EDGAR 10-K Filing

Company CIK: 352955
Filing Year: 2021
Filename: 352955_10-K_2021_0001437749-21-007143.json

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ITEM 1. BUSINESS
ITEM 1.
BUSINESS
Business Description
CKX Lands, Inc., a Louisiana corporation, began operations in 1930 under the name Calcasieu Real Estate & Oil Co., Inc. It was originally organized as a spin-off by a bank operating in southwest Louisiana. The purpose of the spin-off was to form an entity to hold non-producing mineral interests which regulatory authorities required the bank to charge off. Over the years, as some of the mineral interests began producing, the Company used part of the proceeds to acquire land. In 1990, the Company made its largest acquisition when it was one of four purchasers who bought a fifty percent undivided interest in approximately 35,575 acres in southwest Louisiana.
Today the Company’s income is derived from mineral royalties, timber sales and surface payments from its lands. CKX receives income from royalty interests and mineral leases related to oil and gas production, timber sales, and surface rents. Although CKX is active in the management of its land and planting and harvesting its timber, CKX is passive in the production of income from oil and gas production in that CKX does not explore for oil and gas or operate wells. These oil and gas activities are performed by unrelated third parties.
CKX leases its property to oil and gas operators and collects income through its land ownership in the form of oil and gas royalties and lease rentals and geophysical revenues. The Company’s oil and gas income fluctuates as new oil and gas production is discovered on Company land and then ultimately depletes or becomes commercially uneconomical to produce. The volatility in the daily commodity pricing of a barrel of oil or a thousand cubic feet, or “MCF,” of gas will also cause fluctuations in the Company’s oil and gas income.
CKX has small royalty interests in 20 different producing oil and gas fields. The size of each royalty interest is determined by the Company’s net ownership in the acreage unit for the well. CKX’s royalty interests range from 0.0045% for the smallest to 7.62% for the largest. As the Company does not own or operate the wells, it does not have access to any reserve information. Eventually, the oil and gas reserves under the Company’s current land holdings will be depleted.
Timber income is derived from sales of timber on Company lands. The timber income will fluctuate depending on our ability to secure stumpage agreements in the regional markets, timber stand age, and/or stumpage commodity prices. Timber is a renewable resource that the Company actively manages.
Surface income is earned from various recurring and non-recurring sources. Recurring surface income is earned from lease arrangements for farming, recreational and commercial uses. Non-recurring surface income can include such activities as pipeline right of ways, and temporary worksite rentals.
In managing its lands, the Company relies on and has established relationships with real estate, forestry, environmental and agriculture consultants as well as attorneys with legal expertise in general corporate matters, real estate, and minerals.
The Company actively searches for additional real estate for purchase in Louisiana with a focus on southwest Louisiana and on timberland and agricultural land. When evaluating unimproved real estate for purchase, the Company will consider numerous characteristics including but not limited to, timber fitness, agriculture fitness, future development opportunities and/or mineral potential. When evaluating improved real estate for purchase, the Company will consider characteristics including, but not limited to, geographic location, quality of existing revenue streams, and/or quality of the improvements.
CKX does not perform or cause to be performed oil and gas producing activities inasmuch as: (1) we do not search for crude oil or natural gas in their natural states; (2) we do not acquire property for the purpose of exploration or the removing of oil and gas; and (3) we are not involved in construction, drilling and/or production activities necessary to retrieve oil and gas.
The Company does not spend any money on research and development.
Because of the nature of the Company’s revenue streams, the effect of competition on the Company and its results of operations is not material.
In the first quarter of 2019, the Company began developing several ranchette-style subdivisions on certain of its lands in Calcasieu Parish and Beauregard Parish, Louisiana, using existing road rights of way. The Company actively markets for sale the subdivision lots, which consist of more than three acres each. The Company is working to identify additional undeveloped acres that it owns in Southwest Louisiana that would likewise be suitable for residential subdivisions.
Employees
The Company has one employee, who is part-time. The Company is not subject to union contracts nor does the Company have any medical benefit, pension, profit sharing, option or deferred compensation programs. The Company expects to seek the approval of its shareholders at its 2021 annual meeting of shareholders for a stock incentive plan to be adopted, if approved, pursuant to its previously announced Executive Employment Agreement effective July 15, 2020 with its President and Treasurer.
Customers
The Company’s customers are those who have mineral leases on Company lands, purchase timber in competitive bids or execute surface leases for farming, hunting, right of ways or other purposes. During 2020, the Company received approximately 48.64% of its total revenues from the following customers:
Customer
Revenue Type
% of Total Revenue
EOG Resources, Inc.
