UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
     
ž   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 2007
     
o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number: 0-8877
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)
303-297-2200
 
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ž No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. (See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Act.)
Large accelerated filer o       Accelerated filer ž       Non-accelerated filer o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ž
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, net of treasury stock, as of the latest practicable date.
         
Date   Class   Outstanding
 
March 12, 2007   Common stock, $.10 par value   9,261,000
 
 

 

 

 

CREDO PETROLEUM CORPORATION AND SUBSIDIARIES
Quarterly Report on Form 10-Q For the Period Ended January 31, 2007
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  Certification by Chief Executive Officer
  Certification by Chief Financial Officer
  Certification by CEO and CFO Pursuant to Section 906
The terms “CREDO”, “Company”, “we”, “our”, and “us” refer to CREDO Petroleum Corporation and its subsidiaries unless the context suggests otherwise.
 

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Table of Contents

PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CREDO PETROLEUM CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
                 
    January 31,     October 31,  
    2007     2006  
    (Unaudited)          
ASSETS
               
Current Assets:
               
Cash and cash equivalents
  $ 3,055,000     $ 4,577,000  
Short-term investments
    6,136,000       5,624,000  
Receivables:
               
Accrued oil and gas sales
    1,656,000       777,000  
Trade
    1,143,000       1,963,000  
Derivative Assets
    526,000       897,000  
Other current assets
    240,000       71,000  
 
           
Total current assets
    12,756,000       13,909,000  
 
           
 
               
Long-term assets:
               
Oil and gas properties, at cost, using full cost method:
               
Unevaluated oil and gas properties
    8,962,000       7,060,000  
Evaluated oil and gas properties
    44,691,000       43,588,000  
Less: accumulated depreciation, depletion and amortization of oil and gas properties
    (19,488,000 )     (18,556,000 )
 
           
Net oil and gas properties, at cost, using full cost method
    34,165,000       32,092,000  
 
           
 
               
Exclusive license agreement, net of amortization of $449,000 in 2007 and $431,000 in 2006
    251,000       268,000  
 
               
Compressor and tubular inventory to be used in development
    1,308,000       1,293,000  
 
               
Other (net)
    229,000       197,000  
 
           
 
               
Total assets
  $ 48,709,000     $ 47,759,000  
 
           
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
 
               
Current Liabilities:
               
Accounts payable
  $ 1,400,000     $ 1,581,000  
Revenue distribution payable
    1,122,000       1,273,000  
Other accrued liabilities
    510,000       808,000  
Income taxes payable
    273,000       174,000  
 
           
Total current liabilities
    3,305,000       3,836,000  
 
               
Long Term Liabilities:
               
Deferred income taxes, net
    8,367,000       8,039,000  
Exclusive license obligation, less current obligations of $70,000 in 2007 and 2006
    163,000       163,000  
Asset retirement obligation
    957,000       954,000  
 
           
Total liabilities
    12,792,000       12,992,000  
 
           
 
               
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 2007 and 2006
    951,000       951,000  
Capital in excess of par value
    14,851,000       14,794,000  
Treasury stock at cost, 249,000 shares in 2007 and 2006
    —       —  
Accumulated other comprehensive income (loss)
    379,000       650,000  
Retained earnings
    19,736,000       18,372,000  
 
           
Total stockholders’ equity
    35,917,000       34,767,000  
 
           
 
               
Total liabilities and stockholders’ equity
  $ 48,709,000     $ 47,759,000  
 
           
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)
                 
    Three Months Ended  
    January 31,  
    2007     2006  
REVENUES:
               
Oil and gas sales
  $ 3,808,000     $ 4,120,000  
Investment income and other
    247,000       245,000  
 
           
 
    4,055,000       4,365,000  
 
           
 
               
COSTS AND EXPENSES:
               
Oil and gas production
    913,000       1,004,000  
Depreciation, depletion and amortization
    958,000       738,000  
General and administrative
    278,000       260,000  
Interest
    6,000       9,000  
 
           
 
    2,155,000       2,011,000  
 
           
 
               
INCOME BEFORE INCOME TAXES
    1,900,000       2.354,000  
 
               
INCOME TAXES
    (536,000 )     (659,000 )
 
           
 
               
NET INCOME
  $ 1,364,000     $ 1,695,000  
 
           
 
               
EARNINGS PER SHARE OF COMMON STOCK BASIC
  $ .15     $ .19  
 
           
 
               
EARNINGS PER SHARE OF COMMON STOCK DILUTED
  $ .15     $ .18  
 
           
 
               
Weighted average number of shares of Common Stock and dilutive securities:
               
Basic
    9,261,000       9,137,000  
 
           
 
               
Diluted
    9,387,000       9,475,000  
 
           
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
(Unaudited)
For the Three Months Ended January 31, 2007
                                                                 
                                    Accumulated                        
                    Capital In             Other                     Total  
    Common Stock     Excess Of