October 28, 2008
New Concept Energy Announces Acquisition of Two Carl E. Smith, Inc. Subsidiaries
DALLAS, Oct. 28 /PRNewswire-FirstCall/ -- New Concept Energy, Inc. recently announced the acquisition of two Carl E. Smith, Inc. subsidiaries: Carl E. Smith Petroleum, Inc. and Carl E. Smith Real Estate, Inc., and other privately-owned related assets. Immediately following the acquisition, all acquired entities and assets were merged into Carl E. Smith, Inc. and the company's name was changed to Mountaineer State Energy, Inc.
The assets acquired include 94 producing gas wells, 121 non-producing wells and related equipment. The assets also include mineral leases covering 20,000 acres located in Athens and Meigs counties in Ohio, as well as Calhoun, Jackson and Roane counties in West Virginia. New Concept Energy plans to utilize new drilling technologies to help maximize the future potential of these non-producing wells. To date, the estimated reserves and future net revenue for proved producing and undeveloped reserves have been valued by independent petroleum engineers using a 10% discount rate at approximately $22 million.
In addition to the mineral leases, New Concept Energy acquired a complex covering approximately 41 acres with 8,000 square feet of office and storage buildings, an adjacent 12-acre site with a 24-stall horse barn, machinery and equipment in excess of the needs of the gas operation and approximately $1 million in cash. The Company is evaluating the excess equipment and plans to sell any excess land and equipment not needed for current or planned future operations.
At the time of the acquisition the entities acquired were in bankruptcy in West Virginia. A component of the company's bankruptcy plan required that all existing debt to third parties of approximately $5 million be paid off. In addition, New Concept Energy, Inc. paid $7.3 million in cash to the shareholders. New Concept Energy has also paid or will pay approximately $1.6 million in fees and bankruptcy related costs.
According to Gene Bertcher, chief financial officer and executive vice president of the newly formed Mountaineer State Energy, Inc. and chief accounting officer of Prime Income Asset Management, "With the acquisition of Carl E. Smith Petroleum and Carl E. Smith Real Estate, we continue to diversify our real estate portfolio by venturing further into an energy sector that is still connected with land, but stretches the traditional definition of real estate beyond its usual boundaries."
New Concept Energy is a Dallas-based alternative energy resource company which has recently received assistance and other advice from Prime Income Asset Management, LLC (http://www.primeasset.com/), a Dallas-based real estate management and energy sector advisor, which develops and manages in excess of $4.5 billion in value of commercial real estate and energy related assets for various public and private entities. Prime also provides direct or sub-advisory services to both domestic and international entities engaged in real estate, gas, oil, electricity and communication operations. Entities advised or assisted by Prime include American Realty Investors, Inc.; Transcontinental Realty Investors, Inc.; and Income Opportunity Realty Investors, Inc. From time to time, Prime consults with Gene E. Phillips who serves in a senior advisory capacity with Prime. Other entities engaged in energy operations with which Prime is involved as an advisor or is otherwise assisting, including Balkan Energy and EurEnergy Resources Corporation.
New Concept Energy, Inc.
Web site: http://www.primeasset.com/