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<!--egx--><p style='margin:0in 0in 0pt'><b>NOTE G: SUBSEQUENT EVENTS</b></p> <p style='margin:0in 0in 0pt'> </p>The Company has evaluated subsequent events through May 12, 2017, the date the financial statements were available to be issued, and determined that there are none to be reported
<!--egx--><p style='margin:0in 0in 0pt'><b>NOTE C: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</b></p> <p style='margin:0in 0in 0pt'> </p> <p style='margin:0in 0in 0pt'>We consider accounting policies related to our estimates of depreciation amortization and depletion, segments, oil and gas properties, oil and gas reserves, gas gathering assets, office and field equipment, revenue recognition and gas imbalances, leases, revenue recognition for real estate operations, impairment, and sales of real estate as significant accounting policies. The policies include significant estimates made by management using information available at the time the estimates are made. However, these estimates could change materially if different information or assumptions were used. These policies are summarized in our Annual Report on Form 10-K for the year ended December 31, 2016.</p>
<!--egx--><p style='margin:0in 0in 0pt'><b>NOTE A: BASIS OF PRESENTATION</b></p> <p style='margin:0in 0in 0pt'> </p> <p style='margin:0in 0in 0pt'>The accompanying unaudited consolidated financial statements include the accounts of New Concept Energy, Inc. and its majority-owned subsidiaries (collectively, “NCE” or the “Company”). All significant intercompany transactions and accounts have been eliminated. Certain reclassifications have been made to the prior year revenue and operating expense amounts in the statement of operations to conform to the current year presentation.</p> <p style='margin:0in 0in 0pt'> </p> <p style='margin:0in 0in 0pt'>The unaudited financial statements included herein have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. The financial statements reflect all adjustments that are, in the opinion of management, necessary to fairly present such information. All such adjustments are of a normal recurring nature. Although the Company believes that the disclosures are adequate to make the information presented not misleading, certain information and footnote disclosures, including a description of significant accounting policies normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted pursuant to such rules and regulations.</p> <p style='margin:0in 0in 0pt'> </p> <p style='margin:0in 0in 0pt'>These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ending December 31, 2016. Operating results for the three month period ended March 31, 2017 are not necessarily indicative of the results that may be expected for any subsequent quarter or for the fiscal year ending December 31, 2017.</p>
<!--egx--><p style='margin:0in 0in 0pt'><b>NOTE B: NATURE OF OPERATIONS</b></p> <p style='margin:0in 0in 0pt'> </p> <p style='margin:0in 0in 0pt'>The Company operates oil and gas wells and mineral leases in Athens and Meigs Counties in Ohio and in Calhoun, Jackson and Roane Counties in West Virginia through its wholly owned subsidiaries Mountaineer State Energy, LLC and Mountaineer State Operations, LLC.</p> <p style='margin:0in 0in 0pt'> </p> <p style='margin:0in 0in 0pt'>Until March 30, 2017 the Company leased and operated a retirement center in King City, Oregon with a capacity of 114 residents. The terms of the lease agreement provided that if the facility was sold to a third party the lease would be terminated. On March 30, 2017 the owners of the facility sold the facility. The operations of the retirement facility have be reflected a discontinued operations. </p>
<!--egx--><p style='margin:0in 0in 0pt'><b>NOTE D: OIL AND GAS RESERVES</b></p> <p style='margin:0in 0in 0pt'> </p> <p style='text-align:justify;margin:0in 0in 0pt'>The Company uses the full cost method of accounting for its investment in oil and natural gas properties. Under this method of accounting, all costs of acquisition, exploration and development of oil and natural gas properties (including such costs as leasehold acquisition costs, geological expenditures, dry hole costs, tangible and intangible development costs and direct internal costs) are capitalized as the cost of oil and natural gas properties when incurred.</p> <p style='margin:0in 0in 0pt'> </p> <p style='text-align:justify;margin:0in 0in 0pt'>The full cost method requires the Company to calculate quarterly, by cost center, a “ceiling,” or limitation on the amount of properties that can be capitalized on the balance sheet. To the extent capitalized costs of oil and natural gas properties, less accumulated depletion and related deferred taxes exceed the sum of the discounted future net revenues of proved oil and natural gas reserves, the lower of cost or estimated fair value of unproved properties subject to amortization, the cost of properties not being amortized, and the related tax amounts, such excess capitalized costs are charged to expense.