Oil & Gas
13.08 %
Fortune Forest Products
Timber
10.03 %
Enable
Right of Way
7.06 %
Texegy Operating Company LLC
Oil & Gas
6.77 %
Walsh Timber Company, L.L.C.
Timber
6.00 %
Stream Wetland Services LLC
Surface
5.70 %
C6 Operating LLC
Oil & Gas
4.92 %
Bennett Timber Co., LLC
Timber
4.75 %
Loss of cash receipts from any of these customers or revenue streams would have a material adverse effect on the Company.
Environmental and Other Governmental Regulations
The Company does not need government approval of its principal products or services except that the State of Louisiana must permit the size and location of all oil and gas producing units. The operator of the oil and gas units is responsible for this permitting process.
The operators of the wells are responsible for complying with environmental and other governmental regulations. However, should an operator abandon a well located on Company land without following prescribed procedures, the landowners could possibly be held responsible. The Company does not believe this would have a material effect on its financial condition.

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ITEM 1A. RISK FACTORS
ITEM 1A.
RISK FACTORS
Significant Risk Factors
In addition to the other information set forth in this report, you should carefully consider the following risks, which could materially affect our business, financial condition, or results of operations in future periods. The risks described below are not the only risks facing our Company. Additional risks not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, or results of operations in future periods.
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The COVID-19 pandemic created a global health crisis and an unprecedented suspension of commercial activity around the world, including in Louisiana. The effect of the pandemic is constantly evolving, and its future consequences are highly uncertain, so we cannot predict how it may affect our future financial condition and results of operations.
The novel coronavirus, which emerged in China in late 2019, has caused a deadly pandemic that has spread to North America, including Louisiana. Government authorities around the world, including in the State of Louisiana, implemented “stay-at-home” and other social distancing orders that required many businesses, including some of our business partners and customers like timber mills who buy our timber, to close. Although we have been able to continue operating, we cannot predict with any certainty how the pandemic could impact our operations in the future. Among other possible effects, the pandemic could materially and adversely affect us in the following ways:
●
We have only one employee, who is our President and Treasurer. Although our Board of Directors has an emergency management succession plan in case he becomes unavailable due to illness or death from COVID-19, the transition in management to his interim successor may be impeded by the lack of other employees. In addition, conditions created by the pandemic may make it more difficult for our Board of Directors to attract and retain a permanent replacement for his position. Likewise, if a significant number of our nine directors were to be incapacitated by the virus, the continuity of our operations might be materially and adversely affected.
●
We depend on third parties for the generation of revenues, such as exploration and production companies, land management companies, surface lessees and timber mills. If any of these businesses limit or suspend their operations due to the pandemic or its economic effects, our operations could be materially, adversely affected. We may be unable to determine whether declines in income-producing activities on our lands are the result of the pandemic or other conditions.
●
A recession in Louisiana where our lands are located may depress the values of our lands and falling commodity prices could continue to reduce certain of our revenue streams. For example, our oil and gas revenues for the year ended December 31, 2020 were lower than for fiscal 2019 partially due to declines in demand and prices for oil and gas, resulting from the contraction of global economic activity caused by the pandemic.
The direct and indirect effects of the pandemic are extremely widespread and constantly evolving. In addition, its future effects are highly uncertain. It is possible that the pandemic could affect our business in the future in ways that we do not or cannot now anticipate.
A significant portion of our revenues is derived from oil and gas activities on our lands. We rely on third parties to conduct that activity.
We rely on third parties to conduct oil and gas exploration and production activity on our lands. If we are not successful in attracting third parties to conduct that activity or if there is any significant interruption in existing activity on our lands, our results of operations, financial condition and cash flows, would be adversely affected. Additionally, our ability to generate future earnings depends on third parties finding new production on our land to replace present production as it is depleted. Oil and gas prices, as well as new technology, will affect the possibility of replacing present production.
Our revenues could be negatively impacted by declines in commodity prices for oil, natural gas, and timber, among others.
We earn a significant portion of our operating income from the sale of commodities produced from our lands: oil and gas, and timber. Fluctuations in the prices for these commodities will directly impact our cash flow, net income and financial condition.
Additionally, because certain of our lands are leased to farmers, declines in the commodity prices for the crops they grow may impact their ability to make lease payments, and therefore could adversely affect our cash flow, results of operations and financial condition.
Our operations and properties could be adversely affected by hurricanes or other adverse weather events, natural disasters, or other significant disruptions.
