CREDO PETROLEUM CORPORATION

 

(Exact name of registrant as specified in its charter)

Colorado		84-0772991
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)
1801 Broadway, Suite 900, Denver, Colorado		80202
(Address of principal executive offices)		(Zip Code)

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ITEM 1. FINANCIAL STATEMENTS

CREDO PETROLEUM CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

		April 30,				October 31,
		2006				2005
		(Unaudited)
A S S E T S
Current Assets:
Cash and cash equivalents		$	2,084,000			$	1,935,000
Short-term investments			5,893,000				5,495,000
Receivables:
Accrued oil and gas sales			2,929,000				2,776,000
Trade			816,000				1,003,000
Other current assets			257,000				245,000
Total current assets			11,979,000				11,454,000
Long-term assets:
Oil and gas properties, at cost, using full cost method:
Unevaluated oil and gas properties			4,864,000				3,452,000
Evaluated oil and gas properties			40,049,000				36,121,000
Less: accumulated depreciation, depletion and amortization of oil and gas properties			(16,594,000	)			(15,022,000	)
Net oil and gas properties, at cost, using full cost method			28,319,000				24,551,000
Exclusive license agreement, net of amortization of $396,000 in 2006 and $361,000 in 2005			303,000				338,000
Compressor and tubular inventory to be used in development			1,263,000				1,288,000
Other assets			217,000				213,000
Total assets		$	42,081,000			$	37,844,000
L I A B I L I T I E S  A N D  S T O C K H O L D E R S ’ E Q U I T Y
Current Liabilities:
Accounts payable and accrued liabilities		$	2,787,000			$	3,426,000
Income taxes payable			359,000				331,000
Total current liabilities			3,146,000				3,757,000
Long Term Liabilities:
Deferred income taxes, net			6,781,000				5,978,000
Exclusive license obligation, less current obligations of $64,000 in 2006 and 2005			233,000				233,000
Asset retirement obligation			909,000				929,000
Total liabilities			11,069,000				10,897,000
Commitments
Stockholders’ Equity:
Preferred stock, no par value, 5,000,000 shares authorized, none issued			—				—
Common stock, $.10 par value, 20,000,000 shares authorized, 9,510,000 shares issued in 2006 and 2005			951,000				951,000
Capital in excess of par value			14,480,000				13,933,000
Treasury stock, 297,000 shares in 2006 and 393,000 in 2005			—				(125,000	)
Accumulated other comprehensive income (loss)			—				(306,000	)
Retained earnings, net of $6,272,000 related to 20% stock dividend in 2003			15,581,000				12,494,000
Total stockholders’ equity			31,012,000				26,947,000
Total liabilities and stockholders’ equity		$	42,081,000			$	37,844,000

 

		The accompanying notes are an integral part of these consolidated financial statements.

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CREDO PETROLEUM CORPORATION AND SUBSIDIARIES

Consolidated Statements of Operations
(Unaudited)

		Six Months Ended								Three Months Ended
		April 30,								April 30,
		2006				2005				2006				2005
REVENUES:
Oil and gas sales		$	7,843,000			$	5,389,000			$	3,723,000			$	3,004,000
Investment income and other			443,000				96,000				198,000				34,000
			8,286,000				5,485,000				3,921,000				3,038,000
COSTS AND EXPENSES:
Oil and gas production			1,743,000				1,130,000				739,000				642,000
Depreciation, depletion and amortization			1,629,000				1,042,000				891,000				565,000
General and administrative			579,000				540,000				319,000				255,000
Interest			18,000				19,000				9,000				10,000
			3,969,000				2,731,000				1,958,000				1,472,000
INCOME BEFORE INCOME TAXES			4,317,000				2,754,000				1,963,000				1,566,000
INCOME TAXES			(1,230,000	)			(771,000	)			(571,000	)			(439,000	)
NET INCOME		$	3,087,000			$	1,983,000			$	1,392,000			$	1,127,000
EARNINGS PER SHARE OF COMMON STOCK BASIC		$	.34			$	.22			$	.15			$	.12
EARNINGS PER SHARE OF COMMON STOCK DILUTED		$	.33			$	.21			$	.15			$	.12
Weighted average number of shares of Common Stock and dilutive securities:
Basic			9,171,000				9,059,000				9,207,000				9,063,000
Diluted			9,498,000				9,305,000				9,506,000				9,319,000

 

		The accompanying notes are an integral part of these consolidated financial statements.

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CREDO PETROLEUM CORPORATION AND SUBSIDIARIES

Statement of Stockholders’ Equity and Comprehensive Income (Loss)
(Unaudited)
For the Six Months Ended April 30, 2006

																		Accumulated
										Capital In								Other												Total
		Common Stock								Excess Of				Treasury				Comprehensive				Comprehensive				Retained				Stockholders’
		Shares				Amount				Par Value				Stock				Income (Loss)				Income				Earnings				Equity
Balance, October 31, 2005			9,510,000			$	951,000			$	13,933,000			$	(125,000	)		$	(306,000	)						$	12,494,000			$	26,947,000
Comprehensive income:
Net income			—				—				—				—				—			$	3,087,000				3,087,000				3,087,000
Other comprehensive income:
Change in fair value of derivatives, net of tax			—				—				—				—				306,000				306,000				—				306,000
Total comprehensive income			—				—				—				—				—			$	3,393,000				—				—
Exercise of common stock options			—				—				428,000				125,000				—								—				553,000
Compensation expense associated with unvested portion of previously granted stock options			—				—				119,000				—				—								—				119,000
Balance, April 30, 2006			9,510,000			$	951,000			$	14,480,000			$	—			$	—							$	15,581,000			$	31,012,000