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REAL ESTATE OPERATIONS

3 Months Ended

Mar. 31, 2023

REAL ESTATE OPERATIONS

REAL ESTATE OPERATIONS

NOTE 6. REAL ESTATE OPERATIONS

Real Estate Operations

Land and development costs at March 31, 2023 and December 31, 2022 were as follows (in thousands):


		As of
		March 31, 2023			December 31, 2022
Land and Development Costs		$	358		$	358
Subsurface Interests			325			327
Total Land and Development Costs		$	683		$	685

Subsurface Interests. As of March 31, 2023, the Company owns 353,000 acres of Subsurface Interests. The Company leases certain of the Subsurface Interests to mineral exploration firms for exploration. The Company’s subsurface operations consist of revenue from the leasing of exploration rights and in some instances, additional revenues from royalties applicable to production from the leased acreage, which revenues are included within real estate operations in the consolidated statements of operations. During the three months ended March 31, 2023, the Company sold subsurface oil, gas, and mineral rights of 2,412 acres for a sales price of $0.2 million. During the three months ended March 31, 2022, the Company sold subsurface oil, gas, and mineral rights of 4,750 acres for a sales price of $0.4 million. Revenues received from oil royalties totaled under $0.01 million during each of the three months ended March 31, 2023 and 2022.

The Company is not prohibited from selling any or all of its Subsurface Interests. The Company may release surface entry rights or other rights upon request of a surface owner for a negotiated release fee typically based on a percentage of the surface value. Should the Company complete a transaction to sell all or a portion of its Subsurface Interests or complete a release transaction, the Company may utilize the like-kind exchange structure in acquiring one or more replacement investments including income-producing properties. Cash payments for the release of surface entry rights totaled $0.1 million and $0.2 million during the three months ended March 31, 2023 and 2022, respectively.

Mitigation Credits. The Company owns an inventory of mitigation credits with a cost basis of $2.5 million as of March 31, 2023. As of December 31, 2022, the Company owned mitigation credits and mitigation credit rights with an aggregate cost basis of $2.6 million. During the three months ended March 31, 2023, the remaining mitigation credit rights were released and transferred to mitigation credits as they are available for sale as of March 31, 2023. On December 29, 2022, the Company completed the sale of the entity that owned the mitigation bank previously owned by the Company. A balance of mitigation credits and mitigation credit rights were retained by the Company as part of the sale agreement.

Revenues and the cost of sales of mitigation credit sales are reported as revenues from, and direct costs of, real estate operations, respectively, in the consolidated statements of operations. During the three months ended March 31, 2023, 0.73 mitigation credits were sold for $0.1 million resulting in a gain of less than $0.1 million. There were no mitigation credit sales during the three months ended March 31, 2022.