Our properties are located principally in southwest Louisiana, where major hurricanes and flooding have occurred. Depending on where any hurricane makes landfall or flooding occurs, our properties could be significantly damaged, and income-producing activities on our properties could be disrupted. In fact, approximately a percentage of our standing timber was damaged, and oil and gas production on our lands was temporarily interrupted due to Hurricane Laura in August 2020. In addition, the occurrence and frequency of hurricanes and flooding in Louisiana could also negatively impact demand for the use of our real estate assets because of perceptions of hurricane and flooding risks. In addition to hurricanes, the occurrence of other natural disasters and climate conditions in Louisiana, such as tornadoes, fires, unusually heavy or prolonged rain, droughts, and heat waves, could have an adverse effect on our ability to use our properties or realize income from our properties.
We have approximately 10,495 net acres of timberland in various stages of growth or age classes. A typical pine timber stand will be harvested after 30 to 35 years of growth with some thinning occurring during this time. A hardwood stand will be harvested after 45 to 50 years of growth. A natural disaster can have a material adverse effect on timber growth, reducing its value. In addition to hurricanes, natural disasters that could affect our timber lands include tornados, high winds, heavy rains and flooding, and/or fire caused by lightning or other sources.
If any of the events described above occurs, we may experience disruptions to our operations and damage to our properties, which could have an adverse effect on our business, our financial condition, our results of operations, and our cash flows.
Our land holdings are concentrated in southwest Louisiana, and we therefore may suffer economic harm because of adverse conditions in that region.
Our land holdings are located principally in southwest Louisiana. Due to the concentration of our properties in this area, our performance is dependent on local economic conditions. This area has experienced periods of economic decline in the past and may do so in the future.
We rely on third party managers for day-to-day property management of certain of our properties.
We rely on local third-party managers for the day-to-day management of our timberland properties. The cash flows from our timberland properties may be adversely affected if the property manager fails to provide quality services. These third-party managers may fail to manage our properties effectively or in accordance with the terms of our agreement with them. If any of these events occur, we could incur losses or face liabilities from the loss or injury to our property or to persons at our properties. In addition, disputes may arise between us and third-party managers, and we may incur significant expenses to resolve those disputes or terminate the relevant agreement with the third parties and locate and engage competent and cost-effective alternative service providers to manage the relevant properties. Additionally, third party managers may manage and own other properties that may compete with our properties, which may result in conflicts of interest and decisions regarding the operation of our properties that are not in our best interests.
Potential environmental liabilities could result in substantial costs to us or cause our land to lose value.
Under federal, state, and local environmental laws, ordinances and regulations, we may be required to investigate and clean up the effects of releases of hazardous substances or petroleum products on our properties because of current or past ownership or operation of oil and gas activities on our lands. If previously unidentified environmental problems arise, we may have to make substantial payments, which could adversely affect our cash flow. As an owner of properties, we may have to pay for property damage and for investigation and cleanup costs incurred in connection with a contamination. The law typically imposes cleanup responsibility and liability regardless of whether an owner knew of or caused the contamination. Changes in environmental regulations or the discovery of environmental damage on our lands may cause the value of our lands to decline, may impact the development potential of our undeveloped land or could increase operating costs due to the cost of complying with new regulations.
Our overall business is subject to risks associated with the real estate industry.
We are subject to all risks related to investment in real estate, many of which relate to the general lack of liquidity of real estate investments, including, but not limited to:
●
changes in general or local economic conditions where our properties are located;
●
lack of availability of financing at favorable rates (or at all) that may render the purchase, sale or refinancing of a property more difficult or unattractive;
●
changes in real estate and zoning laws; and
●
increases in real estate taxes and insurance costs.
Our common stock may not have an active, liquid, and orderly trading market, and our stock price may be volatile.
Our common stock may not have an active, liquid, and orderly trading market due to the relatively low number of shares that are available for trading. Active, liquid, and orderly trading markets usually result in less price volatility and more efficiency in carrying out purchase and sale orders. The trading volume in our common stock may fluctuate and cause price variations to occur.
The market price of our common stock could also vary significantly because of a number of other factors, some of which are beyond our control, including the following:
●
actual or anticipated variations in our quarterly operating results or dividends;
●
changes in our results of operations or cash flows;
●
publication of research reports about us or the real estate industry;
●
changes in market valuations of similar companies;
●
speculation in the press or investment community;
●
the realization of any of the other risk factors presented in this annual report;
●
the extent of investor interest in our common stock;
●
our underlying asset value;
●
investor confidence in the stock and bond markets, generally;
●
changes in tax laws; and
●
general market and economic conditions.
