Question-and-Answer Session
Robert Holt - Holt Capital Partners
What order of magnitude should we expect on your commercial sales that are somewhere in the pipeline, and how would that compare to your total inventory of commercial acreage?
Ray C. Dillon
I guess it's a difficult question to answer. A range would be somewhere between 15 and 35 to 40 acres. Prices for it would be relative to the historical average that you can see in our reported financial results, but they're about $230,000 to $240,000 an acre.
I want to emphasize that it's difficult to predict those in the environment that we're in, and especially as credit appears to be determining factor for some of these closings to actually occur this year. However we're going to work diligently to accomplish the expectations that I just described, and with a bit of luck maybe we'll be successful.
Robert Holt - Holt Capital Partners
And how would that compare to your total inventory of commercial acreage?
Kenneth D. Mann
We've got about, it's around 440 acres of commercial property that's been titled but not yet contracted for.
Robert Holt - Holt Capital Partners
And your royalty income, is that being booked in the Other Income category on the income statement?
Ray C. Dillon
I'll let Ken handle that.
Kenneth D. Mann
Yes, that's correct. I mean it's something that obviously on our income statement we report net sales as one item of the revenue item, but yes to answer your question, that's how we're recording it.
Robert Holt - Holt Capital Partners
And would it be a fair assumption if you're running on about a $40,000-a-month rate that appears to be escalating to think in terms of that being a three-quarters of a million dollar number for the year?
Ray C. Dillon
It's hard to predict. We're just beginning to see these royalty revenues begin to come in, and we've described what we've seen really for the first quarter. Drilling activity continues to increase, and depending on prices, I think that you could possibly annualize that amount.
I'm not sure that we're comfortable in saying you could escalate it depending on the number of rigs that come to the area and continue to drill additional wells. However I will point out that Chesapeake has indicated that they're bringing about 10 additional rigs to the area to begin drilling this year, but where those rigs will drill and whether we have any ownership in any of those sections is impossible for us to determine at this time.
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