Stock Prices Down for 5 State-Based Energy Firms

Article excerpt

On the flip side of fantastic results in stock prices, and other data, for several Oklahoma-based oil and gas firms in the past couple of years, there are some not-so-good stories, too.

Still, of about 25 oil and gas firms in Oklahoma with public stock, only five have shown a decline in stock prices over the past two years. Not all of the declines are due to poor profit results, either. The five, in order of the largest stock price drop in dollars, are: Red Eagle Resources Corp., Oklahoma City, _ stock prices have dropped by nearly half that of mid-1992. Year-ago prices were sevenfold that of the previous year.

On June 24, Red Eagle stock finished at $3.875 a share, down $3.125, or 45 percent, than $7 a year before. The 1992 price was up from $1 on June 24, 1991.

While the most recent stock activity wasn't as good as the previous year, this firm appears to have a lot going for it. It is an independent aiming for a venture into the international arena, and one of only a handful of companies still putting together successful public drilling partnerships.

In late 1991, Red Eagle, headed by Harry C. Johnson, signed a "memorandum of understanding" with the Republic of Yemen for a drilling concession. There were great visions foreseen, and a production sharing agreement was signed in the first half of 1992. But the Yemen leader who approved the agreement was deposed in November 1992, and the agreement was canceled by replacement Yemen government figures earlier this year.

While negotiations were ongoing in Yemen, Red Eagle laid off 275 employees _ three-quarters of the company's workforce _ and dismantled its contract drilling and oil field services subsidiaries _ United Drilling Co., which was bought in 1989, and Talon Trucking Co., which was formed by Red Eagle in 1980. In addition, the company sold $4 million worth of oil and gas properties in 1992, which generated a pretax gain of $2.4 million. Thus, the company's expenses surely have dropped dramatically.

Now, aside from being managing partner in various drilling partnerships, Red Eagle's chief subsidiary is Cimarron Operating Co. Most activities are concentrated in northwest Oklahoma.

Still, Red Eagle posted profits of $883,000 in 1992, vs. a net loss of $493,000 in 1991. 1991 results compare with earnings of $2 million in 1990. Assets at year-end 1992 totaled $23.7 million, down 25 percent from $31.6 million at year-end 1991. Long-term debt stood at $1.3 million.

Johnson said in February that the Yemen deal may be reopened after elections in that Middle Eastern country. There has been no news of late, though. Bonray Drilling Corp., Oklahoma City, _ stock prices have fallen about 10 percent from mid-1992. Year-ago prices were down about three-quarters from a year before.

On June 24, Bonray Drilling stock closed at $9 a share, down $1 or 10 percent from $10 a year prior. The 1992 price was $3.50 or 74 percent lower than $13.50 on June 24, 1991.

This contract drilling company was spun off in April 1985 to stockholders of Anta Corp., which owned 80 percent of the company. It was formed in 1957; primary stockholders are Raymond Hefner Jr. and family.

Although losses have been reported by Bonray Drilling for eight of the past 12 years, the company has managed to retain most of its rig fleet through the post-bust years.

While a majority-owned subsidiary of Anta from 1981 through 1984, profits were posted until 1984 when a writedown in the value of drilling rigs caused a $9.7 million loss. The company's biggest profits since 1981 _ the peak of the oil and gas drilling boom _ was $8.3 million in 1982. 1982 was the year that sparked the downturn in the oil and gas industry, particularly causing the devaluation of oil field equipment and producing properties. It was earmarked by the collapse of Penn Square Bank in Oklahoma City. …