If the per share trading price of our common stock declines significantly, stockholders may be unable to resell their shares at or above the price paid for them. We cannot assure stockholders that the per share trading price of our common stock will not fluctuate or decline significantly in the future.
In the past, securities class action litigation has often been instituted against companies following periods of volatility in the price of their common stock. This type of litigation could result in substantial costs and divert our management’s attention and resources, which could have an adverse effect on our financial condition, results of operations, cash flows and our ability to pay dividends on, and the per share trading price of, our common stock.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 1B.
UNRESOLVED STAFF COMMENTS
Not applicable.

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ITEM 2. PROPERTIES
ITEM 2.
PROPERTIES
The Company owns approximately 13,941 net acres all located in Louisiana. The approximate gross and net acres located in each Louisiana parish are presented below.
Parish
Gross Acres
Net Acres
Segment(s)
Calcasieu
16,042
4,801
Oil and gas, timber and surface
Jefferson Davis
9,737
2,326
Oil and gas, timber and surface
Allen
8,148
2,483
Oil and gas, timber and surface
Beauregard
7,345
3,576
Oil and gas, timber and surface
Cameron
1,248
Oil and gas, surface
LaFourche
Oil and gas
Natchitoches
Timber
Vermilion
Oil and gas, surface
Rapides
Timber
St. Landry
Timber
Sabine
Timber
Total
43,399
13,941
Included in the 13,941 net acres presented above, are approximately 7,509 acres owned 100% by the Company. The Louisiana parish location for these 100% owned lands is presented below:
Parish
Acres
Segment(s)
Beauregard
2,742
Oil and gas, timber and surface
Calcasieu
2,421
Oil and gas, timber and surface
Allen
1,121
Oil and gas, timber and surface
Jefferson Davis
Timber and surface
Natchitoches
Timber and surface
Cameron
None
Rapides
Timber
Sabine
Timber
Total
7,509
For management purposes, the Company classifies the 13,941 net acres owned by CKX as follows: 10,495 net acres are timber lands, 2,357 net acres are agriculture lands, 895 net acres are marsh lands, and 194 net acres are located in metropolitan areas.

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ITEM 3. LEGAL PROCEEDINGS
ITEM 3.
LEGAL PROCEEDINGS
From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, an d an adverse result in these or other matters may arise from time to time that may harm our business. The Company was not involved in any legal proceedings as of December 31, 2020.

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ITEM 4. MINE SAFETY DISCLOSURE
ITEM 4.
MINE SAFETY DISCLOSURES
Not applicable.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
ITEM 5.
MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
The Company’s common stock trades on the NYSE American under the trading symbol CKX.
Common Stock
As of March 24, 2021, there were 1,942,495 shares outstanding. There were no sales of unregistered securities of the Company and no purchases of CKX equity securities by the Company during 2020.
Holders
On March 24, 2021, we had 452 stockholders of record.
Dividend Policy
The Company does not currently pay dividends on a regular basis. In determining whether to declare a dividend, the Board of Directors takes into account the Company’s prior fiscal year’s cash flows from operations and the current economic conditions among other information deemed relevant.
Pursuant to a dividend reversion clause in the Company’s Articles of Incorporation, dividends not claimed within one year after a dividend becomes payable will expire and revert in full ownership to the Company and the Company’s obligation to pay such dividend will cease. During 2020 and 2019, the Company received no dividend reversions.

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ITEM 6. SELECTED FINANCIAL DATA
ITEM 6.
SELECTED FINANCIAL DATA
Disclosure in response to this item is not required of a smaller reporting company.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the notes to those financial statements appearing elsewhere in this Report.
Overview
CKX Lands, Inc., a Louisiana corporation, began operations in 1930 under the name Calcasieu Real Estate & Oil Co., Inc. It was originally organized as a spin-off by a bank operating in southwest Louisiana. The purpose of the spin-off was to form an entity to hold non-producing mineral interests which regulatory authorities required the bank to charge off. Over the years, as some of the mineral interests began producing, the Company used part of the proceeds to acquire land. In 1990, the Company made its largest acquisition when it was one of four purchasers who bought a fifty percent undivided interest in approximately 35,575 acres in southwest Louisiana.
Today the Company’s income is derived from mineral royalties, timber sales and surface payments from its lands. CKX receives income from royalty interests and mineral leases related to oil and gas production, timber sales, and surface rents. Although CKX is active in the management of its land and planting and harvesting its timber, CKX is passive in the production of income from oil and gas production in that CKX does not explore for oil and gas or operate wells. These oil and gas activities are performed by unrelated third parties.
