The Beard Company Reports Progress on Restructuring Plan; Elects Scott Brown as Interim CEO; Provides Operational Update

OKLAHOMA CITY, May 12, 2011 /PRNewswire/ -- The Beard Company (Pink Sheets: BRCO) ("Beard" or the "Company") today released the following statement:  

"The Company has made considerable progress under its Restructuring Plan announced at year-end 2010.  The credit for the improvements that have been made belongs to our Restructuring Consultant and to our directors, officers and employees.  It has been a total team effort, and we are grateful to everyone involved," said Herb Mee, Jr., Beard's President.

Progress on Restructuring Plan.  On December 31, 2010, we announced that our Board of Directors elected to make some radical changes and cost reductions under a major Restructuring Plan which it implemented December 1.  The directors appointed Scott Brown, one of our directors, as Restructuring Consultant, giving him authority to reduce costs and make restructuring decisions for a period of two to four months.  Under his guidance, significant progress has been made to date under the Plan:

• On December 22, 2010, we made the final payment to complete the purchase, effective May 1, 2010, of an additional 7.53571% BPO working interest (3.01428% APO working interest) in the Dilworth Field.  The purchase was announced on June 7, 2010.
• On December 30, 2010, we filed to delist the Company's common stock and suspend our duty to file reports with the Securities and Exchange Commission, reducing our annual legal and accounting expenses by an estimated $300,000 or more.
• Since January 1, 2011, we have:
  • Through a reduction in force, reduced general and administrative expenses by approximately 35%.
  • Eliminated all management perks.
  • Adopted a Deferred Stock Compensation Plan to promote ownership by officers and directors of a greater proprietary interest in the Company while conserving cash.
  • Worked diligently with the largest outside W.I. owner in the Dilworth Field and made sure they had a clear understanding of the Restructure and what we are trying to accomplish.
  • Revised/revamped our organizational structure and implemented an employee evaluation process for both The Beard Company and Beard Oil Company.
  • Updated the BRCO Website to focus on our oil and gas operations.
• On March 11, 2011, we closed on a $2,500,000 loan from a Miami Beach-based LLC to purchase equipment in the Dilworth Field that had previously been leased from Schlumberger and Rentzel:  
  • By exercising our options to purchase this equipment, we reduced the lease operating expense in the Field by approximately $204,000 per month ($35,770 per month to the Company).
• On May 3, 2011, we completed the sale of most of Beard Technologies, Inc.'s ("BTI") assets to a Coral Gables-based LLC.  We expect to complete the sale of BTI's remaining assets by June 30, 2011.

We estimate that the total annualized savings from the cost reductions implemented to date amount to approximately $1,284,000.

Election of Interim CEO.  The Board of Directors was favorably impressed with the progress made under Scott Brown's leadership and direction, and on April 1 elected him as interim CEO of the Company.  

"We are delighted that the Board has recognized Scott's abilities and the management strengths he has demonstrated during the brief period he has been in charge of the Company.  He has brought a new feeling of excitement to us, and a new focus.  It has been a real pleasure to work with him as he has challenged all of us to recognize the tremendous opportunity we have in the Dilworth Field, and to make certain that we take full advantage of it," Mee added.

Dilworth Field.  The Company's primary asset is its share of the Dilworth Field oil and gas project in northern Oklahoma.  Our wholly-owned subsidiary, Beard Oil Company, is operator of the Field.  By making the final payment on December 22, 2010, on the interest purchased effective May 1, 2010, the Company's working interest ("W.I.") in the Field remained at the previously announced figures of 17.53571% before payout ("BPO") and 17.01428% after payout ("APO").  As a result of the purchase announced on August 24, 2010, by Beard Dilworth, LLC of an additional 7.53571% BPO W.I. (3.01428% APO W.I.), the Company's W. I. in the Field, after the partners in the LLC have recouped their $900,000 investment, will increase to 21.30356% BPO (18.52142% APO).  

