DENVER, June 30 /PRNewswire-FirstCall/ -- Basic Earth Science Systems, Inc. ("Basic" or "the Company") (BULLETIN BOARD: BSIC) reported that it has filed a Form 12b-25 - "Notification of Late Filing" with the Securities Exchange Commission requesting a fifteen day extension of its Form 10-KSB filing deadline. The extension became necessary following the Company's recent filing of a Form 8-K, Item 4.02 - "Non-Reliance on Previously Filed Financial Statements" for the fiscal years 2006 and 2007.
Based on its current knowledge, upon filing Form 10-KSB, the Company expects to report net income of $1,763,000, ten cents ($0.10) per share, on oil and gas sales revenue of approximately $7.4 million for the year ended March 31, 2008 ("2008"). This compares to restated net income of $2,055,000, nearly twelve cents ($0.12) per share (restated), on oil and gas sales revenue of approximately $7.2 million for the year ended March 31, 2007 ("2007"). The $280,000 (4%) increase in oil and gas sales revenue was due primarily to higher oil prices relative to 2007. Net income for 2008 decreased $292,000 (14%). Relative to 2007, net income in 2008 was greatly impacted by increased oil and gas production expense, general and administrative expense and provision for deferred income tax expense. Other factors which contributed to our annual results will be disclosed in the Company's forthcoming Form 10-KSB. At this time, Basic is not aware of any issue that would substantially affect these results.
"We would have been much happier to have filed last week and to have shared the details of these results then, but our upcoming restatement of fiscal 2006 and 2007 has adversely impacted that time table," commented Ray Singleton, President of Basic. "Our results are a mixed story. Revenue, reserves, EBITDA and cash were all up. Reserves, measured by the present value of future cash flow, discounted at 10%, alone increased 78% and we achieved a 6.4% increase in BOE (barrels of oil, equivalent) reserves; replacing 185% of our produced barrels. On the other hand, oil and gas sales were down significantly. Oil sales volumes were down 15,000 barrels (14%) from last year and gas sales volumes were down 47,600 MMCF (30%). Over two-thirds of the oil slump was due to continued normal production declines on our Halverson wells, two horizontal Bakken wells in Richland County, Montana. In addition, in Webb County, Texas, operational issues in the fourth quarter (salt water disposal and new oil transporters) adversely affected production and sales on our West Cole North Unit, our largest oil producing property. These issues have been rectified and should not affect the current quarter. Gas sales declined largely due to construction on our Antenna Federal property where all of our wells were shut in for several months to facilitate the installation of new tank batteries."
"This last year, and especially the fourth quarter, has been one of significant change. With a dramatic realignment of personnel and the departure of our long-time chief financial officer, we have had a number of challenges. Nevertheless, once our upcoming filing is made, overall, we feel we are in a great position to move forward with our plans for continued growth and success," concluded Singleton.
Founded in 1969, Basic is an oil and gas exploration and production company with primary operations in select areas of the Williston basin, the Denver-Julesburg basin in Colorado, the southern portions of Texas, and along the on-shore portions of the Gulf Coast. Basic is traded on the "over-the-counter - bulletin board" under the symbol BSIC. Basic's web site is at http://www.basicearth.net/ where additional information about the Company can be accessed.
Information herein contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which can be identified by words such as "should," "may," "will," "anticipate," "estimate," "intend" or "continue," or comparable words or phrases. Such forward-looking statements include, but are not limited to, statements regarding Basic's preliminary restated results and other items based on Basic's current expectations and involve risks and uncertainties including, but not limited to, risks and uncertainties related to changes in the correction of the error referenced herein, identification of additional accounting errors or corrections, and/or additional recommendations of the Audit Committee, and other risks detailed from time to time in Basic's SEC filings. Basic cautions that these factors, as well as other factors described in SEC filings, are among the factors that could cause actual results to differ materially from the expectations described in these forward-looking statements. Readers are encouraged to read the SEC reports of Basic, particularly the Company's Current Report on Form 8-K, for meaningful cautionary language disclosing why actual results may vary materially from those anticipated by management.
