CORRESP 1 filename1.htm
METZGER & McDONALD PLLC
A PROFESSIONAL LIMITED LIABILITY COMPANY
ATTORNEYS, MEDIATORS & COUNSELORS

Steven C. Metzger | 3626 N. Hall Street, Suite 800 |
Direct Dial 214-740-5030 | Dallas, Texas 75219-5133 | Facsimile 214-224-7555
smetzger@pmklaw.com | 214-969-7600 | 214-523-3838
| www.pmklaw.com | 214-969-7635

October 8, 2012
Via EDGAR
The Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Attn: Karl Hiller, Branch Chief
Joanna Lamb, Staff Accountant

| Re: | New Concept Energy, Inc. (Commission File No. 000-08187; CIK No. 0000105744) - Form 10-K for the fiscal year ended December 31, 2011; Form 10-Q for the fiscal quarter ended June 30, 2012; Response Letter dated September 12, 2012 |

Ladies and Gentlemen:
On behalf of New Concept Energy, Inc., a Nevada corporation (“GBR”) this letter is being filed as correspondence uploaded on the EDGAR system on behalf of GBR in response to a letter of comment from the Staff of the Securities and Exchange Commission dated September 12, 2012. Schedule 1 annexed to this letter contains the responses to the comments of the Staff. In each instance on such Schedule, for convenience, each comment of the Staff is repeated, followed in each instance by the applicable response to such comment or explanation. Also included in such response, where appropriate, is a letter/page reference to the text to the applicable document or instrument referred to in the comment.
This letter is being filed under the EDGAR system in direct response to the comments of the Staff. If you would like to discuss any item concerning the referenced matter included in this letter or Schedule 1, please do not hesitate to contact the undersigned at any time at 214-740-5030 direct or Gene S. Bertcher, President of GBR at 469-522-4238 direct.

| Very truly yours,
| /s/ Steven C. Metzger
| Steven C. Metzger

| cc: | New Concept Energy, Inc.
|  | 1603 LBJ Freeway, Suite 300
|  | Dallas. Texas 75234
|  | Attn: Gene S. Bertcher, President

SCHEDULE 1
Response to Comments of the Staff of
The Securities and Exchange Commission
by letter dated September 12, 2012 with respect to
Form 10-K for the fiscal year ended December 31, 2011 and
Form 10-Q for the fiscal quarter ended June 30, 2012
New Concept Energy, Inc.
Commission File No. 000-08187
_________________
The following information is to provide a response to comments of the Staff of the Securities and Exchange Commission rendered by letter dated September 12, 2012 with respect to Form 10-K for the fiscal year ended December 31, 2011 and Form 10-Q for the fiscal quarter ended June 30, 2012 of New Concept Energy, Inc. (the “Company” or “NCE” or “GBR”). For convenience, each comment of the Staff is restated below, with our response noted immediately following the comment. Also included in such response is a letter/page reference to the text of each instrument where applicable.
Form 10-K for the Fiscal Year ended December 31, 2011
Business, page 4
Comment/Observation No. 1. We note the majority of your revenues appear to come from
your real estate operations. Please include a schedule of lease expirations for each of the next ten years stating (i) the number of tenants whose leases will expire; (ii) the annual rental represented by such leases; and (iii) the percentage of gross annual rental represented by such leases.
Response to Comment/Observation No. 1. The Company does not own any residential facilities; however the Company does hold a triple net lease for one retirement facility with 114 units. NCE does not require long term leases with any of the residents who can move out of the facility at any time upon reasonable notice based on the circumstances. Once a resident leaves the property, no further charges are made to that resident for rental. That concept is the industry practice for retirement and nursing home facilities.
Comment/Observation No. 2. Please disclose historical property occupancy trends. Please also accompany this disclosure with property average rent trends, as adjusted to reflect the impact of tenant expense reimbursements and tenant concessions, such as free rent.
Response to Comment/Observation No. 2. The average occupancy and lease rates per resident for our one retirement facility is as follows:
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|  | Average |  |  | Average |
|  | Occupancy |  |  | Monthly Rate |
December 2007 |  |  | 99.8% |  |  |  | $2,028 |
December 2008 |  |  | 96.7% |  |  |  | $2,052 |
December 2009 |  |  | 93.8% |  |  |  | $2,123 |
December 2010 |  |  | 91.3% |  |  |  | $2,139 |
December 2011 |  |  | 90.5% |  |  |  | $2,191 |
June 2012 |  |  | 85.2% |  |  |  | $2,233 |