CKX leases its property to oil and gas operators and collects income through its land ownership in the form of oil and gas royalties and lease rentals and geophysical revenues. The Company’s oil and gas income fluctuates as new oil and gas production is discovered on Company land and then ultimately depletes or becomes commercially uneconomical to produce. The volatility in the daily commodity pricing of a barrel of oil or a thousand cubic feet, or “MCF,” of gas will also cause fluctuations in the Company’s oil and gas income.
CKX has small royalty interests in 20 different producing oil and gas fields. The size of each royalty interest is determined by the Company’s net ownership in the acreage unit for the well. CKX’s royalty interests range from 0.0045% for the smallest to 7.62% for the largest. As the Company does not own or operate the wells, it does not have access to any reserve information. Eventually, the oil and gas reserves under the Company’s current land holdings will be depleted.
Timber income is derived from sales of timber on Company lands. The timber income will fluctuate depending on our ability to secure stumpage agreements in the regional markets, timber stand age, and/or stumpage commodity prices. Timber is a renewable resource that the Company actively manages.
Surface income is earned from various recurring and non-recurring sources. Recurring surface income is earned from lease arrangements for farming, recreational and commercial uses. Non-recurring surface income can include such activities as pipeline right of ways, and temporary worksite rentals.
In managing its lands, the Company relies on and has established relationships with real estate, forestry, environmental and agriculture consultants as well as attorneys with legal expertise in general corporate matters, real estate, and minerals.
The Company actively searches for additional real estate for purchase in Louisiana with a focus on southwest Louisiana and on timberland and agricultural land. When evaluating unimproved real estate for purchase, the Company will consider numerous characteristics including but not limited to, timber fitness, agriculture fitness, future development opportunities and/or mineral potential. When evaluating improved real estate for purchase, the Company will consider characteristics including, but not limited to, geographic location, quality of existing revenue streams, and/or quality of the improvements.
Recent Developments
In the first quarter of 2019, the Company began developing several ranchette-style subdivisions on certain of its lands in Calcasieu and Beauregard Parishes using existing road rights of way. The Company has identified demand in those areas for ranchette-style lots, which consist of more than three acres each, and the Board of Directors and management believe this project will allow the Company to realize a return on its investment in the applicable lands after payment of expenses. The Company has completed and recorded plats for two subdivisions and obtained approval to complete a third subdivision during the first quarter of 2021. The three subdivisions are located on approximately 415 acres in Calcasieu Parish and approximately 160 acres in Beauregard Parish, and contain an aggregate of 39 lots. As of December 31, 2020, the Company has closed on the sale of six of the 39 lots. As of the date of this report the Company sold an additional seven lots, has five sales pending, and it is actively marketing the remaining lots.
The Company is working to identify additional undeveloped acres owned by the Company in Southwest Louisiana that would likewise be suitable for residential subdivisions.
On August 27, 2020, Hurricane Laura made landfall in Cameron, Louisiana as a major Category 4 hurricane. The hurricane caused widespread property damage, flooding, power outages, and water and communication service interruptions. The Company holds 13,941 acres of land in Southwest Louisiana across 11 parishes with 10,495 acres classified as timber lands. Ten of these parishes are included in the Federal Emergency Management Agency’s disaster declaration related to Hurricane Laura. A percentage of the Company’s timber was damaged during the storm and oil and gas production was temporarily interrupted. No other business operations were affected by the storm. The Company assessed and determined that that the Company did not incur an impairment loss on the value of its timber and determined the temporary interruption had an immaterial effect on its financial condition and results of operations.
On October 9, 2020, Hurricane Delta made landfall in Creole, Louisiana as a Category 2 hurricane. The hurricane caused property damage, flooding, power outages, and water and communication service interruptions. The Company holds property in seven of the parishes included in the Federal Emergency Management Agency’s disaster declaration related to the hurricane. The Company assessed the damage to its timber and the effects of any temporary interruption in oil and gas production on its lands and determined that the effects of the hurricane on its assets and operations were minimal.
Summary of Fiscal Year 2020 Results
During the year ended December 31, 2020, the Company experienced a substantial decline in oil and gas revenue compared to the year ended December 31, 2019. This was primarily due to decreased production as well as lower average sale prices, partially as a result of the COVID-19 pandemic. Timber and surface sales increased approximately 33% as compared to fiscal year 2019. The Company had a much higher gain on the sale of land and a minimal decrease in general and administrative expenses for fiscal year 2020 as compared to fiscal year 2019.