We encountered a number of operational problems in the Field during the first four months of 2011.  There were problems with the amine plant and with a transformer on one of the wells.  One of our salt water disposal ("SWD") wells wasn't performing according to expectations.  We made the decision to drill a replacement SWD well, the Thirsty-Too, which was completed in late March of 2011.  This well was fracked on May 10, 2011, and its initial response has exceeded our expectations.  Meanwhile, we took advantage of the delays to totally refurbish the amine plant, repair and replace various electrical infrastructure components, and get all Field equipment up and running.  Because disposal capacity with respect to our total fluid production capability was limited, only four (sometimes five or six at reduced volumes) of our nine Arbuckle production wells were operating.  As a result, we were only putting away an average of about 130,000 barrels of fluid per day during this period, down from about 180,000 barrels per day late last year.

Due to the reduction in fluid disposal, oil production for the first quarter ("1Q") of 2011 decreased to an average of 158 barrels per day ("BOPD"), down from the 4Q of 2010's average of 257 BOPD.  Total gas produced was down from an average of 569 Mcf per day ("Mcfd") in 4Q of 2010 to 412 Mcfd in Q1 of 2011.  No gas was sold during Q1 of 2011 while the amine plant was being refurbished.  We believe we have now resolved the primary issues responsible for runtime inconsistencies and expect to sustain a reliable pumping infrastructure going forward.

With the completion of the Thirsty-Too well we now have adequate disposal capacity to enable all nine production wells to achieve their full production potential.  The new SWD well allows us to operate the entire field at full production capacity, thereby increasing total fluid production, gas production and natural gas liquid ("NGL") recovery.  It should also enable us, for the first time, to aggressively reduce bottom-hole pressures ("BHPs"), allowing us to achieve Type III Reservoir matrix production.  

The wells not being produced in Q1 of 2011 were the Morgan 20-1, Arnold 17-1, Beard Dilworth 20-2 and Gingerich 17-2.  Due to its centralized location, the Arnold 17-1 serves as the "hub" for all the wells.  Activation of this well will have a significant effect on the reduction of field-wide BHPs as the Arnold 17-1 enhances the coalescence of the other wells' radius of influence.  Coalescence of each adjoining well's "drawdown" will lead to a crest-wide drawdown.  Once this has been maintained for a period of time, the Field should achieve matrix production.  

The BD 20-2 and the Gingerich 17-2 wells came online in early April 2011.  The Arnold 17-1 came online May 3, 2011.  Repairs to the BD 17-1 large bore production well have been completed and it came online May 9, 2011.  The Morgan 20-1 suffered a transformer issue in February 2011 and is expected to be back online within the next 10 days.  At that time, all nine production wells should be online and producing a total of 240,000+ bbls of fluid per day.      

Geohedral LLC.  The Company's mineral exploration activities in Alaska are conducted via its investment in Geohedral LLC.  As previously reported, recent independent assays conducted on Geohedral's mining claims failed to validate the previously documented results.  Geohedral is continuing to seek a partner that will provide the capital required to pursue further exploratory work.  During the past 60 days some new parties have expressed an interest in the project, and Geohedral is following up on these leads.  However, the project must still be considered speculative at this point.

About The Beard Company

The Beard Company creates, acquires, and/or invests in businesses, primarily related to natural resources, that management believes have high growth and/or above-average profit potential and can enhance shareholder value.  The Company is involved in oil and gas activities and in minerals exploration and development through its Geohedral investment.

The Company is headquartered in Oklahoma City and its common stock trades under the symbol "BRCO".

Forward-Looking Statements

This document may include statements that constitute "forward-looking" statements, usually containing the words "believe", "estimate", "project", "expect", "anticipate", or similar expressions.  Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements.  Factors that could cause or contribute to such differences include, but are not limited to, the Company's ability to secure capital to fund current operations; future trends in commodities prices; financial, geological or mechanical difficulties affecting the Company's or Geohedral's planned geological work programs; uncertainties surrounding estimates of mineralized material; and other risks associated with our business.  By making these forward-looking statements, we undertake no obligation to update these statements for revisions or changes in the future.

For Additional Information, Please Contact:
Herb Mee, Jr., President, at (405) 842-2333 or via email at [email protected]

SOURCE The Beard Company