New Concept Energy, Inc. Reports First Quarter 2012 Results

New Concept Energy, Inc. (AMEX:GBR), ( the “Company” or “NCE”) a Dallas-based oil and gas company, today reported a net loss for the three months ended March 31, 2012 of $1.3 million or $(0.65) per share, compared to net income of $97,000 or $0.05 per share for the three months ended March 31, 2011.

During the past few years the exploration, development and production of natural gas has resulted in an oversupply of natural gas which has resulted in a substantial reduction in the market price. Management of the Company believes that this oversupply will last for some time and does not anticipate an increase in the price we can receive in the market place. In April 2012 the Company entered into an agreement to fix the price it receives for the sale of its gas. For the five years ended April 2017, the Company will receive $4.53 per MCF. While the lock-in price is approximately 40% higher than the current price paid to the company when applying the new price using the formula mandated by the accounting rules, which includes a 10% present value factor, the result is a reduction of $912,000 in the accounting value of the Company’s recorded interests in its oil and gas properties. This accounting reduction in value has been reflected in the financial statements of the company as of March 31, 2012.

For the three months ended March 31, 2012, the Company recorded oil and gas revenues of $290,000 as compared to $280,000 for the comparable period of 2011. The changes in oil & gas revenue were due to an increase of approximately $70,000 due to new oil wells that were drilled in late 2011 and a decrease of approximately $60,000 due to lower prices being received for the sale of our natural gas.

The Company recorded revenues of $674,000 for the three months ended March 31, 2012 from its retirement property compared to $729,000 for the comparable period in 2011. The decrease was due almost entirely to a reduction in the number of residents in the facility.

For the three months ended March 31, 2012, the Company recorded oil and gas operating expenses of $471,000 as compared to $335,000 for the comparable period of 2011. The increase was principally due to an increase in depletion expense. The marked decrease in the market price being paid for natural gas resulted in a modification in the valuation the company placed on its gas reserves which impacted the anticipated production life of its wells. This led to an acceleration of the depletion expense being recorded.

For the three months ended March 31, 2012, operating expenses and lease expense at the retirement property were $597,000 as compared to $581,000 for the comparable period in 2011. The increase was due to an increase in the lease payment being recorded on the property of $40,000 offset by a general reduction in operating costs.

For the three months ended March 31, 2012, corporate general & administrative expenses were $159,000 as compared to $124,000 for the comparable period in 2011. The increase is primarily due to legal fees incurred by the company to defend itself against certain lawsuits.

For the three months ended March 31, 2012, interest income was $0 as compared to $119,000 for the comparable period in 2011. In December 2011 the Company became concerned about the collectability of a certain note receivable and determined that the note and any accrued interest be fully reserved. The company continues to accrue interest but provides a full reserve should it be unable to collect.

For the three months ended March 31, 2012, the Company recorded interest expense of $62,000 as compared to $31,000 for the comparable period in 2011. The increase is due to additional interest due on financing obtained in late 2011. The proceeds were used to drill wells.