Properties, page 9
Comment/Observation No. 3. We note that you have not provided all of the property disclosures that are necessary to comply with Subpart 1200 of Regulation S-K. Please understand that many of the Items require disclosures covering each of the last three fiscal years and narratives to supplement information provided in tabular form.
Please expand your disclosures to include the required information and ensure that your revisions address the following points.

| • | Discussion of investments and progress converting undeveloped reserves to developed reserves and reasons for derecognition (Item 1203)

| • | Production prices and costs per unit (Item 1204)

| • | Number and types of wells drilled each year - indicate whether these are net productive or dry development or exploratory (Item 1205)

| • | Description of present activities including any activities which are of material importance (Item 1206)

| • | Delivery commitments if applicable (Item 1207)

Response to Comment/Observation No. 3. Please see a proposed revised Part I, Item 1 Business attached which adds Additional Oil and Gas Information (highlighted) which adds the requested information [Attachment A].
Executive Compensation, page 24
Comment/Observation No. 4. Please revise to provide all of the information required by Items 402(l) through (r) of Regulation S-K. We may have further comments after reviewing your response.
Response to Comment/Observation No. 4. Item 402(l) of Regulation S-K provides that “a registrant that qualifies as a “smaller reporting company,” . . . may provide the scaled disclosure in paragraphs (m) through (r) instead of paragraphs (a) through (k) and (s) of this Item. The Company chose instead, in its Form 10-K Annual Report under Item 11 to provide the information in a substantially similar format to prior years as the only executive officer whose compensation qualifies for
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inclusion is Gene S. Bertcher, Chairman, President and Chief Financial Officer. Gene S. Bertcher is also the Principal Executive Officer (so-called “PEO”) in Item 402 of Regulation S-K. The information currently included in the Form 10-K under Item 11 satisfies (m), contains the same Summary Compensation Table as set forth in (n), does not require a narrative description of any material factors necessary to an understanding of the information disclosed in the table as provided by subpart (o) and already includes the precise information suggested by subpart (r) including the exact table specified for Director Compensation. As subpart (l) under Item 402 utilizes the phrase “may” (which it is wholly permissive and not required) the Registrant chose to continue to utilize the same format updated as in prior years which covers subparts (a) through (k) of Item 402 of Regulation S-K. Registrant would respectfully request that this comment be withdrawn to the extent the Staff “requires” Items 402(l) through (r) of Regulation S-K rather than allowing its permissive use as stated by subpart (l) of Item 402.
Certain Relationships and Related Transactions, and Director Independence, page 26
Comment/Observation No. 5. We note your reference to “a related company which pays
50% of Mr. Bertcher’s total compensation” on page 24. Please described the arrangement and file the agreement as an exhibit.
Response to Comment/Observation No. 5. Commencing in February 2008, three other publicly held entities needed a chief financial officer, Income Opportunity Realty Investors, Inc. (“IOT”), Transcontinental Realty Investors, Inc. (“TCI”) and American Realty Investors, Inc. (“ARL”) each of which have the same contractual advisor, now Pillar Income Asset Management, Inc. (“Pillar”). On an interim basis, these three entities made an arrangement with the Company for the accounting and administrative services of the Company, specifically Gene S. Bertcher, President and principal executive officer of the Company who is a certified public accountant and has a long history in that industry. At the time NCE through Bertcher was also providing accounting and administrative services to other entities on a fee based arrangement to assist those entities when NCE had excess capacity and personnel to provide accounting services. Commencing February 2008, Mr. Bertcher was elected as an officer and chief financial officer of each of IOT, TCI and ARL. As a compensation arrangement evolved overtime, the three entities agreed to reimburse NCE for one-half of the gross compensation and related expenses of Bertcher at NCE and from and after December 31, 2010, arranged to provide office space for Mr. Bertcher and certain other NCE personnel rather than requiring operating out of two separate locations. Beginning January 1, 2011, the NCE accounting department moved into offices maintained by the contractual advisor of the three entities. Further, NCE was allowed the use of certain administrative services such as space on the contractual advisor’s computer server, use of copiers, telephone service etc. NCE has not been charged for the use of office space, computer services, telephone service or other day-to-day cost of operating an office. Each of IOT, TCI and ARL effectively split the cost one-third each. ARL owns in excess of 80% of the Common Stock of TCI and TCI in turn owns in excess of 80% of the Common Stock of IOT. A copy of the applicable agreement, which renews on an annual basis and is terminable on sixty days written notice is attached to this response as Attachment B.
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Exhibits and Financial Statement Schedules, page 30
Comment/Observation No. 6. You disclose that independent petroleum engineers prepared your reserve reports on page 9. Please file your third party report as an exhibit. Refer to Item 1202(a)(8) of Regulation S-K.
Response to Comment/Observation No. 6. NCE will present the reserve report prepared by an independent petroleum engineer as an exhibit in an amended filing. A copy of the reserve report is also attached to this response as Attachment C.
Comment/Observation No. 7. Your exhibit index includes an agreement referenced as Exhibit 10.3, which does not appear to be filed with your Form 10-K or incorporated by reference. Please advise.
Response to Comment/Observation No. 7. The inclusion of Exhibit “10.3" styled “Form of Umbrella Agreement” was included in the exhibit list for the Company’s Form 10-K for the fiscal year ended December 31, 2011 in error and the reference will be deleted in future filings. This item was picked up in “error” from a prior summarized list. Please accept the Company’s apology for the typographical error.
Report of Independent Registered Public Accounting Firm, page 34
Comment/Observation No. 8. The audit report is not properly dated at March 30, 2011 as this precedes the end of the periods covered by your financial statements. Please obtain and file in an amendment to your Form 10-K a correctly dated audit report.
Response to Comment/Observation No. 8. The date should be March 31, 2012 and will be corrected in an amendment.
Exhibit 32.1
Certification required by Section 1350 of Chapter 63 of Title 18 of the United States Code
Comment/Observation No. 9. We note that you have not filed the certification required by Item 601(b)(32) of Regulation S-K. The certification pertaining to your 2009 report will not suffice. You should file a complete amendment to your annual report, with all disclosures prescribed for all sections of the document, to include the certifications, prescribed under Item 601(b)(32) of Regulation S-K, pertaining to your 2011 report. In addition, the certifications required under Item 601(b)(31) of Regulation S-K will need to be updated to comply with Rule 12b-15 of Regulation 12B.
Response to Comment/Observation No. 9. Exhibit 32.1 filed with the Form 10-K Annual Report for the fiscal year ended December 31, 2011 contains two typographical errors referring to the year 2009 which should have been in each instance the year 2011. The Registrant apologizes for the typographical errors which were unintentional and will certainly be corrected in the future.
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Form 10-Q for the Fiscal Quarter ended June 30, 2012
Management’s Discussion and Analysis, page 11
Comment/Observation No. 10. Please expand your disclosure to comply with Item 303(b)(2) of Regulation S-K, which requires discussion and analysis of material changes, comparing the results of operations for the quarter to the corresponding quarter of the prior year, to augment your narrative on the cumulative results of operations. Please adhere to Instructions 3, 4 and 5 to paragraph 303(b) in preparing your revisions.
Response to Comment/Observation No. 10. In future filings the Company will add a quarter to quarter comparison similar to the following comparison of the three months ended June 30, 2012 with the same period in 2011.
The Company reported a net loss of $169,000 for the three months ended June 30, 2012, as compared to net income of $66,000 for the similar period in 2011.
For the three months ended June 30, 2012, the Company recorded oil and gas revenues of $325,000 as compared to $280,000 for the comparable period of 2011. The changes in oil & gas revenue was due to an increase of approximately $105,000 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 $663,000 for the three months ended June 30, 2012 from its retirement property compared to $733,000 for the comparable period in 2011. The decrease was due almost entirely to a reduction in the number of residence in the facility.
For the three months ended June 30, 2012, the Company recorded oil and gas operating expenses of $453,000 as compared to $365,000 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 June 30, 2012, operating expenses at the retirement property were $353,000 as compared to $321,000 for the comparable period in 2011. The increases in operating expenses were due to an overall increase in non payroll related expenses
For the three months ended June 30, 2012, corporate general & administrative expenses were $134,000 as compared to $126,000 for the comparable periods in 2011.
For the three months ended June 30, 2012, interest income was $0 as compared to $120,000 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.
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For the six months ended June 30, 2012 the Company recorded interest expense of $56,000 as compared to $31,000 for the comparable periods in 2011. The increase is due to additional interest due on financing obtained in late 2011. The proceeds were used to drill wells.
The Company recorded other income of $104,000 for the three months ended June 30, 2012. The income was the result of a legal settlement where the Company had previously over accrued for its portion of the loss.
Exhibits, page 16
Comment/Observation No. 11. We note that you have not filed the certifications required by Item 601(b)(32) of Regulation S-K in either of the two interim reports filed subsequent to your most recent annual report. The certification attached as exhibit 32.1 to your first quarter interim report makes reference to the quarter ended September 30, 2010, while the certification attached as exhibit 32.1 to your second quarter interim report makes reference to the quarter ended June 30, 2011. Please amend both interim reports to resolve these deficiencies, in a manner that is consistent with the corresponding guidance on the annual report certification above.
Response to Comment/Observation No. 11. In future filings the Registrant will file appropriate certifications. A copy of the correct certifications for the first two interim reports covering the periods ended March 31, 2012 and June 30, 2012 are attached as Attachments D and E.
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EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. § 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of New Concept Energy, Inc. (the "Company") on Form 10-Q for the period ended March 31, 2012, as filed with the Securities Exchange Commission on the date hereof (the "Report"), I, Gene S. Bertcher, President and Chief Financial Officer of the Company, do hereby certify pursuant to 18 U.S.C. § 1350 that:

1. | The Report fully complies with the requirements of Section I 3(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the end of the period indicated.

Dated: October, 2012

| /s/ Gene S. Bertcher
| Gene S. Bertcher, Principal Executive
| Officer, President and Chief Financial
| Officer

ATTACHMENT D

EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. § 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of New Concept Energy, Inc. (the "Company") on Form 10-Q for the period ended June 30, 2012, as filed with the Securities Exchange Commission on the date hereof (the "Report"), I, Gene S. Bertcher, President and Chief Financial Officer of the Company, do hereby certify pursuant to 18 U.S.C. § 1350 that:

1. | The Report fully complies with the requirements of Section 13(a) or I 5(d) of the Securities Exchange Act of 1934, as amended; and

2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the end of the period indicated.

Dated: October, 2012

| /s/ Gene S. Bertcher
| Gene S. Bertcher, Principal Executive
| Officer, President and Chief Financial
| Officer

ATTACHMENT E

NEW CONCEPT ENERGY, INC.
ACKNOWLEDGMENT
The undersigned, on behalf of New Concept Energy, Inc., a Nevada corporation (the “Company”), in connection with a response to a comment letter from the Staff of the Securities and Exchange Commission dated September 12, 2012, do hereby acknowledge on behalf of the Company that:

| 1. | The Company is responsible for the adequacy and accuracy of the disclosure in filings with the Securities and Exchange Commission (the “Commission”).

| 2. | Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the filings.

| 3. | The Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

IN WITNESS WHEREOF, the undersigned have executed this Acknowledgment on and as of the 8th day of October, 2012.

| NEW CONCEPT ENERGY, INC.
| By: /s/ Gene S. Bertcher
| Gene S. Bertcher, President