The Company realized oil and gas revenues of $6,040,872 in 2003 compared to $5,437,723 in 2002 and $6,656,758 in 2001. The increase in revenues in 2003 from 2002 was due to an increase in gas and oil prices in 2003. Prices for gas produced from the Swan Creek Field averaged $5.38 per MCF in 2003 compared to $3.22 in 2002. Prices for oil produced from the Swan Creek Field averaged $26.87 per barrel in 2003 compared to $21.85 in 2002. Prices for gas produced from the Kansas Properties averaged $4.73 per MCF in 2003 compared to $2.96 in 2002. Prices for oil produced from the Kansas Properties averaged $29.00 per barrel in 2003 compared to $23.89 in 2002. The increase in prices was partially offset by a reduction in volumes produced. The Company sold 1,004,899 MCF of natural gas from Swan Creek and Kansas in 2002 compared to 620,873 MCF in 2003. The Company also sold 147,243 barrels of oil from Swan Creek and Kansas in 2003, compared to 157,973 barrels in 2002. The reason for the decrease in volumes produced in 2003 was the Company's dispute with its primary lender Bank One N.A. which significantly limited the Company's ability to drill new wells and to work over under-producing wells in Kansas.
The Company incurred a net loss to holders of common stock of $2,815,119 ($0.24 per share) in 2003 compared to a net loss of $3,661,344 ($0.33 per share) in 2002 and a net loss of $2,653,970 ($0.26 per share) in 2001.
The Report stated the results of the Company's recently concluded rights offering. The rights offering was a distribution to the holders of the Company's common stock on the record date, February 27, 2004, of a non- transferable subscription right to purchase three shares of the Company's common stock for each share of common stock owned at a price of $0.25 per each share purchased. Each subscription right carried with it an over-subscription privilege to seek to purchase a portion of the offered shares that were not purchased by other stockholders through the exercise of their basic subscription privilege at the same subscription price per share. The offering expired on March 18, 2004.
All 36.3 million shares available in the rights offering were subscribed for and, as a result the Company raised approximately $9.1 million. The number of shares subscribed for exceeded the 36.3 million shares available for issuance under the offering by 20,790,806 shares. All shares subscribed for under the basic privilege were issued and the number shares issued under the oversubscription privilege was proportionately reduced to equal the number of remaining shares. The allocation and issuance of the shares under the oversubscription privilege was made by Mellon Investor Services, the Company's subscription agent. Mellon Investor Services will return the payments received for the additional shares that were subscribed for under the oversubscription privilege but were ultimately not available in the offering.
Pursuant to the rights offering, 7,029,604 rights were exercised under the basic subscription privilege, resulting in the issuance of 21,088,812 shares at $0.25 per share for gross proceeds to the Company of $5,272,203 from the basic subscription privilege. A total of 15,211,188 shares were issued under to the oversubscription privilege, resulting in additional gross proceeds to the Company of $3,802,797.
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