AMEN Properties Announces Second Quarter 2006 Financial Results.MIDLAND, Texas Midland is the county seat of Midland CountyGR6 located on the Southern Plains of the western area of the U.S. State of Texas. As of the 2006 U.S. Census estimate, the city had a total population of 102,073. -- Amen Properties Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :AMEN), with headquarters in Midland Midland, town, Canada Midland, town (1991 pop. 13,865), S Ont., Canada, on Georgian Bay, NW of Toronto. Midland is a port and has grain elevators and plants that manufacture textiles, cameras, optical goods, and other products. , TX, today announced the results for the quarter ending June June: see month. 30, 2006. About Amen Properties Inc. AMEN Properties Inc. (the "Company") is a real estate and energy company engaged in owning and managing real estate, oil and gas royalties, and energy-related business properties. The Company is a holding company and conducts its operations through AMEN Delaware Delaware, state, United States Delaware (dĕl`əwâr, –wər), one of the Middle Atlantic states of the United States, the country's second smallest state (after Rhode Island). LP ("Delaware"); AMEN Minerals LP ("Minerals") and W Power and Light LP ("W Power"), each being a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of the Company. The Company owns its present real estate holdings through Delaware. Delaware owns an approximate ap·prox·i·mate v. To bring together, as cut edges of tissue. adj. 1. Relating to the contact surfaces, either proximal or distal, of two adjacent teeth; proximate. 2. Close together. 71.35% limited interest in TCTB Partners Ltd., which currently owns two commercial office buildings in Midland, TX. The Company's present oil and gas royalty holdings are through Minerals, which owns two oil and gas royalty properties, one in Nowata County, Oklahoma Oklahoma (ōkləhō`mə), state in SW United States. It is bordered by Missouri and Arkansas (E); Texas, partially across the Red R. (S, W); New Mexico, across the narrow edge of the Oklahoma Panhandle (W); and Colorado and Kansas (N). and the other in Hemphill County, Texas Hemphill County is a county located in the U.S. state of Texas. In 2000, its population was 3,351. It is named for John Hemphill, a judge and Confederate congressman. Hemphill County is one of 46 prohibition, or entirely dry, counties in the state of Texas. . The Company is engaged in the retail electricity market as a retail electric provider serving both retail and wholesale customers within the state of Texas through W Power. Effective April 1, 2006, AMEN Properties acquired 100% of Priority Power Management Ltd., a Texas limited partnership, and Priority Power Management, Dallas Dallas, city (1990 pop. 1,006,877), seat of Dallas co., N Tex., on the Trinity River near the junction of its three forks; inc. 1871. The second largest Texas city, after Houston, and the eighth largest U.S. , Ltd., a Texas limited partnership, (collectively referred to as "Priority Power"). Priority Power is primarily involved in providing energy management services and the Company believes that Priority Power's business is complimentary to the retail electricity provider business conducted by the Company's subsidiary W Power. For the six months ended June 30, 2006, the Company generated net income of $590,811 or $.27 per share as compared to a net loss of $374,988, or $.17 per share for the same period ended June 30, 2005, for a net increase of $965,799. This increase is mainly due to the Company's wholly owned subsidiary W Power generating net income for the six months ended June 30, 2006 of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $426,000 compared to a net loss of approximately $265,000 for the same period ended June 30, 2005. W Power was in its startup (STARTing UP) "At startup" means when the computer is first turned on or when a program is first loaded. See Startup folder. period during this time last year, and was able to grow its customer base sufficiently to achieve profitability for the same period this year. Additionally, retail margins have expanded because of increased contract prices and a decrease in certain wholesale ancillary Subordinate; aiding. A legal proceeding that is not the primary dispute but which aids the judgment rendered in or the outcome of the main action. A descriptive term that denotes a legal claim, the existence of which is dependent upon or reasonably linked to a main claim. energy services prices. The Company also completed the acquisition of Priority Power effective April 1, 2006. For the three months ended June 30, 2006, Priority Power generated net income of approximately $ 262,000. For the three and six months ended June 30, 2006, the Company experienced an increase in rental revenue of approximately $161,000 and $242,000, respectively, as compared to the same period ended June 30, 2005. The increase is mainly due to the Company billing tenants for the incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. increase in building operations. The Company did not pass through the incremental increase in building operations during the same period ended June 30, 2005. W Power experienced a net increase in retail electricity revenue of approximately $2,266,000 and $5,124,000 during the three months and six months ended June 30, 2006, respectively. This increase is mainly due to W Power moving from a startup phase to acquiring a customer base of approximately 1,400 meters. Total operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. for the three months ended June 30, 2006 and 2005 were $4,208,640 and $1,924,424, respectively. The increase of approximately $2,284,000 in operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. is mainly related to W Power's increase of wholesale electricity purchases of approximately $1,920,000, consistent with its increased customer base. The remaining increase of $364,000 in operating expenses is related to the increase in general and administrative and rental property operations, approximately $273,000 and 90,000, respectively. W Power's cost of goods and services In economics, economic output is divided into physical goods and intangible services. Consumption of goods and services is assumed to produce utility (unless the "good" is a "bad"). It is often used when referring to a Goods and Services Tax. were $3,063,743 or approximately 90.3% of retail sales for the three months ended June 30, 2006. This increase in gross profits is mainly due to an increase in customer contract prices and a decrease in certain wholesale ERCOT ERCOT Electric Reliability Council Of Texas, Inc. ancillary energy services. Total operating expense for the six months ended June 30, 2006 as compared to same period ended June 30, 2005 increased approximately $4,938,000. This increase is mainly related to W Power's increase in purchased wholesale electricity of approximately $4,460,000. The remaining increase of approximately $478,000 in operating expenses is mainly related to the increase of general and administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. , approximately $273,000, associated with the newly acquired business segment Priority Power and an increase in rental property operations, approximately $163,000, associated with the increase in energy costs. W Power's cost of goods and services were $5,884,161 or approximately 89.7% of retail electricity sales for the six months ended June 30, 2006, for a gross profit of approximately $676,000 or approximately 11.1% of retail electricity sales for the six months ending June 30, 2006. For the six months ended June 30, 2005, W Power's cost of goods and services were $1,423,375 or approximately 99.1% of retail electricity sales for the six months ended June 30, 2005, for a gross profit of approximately $13,000 or approximately 0.1% of retail electricity sales for the six months ending June 30, 2005. The net increase of approximately 10% in gross profit earnings is mainly due to W Power successfully increasing its customer contract prices while also experiencing a decrease in the costs of wholesale power and certain wholesale ERCOT ancillary services. Management's initial focus of the 2002 Business Plan was to focus on value-added val·ue-add·ed adj. Of or relating to the estimated value that is added to a product or material at each stage of its manufacture or distribution: plays in three distinct arenas, 1) acquiring office space in secondary stagnant stagnant /stag·nant/ (stag´nant) 1. motionless; not flowing or moving. 2. inactive; not developing or progressing. markets, 2) acquiring office space in out-of-favor growth markets 3) acquiring investments in oil and gas royalties and to assess opportunities in acquiring other properties and businesses that have a consistent and stable cash flow history. Management believes that through its wholly owned subsidiary, W Power, we have been able to enter a market that will provide a stable cash flow in the future. Additionally, we believe the recent acquisition of Priority Power Management LP (PPM) will also provide stable cash flow in the future, and is consistent with our interest in the deregulated electricity market in Texas. With PPM as a wholly owned subsidiary, Management believes we can continue participating in opportunities within Texas and elsewhere, and diversify diversify To acquire a variety of assets that do not tend to change in value at the same time. To diversify a securities portfolio is to purchase different types of securities in different companies in unrelated industries. our energy activities. As discussed last quarter, W Power faced several challenges during its first year of operations, including: 1) rapidly escalating and volatile energy prices; 2) an extended period of above-average summer and fall temperatures resulting in record-breaking Adj. 1. record-breaking - surpassing any previously established record; "a record-breaking high jump"; "record-breaking crowds" best - (superlative of `good') having the most positive qualities; "the best film of the year"; "the best solution"; "the best time for electricity demand and consumption across Texas; and 3) a shortage of electric generating capacity. While W Power reported positive net income in the first two quarters of 2006, Management believes W Power will be faced with similar challenges throughout 2006 and perhaps beyond. If so, W Power will need to continue a deliberately de·lib·er·ate adj. 1. Done with or marked by full consciousness of the nature and effects; intentional: mistook the oversight for a deliberate insult. 