Local companies riding financial market storm

Published 9:13 pm Saturday, August 16, 2008

NATCHEZ — High oil prices and the sub-prime mortgage crisis have not been problematic for two publicly traded Natchez companie.s

Callon Petroleum’s stock, which is traded on the New York Stock Exchange, climbed from $11.76 this time last year to a recent high of $28.93 (CPE). It closed Friday at $20.10 per share. Britton & Koontz Bank, which is traded on the NASDAQ, has stayed fairly level in recent months.

“Whatever the commodities prices are doing is what the stock prices will do,” said Bob Weatherly, executive vice president and chief financial officer for Callon. “It ran up with the commodities market.”

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Like many energy companies, Callon has also seen a big increase in income, which has gone up 50 percent since the second quarter of 2007, Weatherly said.

However, because income is based on the prices of the commodities, the true measure of an energy company is production, Weatherly said.

“In the oil and gas business they measure you how much oil and gas you’re producing,” he said.

For the second quarter of 2008 Callon produced 286,000 barrels of oil, up from 263,000 in 2007.

They also produced 37.2 million cubic feet of natural gas equivalent per day. The natural gas production declined sharply from 2007 as Callon shifted its focus to its Entrada project.

The company is currently working to exploit the Entrada field, located off the coast of Louisiana.

“We anticipate (production) will go way up with the completion of Entrada,” Weatherly said.

The water above the deposit is 4,600 feet deep, and the wells will have a vertical depth of 13,000 to 21,000 feet, which makes it difficult to get to the oil, he said.

“We just want to get it out of the ground,” he said.

The Entrada field has a proven reserve of 32 million barrels equivalent, but could hold much more, Weatherly said.

“You don’t know until the oil comes ashore, but it has the potential to be a big increase,” he said.

The success of oil companies in the region has also been a boost to B&K Bank, said Page Ogden, president and chief executive officer for B&K Bank.

“We’re all benefiting somewhat from the price of oil, the renewed activity in the oil and gas sector,” he said.

Because B&K is a smaller company, it has been immune to much of the turbulence in the national banking industry and has kept its earnings relatively even.

“Our core earnings are relatively flat,” Odgen said. “That’s a great thing in the banking world to be able to maintain your earnings.”

One reason for this is B&K’s small size.

“This area is somewhat insulated from some of the economic issues that are occurring in pockets throughout the country,” Odgen said. “We’re not down nearly as much as some of the larger banks in the country.”

The bank has also seen asset growth of approximately $23.4 million.

“A good part of that growth was in our investment portfolio,” he said. “Part of our ability to do that was based on our strong capital growth.

B&K’s stock closed Friday at $13.83 per share and has remained fairly steady over the past year. The 52-week high was $18 and the low was $11.05.

“The majority of our shareholders are long time holders and the stocks are not being actively traded out there,” he said.

One of the keys to coming out unscathed from the mortgage crash is small banks’ focus on commercial real estate, Odgden said.

From 2002 to 2007, B&K’s commercial loans jumped from $60 million to $112 million, up to 50 percent of their total loans.

“We’ve been a major player in the mortgage business but we’ve done less in recent years than in the 1990s because the mortgage brokerage industry was doing most of those originations,” he said.

However B&K is looking to get back into the residential loan game.

“The long term players in this will be the banks, not necessarily the parties that were players before,” he said.