Results of Operations - for the years ended December 31, 2020 and 2019
Revenue
Total revenues for 2020 were $671,944, a decrease of approximately 17% when compared with 2019 revenues of $811,271. Total revenue consists of oil and gas, timber, and surface revenues. Components of revenues for the year ended December 31, 2020 as compared to 2019, are as follows:
Years Ended December 31,
Change from
Prior Year
Percent Change
from Prior Year
Revenues:
Oil and gas
$ 257,247
$ 500,426
$ (243,179 )
(48.6 )%
Timber sales
134,720
72,847
61,873
84.9 %
Surface revenue
279,977
237,998
41,979
17.6 %
Total revenues
$ 671,944
$ 811,271
$ (139,327 )
(17.2 )%
Oil and Gas
Oil and gas revenues were 38% and 62% of total revenues for 2020 and 2019, respectively. A breakdown of oil and gas revenues for the years ended December 31, 2020 as compared to 2019 are as follows:
Years Ended December 31,
Change from
Prior Year
Percent Change
from Prior Year
Oil
$ 228,571
$ 383,578
$ (155,007 )
(40.4 )%
Gas
26,361
109,164
(82,803 )
(75.9 )%
Lease and geophysical
2,315
7,684
(5,369 )
(69.9 )%
Total revenues
$ 257,247
$ 500,426
$ (243,179 )
(48.6 )%
CKX received oil and/or gas revenues from 94 and 101 wells during the years ended December 31, 2020 and 2019, respectively.
The following schedule summarizes barrels and MCF produced and average price per barrel and per MCF for the years ended December 31, 2020 and 2019:
Years Ended
December 31,
Net oil produced (Bbl)(2)
5,043
6,272
Average oil sales price (per Bbl)(1,2)
$ 45.32
$ 61.16
Net gas produced (MCF)
12,376
32,107
Average gas sales price (per MCF)(1)
$ 2.13
$ 3.40
(1) Before deduction of production costs and severance taxes
(2) Excludes plant products
Oil revenues decreased for the year ended December 31, 2020, as compared to 2019, by $155,007. Gas revenues decreased for the year ended December 31, 2020, as compared to 2019, by $82,803. As indicated from the schedule above, the decrease in oil revenues was due to a decrease in net oil produced and a decrease in the average oil sales price per barrel. The decrease in gas revenues was due to a decrease in net gas produced and a decrease in the average price per MCF. Management believes the decrease in oil and gas revenues is a factor of the extreme weakness in oil and gas markets due to the COVID-19 pandemic.
The following eight fields produced 92.31% of the Company’s oil and gas revenues in 2020. The following table shows the number of barrels of oil (Bbl Oil) and MCF of gas (MCF Gas) produced from these fields.
Field
Bbl Oil (1)
MCF Gas
Gonzales County
1,591
South Bear Head Creek
3,418
Reeves
Castor Creek
South Lake Charles
Cowards Gully
Lake Arthur
North Indian Village
1,440
The following eight fields produced 92.33% of the Company’s oil and gas revenues in 2019. The following table shows the number of barrels of oil (Bbl Oil) and MCF of gas (MCF Gas) produced from these fields.
Field
Bbl Oil (1)
MCF Gas
South Bear Head Creek
1,821
1,757
South Jennings
9,298
Coward Gully
South Lake Charles
6,299
Castor Creek
Gonzales County
South Elton
Pine Prairie
1,345
The Company was a lessor in the following non-producing mineral leases:
Activity
Bonus lease
Delay lease
Gross acres
Net acres
Lease and geophysical revenues decreased for the year ended December 31, 2020, as compared to 2019, by $5,369. These revenues are dependent on oil and gas producers’ activities, are not predictable and can vary significantly from year to year.
Timber
Timber revenues were 20% and 9% of total revenues for 2020 and 2019, respectively. Timber revenues increased for the year ended December 31, 2020, as compared to the year ended December 31, 2019, by $61,873. The increase in timber revenues was due to some holders of timber contracts determining to harvest timber on Company lands and favorable weather conditions for harvesting.
Surface
Surface revenues were 42% and 29% of total revenues for 2020 and 2019, respectively. Surface revenues increased for the year ended December 31, 2020, as compared to 2019, by $41,979. This increase is due to an increase in the price per acre charge for leases.
Costs and Expenses
Oil and gas costs decreased for the year ended December 31, 2020 as compared to 2019 by $28,075. These variances are due to the normal variations in year to year costs, which correlate directly with variations in revenues.
Timber costs decreased for the year ended December 31, 2020 as compared to 2019 by $11,735. This is primarily due to decreased timber management costs.
