13,000 a month within a year. The 36-we- ll companys operating costs now run about $5,000 a month so the remainder should provide a nice profit. The wells on the property are inexpensive, Chuman said with the top of the reservoir lying at about 500 feet and a net pay zone of 8 to 10 feet. Before the program started, he said, average production was between 18 and 20 barrels continued on page 10 A Change of Face re-elect- ed Our dramatic growth the past two years is the result of two events. In 1974, we acquired Dixie Insulation of Houston, Texas, and changed our business to insulation of oil refining and storage facilities. In 1975, we broadened our services through insulation of liquid ammonia fertilizer storage tanks and plants. Our experience in insulating ammonia facilities places us in a favorable position to take advantage of the increased world production of liquid ammonia. At the same time, we continue to assist the petroleum industry in its effort to increase oil and gas production. We have dedicated ourselves to making DiEnco the foremost petroleum and fertilizer facility insulation company in the nation. company is the money inveted RESEARCH old and inactive securities for $10 each. Send copies to AD Unversaw 825 10th Avenue, Vero Beach, Fla, 32960 Man behavior, which is: tends to satisfy his needs and desires with the least possible exertion. Executives in highly regulated industries such as public utilities, airlines, and trucking, and highly subsidized and protected industries, such as aviation and shipping, tend to defend regulation whenever it is threatened by those who would displace it with competition. For instance, when the Fed- eral Trade Commission prices, the major airlines were quick to uphold these anticom- petitive regulations. A rather common rationale for regulation was expressed by the chairman of Americas largest utility when he said in a recent The times are too speech: dangerous and the world too complex to entrust the future entirely to the random inter- (i.e. the play of free market). He went on to recommend that the governments role be to establish national goals and hold business strictly to account for performance in meeting the goals. This type of public position is clearly inimical to a strong defense of economic self-intere- st freedom. Obviously, those of us in business who believe in the benefits of economic freedom and want to see the tide of government inverventionism halted or reversed have a tough job ahead of us. We must first convince large numbers of potentially sympathetic colleagues that the growing public opposition to business is a very serius threat to our market economy. Second, we need to prove that this opposition is not irresistible and irreversible; that, in fact, peoples attitudes can be positively influenced by economic education. Finally, we should publicize examples of business programs that communicate economic information to employees and stockholders and provide financial support to educational. institutions and foundations which conattacked the fare regulations promote of the Civil Aeronautics Board cepts. because they tend to raise lieprinled by permission The free-enterpri- SALT LAKE HOUSTON se Allernnlive Mug., Apr. 19 76 |