2. controlled growth plan in order not to exceed its credit capacity and to manage the risks associated with volatile energy prices. The main challenges W Power will face will be volatile energy prices and the amount of credit required to hedge forward its electricity requirements. Management continues to monitor and limit the growth of W Power's customer acquisition to ensure that W Power will be able to meet its credit requirements to hedge forward its electricity obligations. Even with continued deliberate Willful; purposeful; determined after thoughtful evaluation of all relevant factors; dispassionate. To act with a particular intent, which is derived from a careful consideration of factors that influence the choice to be made. limiting of W Power's growth, the Company's business model leads Management to expect continued positive earnings for 2006. The PPM acquisition was made with a combination of cash and promissory notes promissory note, unconditional written promise to pay a certain sum of money at a definite time to bearer or to a specified person on his order. Promissory notes are generally used as evidence of debt. . PPM was profitable in the period. Management is optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that PPM will continue its profitability throughout 2006 and beyond, and will continue to grow its client base and become an important component in providing stable cash flow in the future. Management believes the continued high volatility of energy prices will provide a reason for additional end-use energy consumers to solicit energy management services from PPM. Though we have not abandoned the 2002 business model, our focus is to continue supporting W Power for the immediate future, integrate the PPM acquisition into the Company and support is growth efforts, actively monitor TCTB, and assess opportunities as they present themselves.
AMEN Properties Inc. and Subsidiaries
CONSOLIDATED STATEMENT OF OPERATIONS
For the Three and Six Months Ended June 30,
(Unaudited)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2006 2005 2006 2005
---------- ---------- ---------- ----------
Operating Revenue
Rental revenue $ 832,969 $ 672,137 $1,584,574 $1,342,319
Energy management fees 676,806 -- 676,806 --
Retail electricity
revenue 3,391,948 1,125,596 6,560,655 1,436,385
---------- ---------- ---------- ----------
Total operating revenue 4,901,723 1,797,733 8,822,035 2,778,704
---------- ---------- ---------- ----------
Operating Expense
Cost of goods and
services 3,063,743 1,143,727 5,884,161 1,423,375
Rental property
operations 542,797 452,447 1,021,183 858,109
General and
administrative 497,041 223,579 733,733 430,565
Depreciation,
amortization and
depletion 105,059 104,671 207,335 196,506
---------- ---------- ---------- ----------
Total operating
expenses 4,208,640 1,924,424 7,846,412 2,908,555
---------- ---------- ---------- ----------
Income (loss) from
operations 693,083 (126,691) 975,623 (129,851)
---------- ---------- ---------- ----------
Other (expense) income
Interest income 59,115 15,693 108,816 27,537
Interest expense (206,205) (148,149) (346,867) (262,495)
Other income (112,997) 43,578 (90,052) 26,414
---------- ---------- ---------- ----------
Total other (expense)
income (260,087) (88,878) (328,103) (208,544)
---------- ---------- ---------- ----------
Income (loss) from
continuing operations
before income taxes and
minority interest 432,996 (215,569) 647,520 (338,395)
---------- ---------- ---------- ----------
Income taxes -- -- -- --
Minority interest (34,839) 4,231 (56,709) (36,593)
---------- ---------- ---------- ----------
NET INCOME (LOSS) $ 398,157 $ (211,338)$ 590,811 $ (374,988)
========== ========== ========== ==========
Net income (loss) per
common share (basic) $ .18 $ (.10)$ .27 $ (.17)
========== ========== ========== ==========
Net income (loss) per
common share (diluted) $ .11 $ (.10)$ .17 $ (.17)
========== ========== ========== ==========
Weighted average number of
common shares outstanding
-- basic 2,246,084 2,201,356 2,226,260 2,201,356
========== ========== ========== ==========
Weighted average number of
common shares outstanding
-- diluted 3,595,848 2,201,356 3,576,024 2,201,356
========== ========== ========== ==========
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