General and administrative expenses decreased for the year ended December 31, 2020 as compared to 2019 by $13,696. This is primarily due to decreased costs to prepare and file SEC reports, salaries, contract services and director’s fees, partially offset by an increase in property management expense.
Gain on Sale of Land and Equipment
Gain on sale of land and equipment was $354,577 and $80,876 for the years ended December 31, 2020 and 2019, respectively. For the year ended December 31, 2020, this consisted of a gain on sale of eight tracts of land including six lots in subdivisions and one sale to local government for roadway construction.
Outlook for Fiscal Year 2021
The Company will continue to consider and evaluate commercial, agricultural and timber lands, and other business opportunities for acquisitions and to evaluate its current holdings for divestiture. The Company will consider purchases outside of southwest Louisiana and will consider developing its properties for commercial or residential purposes.
The Company will continue to actively market its timber. Weather in 2020 was generally better for timber harvesting than in 2019. Due to Hurricanes Laura and Delta in 2020 the Company sold some of its timber at salvage prices. Stumpage prices have remained depressed when compared to recent historical prices. The Company will seek to enter into additional stumpage agreements.
The Company began directly managing its lands in 2017, except for approximately 5,030 acres of timber property in which the Company owns an undivided 1/6 interest, which is managed by Walker Louisiana Properties. The Company believes direct land management and continuing economic activity in southwest Louisiana will be a catalyst for increased surface revenue.
Liquidity and Capital Resources
Sources of Liquidity
The Company’s current assets totaled $7,073,076 and current liabilities equaled $342,195 at December 31, 2020.
The Company entered into an unsecured revolving line of credit with Hancock Whitney Bank on June 25, 2018. The line of credit permitted the Company to draw a maximum aggregate amount of $1,000,000. Borrowings under the line of credit bore interest at a rate of 4.25%. The line of credit expired on June 25, 2019 and was not extended. As of December 31, 2020, and 2019, the Company had no outstanding debt.
In the opinion of management, cash and cash equivalents are adequate for projected operations and possible land acquisitions.
Analysis of Cash Flows
Net cash provided by operating activities decreased by $54,546 to $140,165 for the year ended December 31, 2020, compared to $194,711 for the year ended December 31, 2019. The decrease in cash provided by operating activities was attributable primarily to the change on the gain on the sale of land.
Net cash provided by investing activities was $3,042,801 and $1,224,842 for the year ended December 31, 2020, and 2019, respectively. For the year ended December 31, 2020, this included purchases of certificates of deposit of $1,985,920, purchases of mutual funds of $3,960, and costs of reforesting timber of $9,321 offset by proceeds from maturity of certificates of deposit of $4,682,920 and proceeds from the sale of fixed assets of $359,082. For the year ended December 31, 2019, this included purchases of certificates of deposit of $2,456,000, purchases of mutual funds of $255,578 and costs of reforesting timber of $26,815, offset by proceeds from maturity of certificates of deposit of $3,854,000, and proceeds from the sale of fixed assets of $109,235.
Net cash used in financing activities was $0 and $0 for the year ended December 31, 2020, and 2019, respectively.
Significant Accounting Policies
For a discussion of significant accounting policies, see Note 1 in the notes to our audited financial statements included elsewhere in this Form 10-K.
Off Balance Sheet Arrangements
We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities” (SPEs).

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 7A.
QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Disclosure in response to this item is not required of a smaller reporting company.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8.
FINANCIAL STATEMENTS AND SUPPORTING DATA
The Company’s financial statements, together with the report of the independent registered public accounting firm thereon and the notes thereto, are presented beginning at page. The Company’s balance sheets as of December 31, 2020 and 2019 and the related statements of operations, changes in stockholders’ equity and cash flows for the years then ended have been audited by MaloneBailey, LLP. MaloneBailey, LLP is an independent registered public accounting firm. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and pursuant to Regulation S-K as promulgated by the Securities and Exchange Commission and are included herein pursuant to Part II, Item 8 of this Form 10-K.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.

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ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9A. CONTROLS AND PROCEDURES
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
We conducted an evaluation, under the supervision and with the participation of our principal executive and financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2020. Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to provide reasonable assurance that information required to be disclosed in our reports filed under the Exchange Act, such as this Annual Report on Form 10-K, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures also include, without limitation, controls and procedures that are designed to provide reasonable assurance that such information is accumulated and communicated to our principal executive and financial officer, as appropriate, to allow timely decisions regarding required disclosure.
