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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2021-06-25 compared with 2020-06-26 · 47 added, 47 removed, 13 unchanged (88% of the section changed)

1 unchanged sentence

primary source of market risk for us includes fluctuations in commodity prices and interest rates.

All of our financial instruments

are for purposes other than trading.

At March 31, 2020, we had an outstanding loan balance of $795,000 under our credit agreement, which bears interest

at a rate equal to the prime rate as quoted in the Wall Street Journal plus one-half of one percent (0.5%) floating daily.

the interest rate on our bank debt increases or decreases by one percentage point our annual pretax income would change by $7,950

based on the outstanding balance at March 31, 2020.

All of our financial instruments are

for purposes other than trading.

At March 31, 2021, we had an outstanding loan balance of $1,180,000 under our credit agreement, which bears interest at

a rate equal to the prime rate as quoted in the Wall Street Journal plus one-half of one percent (0.5%) floating daily.

If the interest

rate on our bank debt increases or decreases by one percentage point our annual pretax income would change by $11,800 based on the outstanding

balance at March 31, 2021.

Credit risk is the risk of loss as a result of nonperformance by other parties of their contractual obligations.

primary credit risk is related to oil and gas production sold to various purchasers and the receivables are generally not collateralized.

At March 31, 2019, our largest credit risk associated with any single purchaser was $170,418 or 63% of our total oil and gas receivables.

credit risk is related to oil and gas production sold to various purchasers and the receivables are generally not collateralized.

March 31, 2021, our largest credit risk associated with any single purchaser was $440,715 or 71% of our total oil and gas receivables.

We have not experienced any significant credit losses.

1 unchanged sentence

Our financial

condition, results of operations, and capital resources are highly dependent upon the prevailing market prices of, and demand

for, oil and natural gas.

condition, results of operations, and capital resources are highly dependent upon the prevailing market prices of, and demand for, oil

and natural gas.

Prices for oil and natural gas fluctuate widely.

We cannot predict future oil and natural gas prices

with any certainty.

Pricing for oil and natural gas production has been volatile and unpredictable for several years, and we expect

this volatility to continue in the future.

that can cause price fluctuations include the level of global demand for petroleum products, foreign and domestic supply of oil

and gas, the establishment of and compliance with production quotas by oil-exporting countries, weather conditions, the price

and availability of alternative fuels and overall political and economic conditions in oil producing countries.

We cannot predict future oil and natural gas prices with any certainty.

Pricing for oil and natural gas production has been volatile and unpredictable for several years, and we expect this volatility to continue

in the future.

that can cause price fluctuations include the level of global demand for petroleum products, foreign and domestic supply of oil and gas,

the establishment of and compliance with production quotas by oil-exporting countries, weather conditions, the price and availability

of alternative fuels and overall political and economic conditions in oil producing countries.

prices dropped sharply in early March 2020, and then continued to decline reaching levels below zero dollars per barrel.

was a result of multiple factors affecting supply and demand in global oil and gas markets, including the announcement of price

reductions and production increases by OPEC members and other oil exporting nations and the ongoing COVID-19 pandemic.

natural gas prices are expected to continue to be volatile as a result of the changes in oil and natural gas production, inventories

and demand, as well as national and international economic performance.

We cannot predict when prices will improve and stabilize.

addition, prices for natural gas have been adversely effected by temporary pipeline capacity constraints primarily in the Permian

We are unable to predict exactly how long this limitation will continue.

example, the NYMEX West Texas Intermediate (“WTI”) posted price for crude oil on March 31, 2020 was $16.75 per bbl

and averaged $14.68 and $24.67 per bbl for the months of April and May 2020, respectively.

The WTI posted price for crude oil

was $35.75 on June 19, 2020.

The Henry Hub Spot Market Price (“Henry Hub”) posted price for natural gas on March 31,

2020 was $1.71 per MMBtu and averaged $1.74 and $1.75 per MMBtu for the months of April and May 2020, respectively.

Hub posted price for natural gas was $1.67 on June 19, 2020.

in oil and natural gas prices will materially adversely affect our financial condition, liquidity, ability to obtain financing

and operating results.

Changes in oil and gas prices impact both estimated future net revenue and the estimated quantity of proved

Any reduction in reserves, including reductions due to price fluctuations, can reduce the borrowing base under our credit

facility and adversely affect the amount of cash flow available for capital expenditures and our ability to obtain additional

capital for our acquisition, exploration and development activities.

In addition, a noncash write-down of our oil and gas properties

could be required under full cost accounting rules if prices declined significantly, even if it is only for a short period of

See Critical Accounting Policies and Estimates —

This was a result

of multiple factors affecting supply and demand in global oil and gas markets, including the announcement of price reductions and production

increases by OPEC members and other oil exporting nations and the ongoing COVID-19 pandemic.

Oil and natural gas prices are expected

to continue to be volatile as a result of the changes in oil and natural gas production, inventories and demand, as well as national

and international economic performance.

We cannot predict when prices will stabilize.

example, in the last twelve months, the NYMEX West Texas Intermediate (“WTI”) posted price for crude oil has ranged from

a low of negative $41.25 per bbl in April 2020 to a high of $62.07 per bbl in March 2021.

The Henry Hub Spot Market Price (“Henry

Hub”) for natural gas has ranged from a low of $1.33 per MMBtu in September 2020 to a high of $23.86 per MMBtu in February 2021.

On March 31, 2021 the WTI posted price for crude oil was $55.14 per bbl and the Henry Hub spot price for natural gas was $2.52 per MMBtu.

in oil and natural gas prices will materially adversely affect our financial condition, liquidity, ability to obtain financing and operating

Changes in oil and gas prices impact both estimated future net revenue and the estimated quantity of proved reserves.

Any reduction

in reserves, including reductions due to price fluctuations, can reduce the borrowing base under our credit facility and adversely affect

the amount of cash flow available for capital expenditures and our ability to obtain additional capital for our acquisition, exploration

and development activities.

In addition, a noncash write-down of our oil and gas properties could be required under full cost accounting

rules if prices declined significantly, even if it is only for a short period of time.

See Critical Accounting Policies and Estimates

Ceiling Test under Item 7 of this report on Form 10-K.

may also reduce the amount of crude oil and natural gas that can be produced economically.

Thus, we may experience material increases

or decreases in reserve quantities solely as a result of price changes and not as a result of drilling or well performance.

any improvements in oil and gas prices can have a favorable impact on our financial condition, results of operations and capital

Lower prices may also reduce the amount of crude oil and natural gas that

can be produced economically.

Thus, we may experience material increases or decreases in reserve quantities solely as a result of price

changes and not as a result of drilling or well performance.

any improvements in oil and gas prices can have a favorable impact on our financial condition, results of operations and capital resources.

Oil and natural gas prices do not necessarily fluctuate in direct relationship to each other.

If the average oil price

had increased or decreased by five dollars per barrel for fiscal 2020, our oil revenue would have changed by $221,505.

average gas price had increased or decreased by one dollar per mcf for fiscal 2020, natural gas revenue would have changed by

If the average oil price had increased

or decreased by ten dollars per barrel for fiscal 2021, our oil revenue would have changed by $503,270.

If the average gas price had

increased or decreased by one dollar per mcf for fiscal 2021, natural gas revenue would have changed by $324,205.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk