Monday, March 19, 2012HOWLAND, Ohio -- Investors apparently like the idea of Avalon Holdings Inc., the waste management company that also operates three area golf clubs, getting into the brine disposal business.
A one-sentence notice of the company’s intention was included in its annual report, filed Thursday with the U.S. Securities and Exchange Commission. The following day, Avalon’s share price rose 26.6% in extremely heaving trading.
Stated the company in the SEC report: “Due to the increase of oil and gas drilling in the Marcellus Shale and Utica Shale regions located in northeast Ohio and western Pennsylvania, Avalon is exploring and researching the possibility of drilling deep waste water disposal wells for the disposal of the brine waters from such drilling and, as such, has purchased options on a number of properties for this purpose.”
The company previously disclosed that it has received a payment of $400,000 for leasing oil and gas drilling rights on some 200 acres it owns.
Avalon did not disclose where it could drill brine injection wells, nor any timetable to execute this possible new phase of its waste-disposal business.
Brine disposal wells have come under heavy regulatory scrutiny since the series of 12 earthquakes that rattled the area last year. In linking the cause of the quakes to one of D&L Energy’s brine disposal wells at its Salts Springs Road headquarters in Youngstown, the Ohio Department of Natural Resources recently announced new standards for transporting and disposing of brine, a by-product of hydraulic fracturing. No new wells can be drilled into the Precambrian basement rock formation, the fault-line area of the earthquakes, the agency said. Companies involved in brine disposal must also submit extensive geological data before drilling.
On Friday, the first trading day following Avalon’s announcement, the company’s stock price rose to $4.29 on a trading volume of 4,700. The day before, March 15, just 100 shares were traded.
In its annual report, the company also said it could enter into acquisition agreements that would expand its golf club business. “Several private country clubs in the northeast Ohio area are experiencing economic difficulties,” the company said. “Avalon believes some of these clubs may represent an attractive investment opportunity. While Avalon has not entered into any pending agreements for acquisitions, it may do so at any time.”
Avalon Holdings reported fourth-quarter net operating revenues of $16.9 million compared with $11.3 million in 2011. The company recorded net income of $.7 million or 19 cents per share in the fourth quarter compared with $.1 million or 2 cents per share in 2010.
For the full year of 2011, net operating revenues increased to $54.0 million compared with $43.5 million for 2011. The company reported net income of $.8 million, or 20 cents per share for 2011 compared with a net loss of $.5 million, or 14 cents per share for 2010.
Avalon Holdings will conduct its annual shareholders meeting April 26 at its Avalon Golf and Country Club at Squaw Creek in Vienna.
Published by The Business Journal, Youngstown, Ohio.