The evaluation of our disclosure controls and procedures included a review of the control objectives and design, our implementation of the controls and the effect of the controls on the information generated for use in this Annual Report on Form 10-K. After conducting this evaluation, our principal executive and financial officer concluded that our disclosure controls and procedures, as defined by Rule 13a-15(e) under the Exchange Act, were effective as of December 31, 2020 to provide reasonable assurance that information required to be disclosed in this Annual Report on Form 10-K was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and was accumulated and communicated to our principal executive and financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Management's Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act). Internal control over financial reporting is the process designed under the principal executive and financial officer’s supervision, and effected by our Board of Directors, the principal executive and financial officer and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States.
There are inherent limitations in the effectiveness of internal control over financial reporting, including the possibility that misstatements may not be prevented or detected. Accordingly, an effective control system, no matter how well designed and operated, can provide only reasonable assurance of achieving the designed control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Under the supervision and with the participation of our principal executive and financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2020, as required by Exchange Act Rule 13a-15(c). In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in the 2013 Internal Control - Integrated Framework. Based on our assessment under the framework in Internal Control - Integrated Framework (2013 framework), our principal executive and financial officer concluded that our internal control over financial reporting was effective as of December 31, 2020.
Changes in Internal Controls over Financial Reporting
During the year ended December 31, 2020, there were some changes to our internal controls to improve segregation of duties. No other changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the year ended December 31, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within any company have been detected.

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ITEM 9B. OTHER INFORMATION
Item 9B.
OTHER INFORMATION
None.
PART III

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
The information required by Item 10 will be included in the Registrant’s definitive proxy statement to be filed pursuant to Section 14(a) of the Exchange Act of 1934 and is incorporated herein by reference.

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ITEM 11. EXECUTIVE COMPENSATION
ITEM 11.
EXECUTIVE COMPENSATION
The information required by Item 11 will be included in the Registrant’s definitive proxy statement to be filed pursuant to Section 14(a) of the Exchange Act of 1934 and is incorporated herein by reference.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required by Item 12 will be included in the Registrant’s definitive proxy statement to be filed pursuant to Section 14(a) of the Exchange Act and is incorporated herein by reference.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 will be included in the Registrant’s definitive proxy statement to be filed pursuant to Section 14(a) of the Exchange Act and is incorporated herein by reference.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
ITEM 14.
PRINCIPAL ACCOUNTANTS FEES AND SERVICES
The information required by Item 14 will be included in the Registrant’s definitive proxy statement to be filed pursuant to Section 14(a) of the Exchange Act and is incorporated herein by reference.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 15.
EXHIBITS, FINANCIAL STATEMENTS SCHEDULES
(a)
Documents filed as part of this report:
(1)
Financial Statements. The financial statements filed as part of this report are listed in the Table of Contents to Financial Statements appearing immediately after the signature page of this Form 10-K and are included herein by reference.
(2)
Financial Statement Schedules. Financial Statement Schedules are not required.
(3)
Exhibits. See (b) below
(b)
Exhibits:
3.1
Restated Articles of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to Form 10-K (File No. 001-31905) for year ended December 31, 2018 filed on March 21, 2019).
3.2
Amendment to Articles of Incorporation of the Registrant (incorporated by reference to Exhibit 3.2 to Form 10-K (File No. 001-31905) for year ended December 31, 2003 filed on March 19, 2004).
3.3
Articles of Amendment to the Restated Articles of Incorporation of the Registrant (incorporated by reference to Exhibit 3.3 to Form 10-K (File No. 001-31905) for year ended December 31, 2018 filed on March 21, 2019).
3.4
By-Laws of the Registrant (incorporated by reference to Exhibit 3.1 to Form 8-K (File No. 001-31905) filed on August 9, 2019).
4.1
Description of capital stock (incorporated by reference to Exhibit 4.1 to Form 10-K (File No. 001-31905) for the year ended December 31,2019, filed on March 16, 2020).
10.1+
Executive Employment Agreement effective as of July 15, 2020. (incorporated by reference to Exhibit 10.1 to Form 8-K (File No. 001-31905) filed on July 16, 2020).
31*
Certification of W. Gray Stream, President and Treasurer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 filed herewith.
32**
Certification of W. Gray Stream, President and Treasurer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 filed herewith.
101.INS*
XBRL Instance
101.SCH*
XBRL Taxonomy Extension Schema
101.CAL*
XBRL Taxonomy Extension Calculation
101.DEF*
XBRL Taxonomy Extension Definition
101.LAB*
XBRL Taxonomy Extension Labels
101.PRE*
XBRL Taxonomy Extension Presentation
*
Filed herewith
**
Furnished herewith
+
Management contract or compensatory plan or arrangement.