</p> <p style='margin:0in 0in 0pt'> </p> <p style='text-align:justify;margin:0in 0in 0pt'>The standardized measure of discounted future net cash flows and changes in such cash flows are prepared using assumptions required by the Financial Accounting Standards Board and the Securities and Exchange Commission. Such assumptions include a standardized method for determining pricing and require that future cash flow be discounted using a 10% rate. The valuation that results may not represent management’s estimated current market value of proved reserves.</p> <p style='text-align:justify;margin:0in 0in 0pt'> </p> <p style='text-align:justify;margin:0in 0in 0pt'>During the past few years the exploration, development and production of natural gas has resulted in an oversupply of natural gas which has resulted in a substantial reduction in the market price. Management of the Company believes that this oversupply will last for some time and does not anticipate an increase in the price we can receive in the market palace. In April 2012 the Company entering into an agreement to fix the price it receives for the sale of its gas. For the five years ended April 2017 the Company will receive $4.53 per MCF.<b> </b></p>
<!--egx--><p style='margin:0in 0in 0pt'><b>NOTE E: CONTINGENCIES</b></p> <p style='margin:0in 0in 0pt'> </p> <p style='margin:0in 0in 0pt'><u>Carlton Energy Group, LLC </u></p> <p style='margin:0in 0in 0pt'> </p> <p style='margin:0in 0in 0pt'>In December 2006, Carlton Energy Group, LLC (“Carlton”) instituted litigation against an individual, Eurenergy Resources Corporation (“Eurenergy”) and several other entities including New Concept Energy, Inc., which was then known as CabelTel International Corporation (the “Company”) alleging tortuous conduct, breach of contract and other matters and as to the Company that it was the alter ego of Eurenergy. The trial judge ruled that the Company was not the alter-ego of Eurenergy however that decision was subsequently reversed by the Court of Appeals. The matter was then appealed to the Texas Supreme Court who determined that the damages had been miscalculated and sent the matter back to the Court of Appeals to determine what the acutual damages should be. At this point the damages according to the courts appear to be in the range of $32 million dollars. We anticipate that the matter will be sent back to the Texas Supreme Court.</p> <p style='margin:0in 0in 0pt'> </p> <p style='margin:0in 0in 0pt'>Management notes that in connection with the original appeal, the individual defendant deposited alternative security with the Trial Court to supersede the judgment which the court determined to have a value in excess of $56 million. Management believes that the maximum exposure would be in an amount significantly less than the amount on deposit. Accordingly, management believes that any adverse outcome is fully secured by that deposit.</p> <p style='margin:0in 0in 0pt'> </p> <p style='margin:0in 0in 0pt'>For a discussion of this legal matter see Item: 3 of the Company’s Form 10-K for December 31, 2016.</p> <p style='margin:0in 0in 0pt'> </p> <p style='margin:0in 0in 0pt'><u>Other</u></p> <p style='margin:0in 0in 0pt'> </p> <p style='text-align:justify;margin:0in 0in 0pt'>The Company has been named as a defendant in other lawsuits in the ordinary course of business. Management is of the opinion that these lawsuits will not have a material effect on the financial condition, results of operations or cash flows of the Company.<b> </b></p>
<!--egx--><p style='margin:0in 0in 0pt'><b>NOTE F: NEWLY ISSUED ACCOUNTING STANDARDS</b></p> <p style='margin:0in 0in 0pt'> </p> <p style='text-align:justify;margin:0in 0in 0pt'>In February 2016, Accounting Standards Update No. 2016-02 (“ASU 2016-02”), Leases was issued. This new guidance establishes a new model for accounting for leases and provides for enhanced disclosures. ASU 2016-02 is effective for reporting periods beginning after December 15, 2018. The Company is currently evaluating the impact the adoption of this guidance, if any, on its financial position and results of operations. </p> <p style='margin:0in 0in 0pt'> </p>
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false
New Concept Energy, Inc.
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2017
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114
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2017-01-01
2017-03-31
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2017-05-12
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2016-01-01
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