Oklahoma pink sheet stocks not all that pink

The numbers weren't all that defined among the Bulletin Board stocks, with just about as many negatives as positives among factors going into the Oklahoma Inc. rankings.
BY RICHARD MIZE richardmize@opubco.com Published: November 13, 2011
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Energy, plastics, multimedia technology and corrections define Oklahoma's top companies among the pink sheets — publicly traded but over the counter, not listed on a stock exchange.

Literally define.

Of the top six, two are energy companies, Reserve Petroleum Co. and Beard Co., both in Oklahoma City.

The plastics company is manufacturer-recycler Greystone Logistics in Tulsa.

The tech company is EnXnet Inc., also in Tulsa.

The corrections company is Avalon Correctional Services Inc., based in Oklahoma City.

Vaughan Foods Inc. in Moore, No. 6 on the Oklahoma Inc. list, sold to Reser's Fine Foods Inc. in Beaverton, Ore., and is no longer traded, so it's out.

As usual, the numbers weren't all that defined among the Bulletin Board stocks, with just about as many negatives as positives among the factors going into the Oklahoma Inc. rankings. Below are snapshots of the top five over-the-counter companies.

Reserve Petroleum

•  No. 1, Reserve Petroleum Co., trading symbol RSRV.

The company, founded in 1931, is in oil and natural gas exploration and development and minerals management mainly in Oklahoma, Texas, Kansas and Arkansas. It owned nonproducing mineral interests in 260,470 gross acres; royalty interests in 23 gross wells; and held interests in about 660 producing properties as of March 31, according to Bloomberg BusinessWeek.

Cameron R. McLain has been CEO since 2009, president since 2008 and exploration manager since 1982. The company has eight employees and offices at 6801 Broadway Extension, Suite 300. Its website is www.reserve-petro.com.

As of June 30, Reserve Petroleum, which was No. 4 in the Oklahoma Inc. rankings last year, had a one-year return on stocks and dividends of 80.9 percent; a 4.1 percent increase in revenues; and increase in earnings per share of 36 percent. The company had a market capitalization of $58.765 million, revenues of $12.6 million and net income of $4.7 million.

Beard Co.

•  No. 2, Beard Co., trading symbol BRCO.

The company dates to a sole proprietorship started by founder Joseph G. Beard in 1921 when he drilled his first producing well in Stephens County. It has offices at 301 NW 63, Suite 400. Its website is www.beardco.com.

Beard, now led by Herb Mee Jr., president, continues with restructuring begun in late 2010. The company downsized, reducing expenses by about 35 percent; eliminated management perks; and adopted a deferred stock compensation plan for officers and directors to conserve cash.

The company said it struggled with operations in the Dilworth Field in northern Oklahoma, its primary asset, in the first four months of this year, but that new financing and infrastructure repair “for the first time, positioned us to aggressively reduce bottom-hole pressures, which should allow us to achieve our ultimate goal of matrix production.”

Beard, which was No. 4 in the Oklahoma Inc. rankings last year, had a one-year loss on stocks and dividends of 73.5 percent; a 220.1 percent increase in revenues; and increase in earnings per share of 52.6 percent. The company had a market capitalization of $8.428 million, revenues of $1.149 million and net loss of $1.977 million.

Avalon Correctional

•  No. 3, Avalon Correctional Services Inc., trading symbol CITY.

Donald E. Smith founded Avalon in 1985 as an alternative incarceration for drunken drivers. The company has expanded to 10 locations and 2,600 beds. The company operates facilities and manages programs in Oklahoma, Texas and Wyoming, with plans to expand into other states. Smith continues as chairman and chief executive officer.

The recession and declining state revenues caused Avalon to concentrate on “new opportunities in existing community corrections operations” and in states new to “the positive results of utilizing community corrections programs,” Smith said in a shareholder letter posted on the company website, www.avaloncorrections.com. In Oklahoma, Avalon closed a leased facility in Tulsa in late 2010, and new projects were put on hold.

However, Smith said, “Our optimism about the company's future is greater today than when we started the company in 1985. Our mission continues to be offering cost effective alternatives with lower recidivism rates to the ever-increasing prison population. Virtually all states and governmental agencies have experienced tremendous increases in the cost of maintaining and operating their prison systems. Many states are evaluating their incarceration policies and considering the utilization of a greater number of community-based corrections beds and services to reduce costs and reduce the rate of recidivism while continuing to provide public safety. We believe we have an excellent opportunity to participate in this national movement to significantly increase the utilization of community based correctional services.”

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