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 July 31, 2006
     
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 o No ž
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 o            Non-accelerated filer  ž
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
 
Sept. 8, 2006   Common stock, $.10 par value   9,247,646
 
 

 

 

 

 

CREDO PETROLEUM CORPORATION AND SUBSIDIARIES
Quarterly Report on Form 10-Q For the Period Ended July 31, 2006
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  Certification of CEO Pursuant to Section 302
  Certification of CFO Pursuant to Section 302
  Certification of CEO & 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
                 
    July 31,     October 31,  
    2006     2005  
    (Unaudited)          
ASSETS
Current Assets:
               
Cash and cash equivalents
  $ 3,784,000     $ 1,935,000  
Short-term investments
    5,858,000       5,495,000  
Receivables:
               
Accrued oil and gas sales
    2,118,000       2,776,000  
Trade
    1,126,000       1,003,000  
Other current assets
    215,000       245,000  
 
           
Total current assets
    13,101,000       11,454,000  
 
           
 
               
Long-term assets:
               
Oil and gas properties, at cost, using full cost method:
               
Unevaluated oil and gas properties
    5,268,000       3,452,000  
Evaluated oil and gas properties
    42,535,000       36,121,000  
Less: accumulated depreciation, depletion and amortization of oil and gas properties
    (17,507,000 )     (15,022,000 )
 
           
Net oil and gas properties, at cost, using full cost method
    30,296,000       24,551,000  
 
           
 
Exclusive license agreement, net of amortization of $414,000 in 2006 and $361,000 in 2005
    285,000       338,000  
 
Compressor and tubular inventory to be used in development
    1,298,000       1,288,000  
 
Other assets
    200,000       213,000  
 
           
 
Total assets
  $ 45,180,000     $ 37,844,000  
 
           
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
               
Current Liabilities:
               
Accounts payable and accrued liabilities
  $ 4,049,000     $ 3,426,000  
Income taxes payable
    132,000       331,000  
 
           
Total current liabilities
    4,181,000       3,757,000  
 
Long Term Liabilities:
               
Deferred income taxes, net
    7,387,000       5,978,000  
Exclusive license obligation, less current obligations of $64,000 in 2006 and 2005
    233,000       233,000  
Asset retirement obligation
    832,000       929,000  
 
           
Total liabilities
    12,633,000       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
    14,729,000       13,933,000  
Treasury stock, 263,000 shares in 2006 and 279,000 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
    16,867,000       12,494,000  
 
           
Total stockholders’ equity
    32,547,000       26,947,000  
 
           
 
               
Total liabilities and stockholders’ equity
  $ 45,180,000     $ 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)
                                 
    Nine Months Ended     Three Months Ended  
    July 31,     July 31,  
    2006     2005     2006     2005  
REVENUES:
                               
Oil and gas sales
  $ 11,809,000     $ 8,785,000     $ 3,966,000     $ 3,396,000  
Investment income and other
    446,000       201,000       3,000       105,000  
 
                       
 
    12,255,000       8,986,000       3,969,000       3,501,000  
 
                       
 
                               
COSTS AND EXPENSES:
                               
Oil and gas production
    2,604,000       1,920,000       861,000       790,000  
Depreciation, depletion and amortization
    2,568,000       1,610,000       939,000       568,000  
General and administrative
    940,000       782,000       361,000       242,000  
Interest
    27,000       28,000       9,000       9,000  
 
                       
 
    6,139,000       4,340,000       2,170,000       1,609,000  
 
                       
 
                               
INCOME BEFORE INCOME TAXES
    6,116,000       4,646,000       1,799,000       1,892,000  
 
                               
INCOME TAXES
    (1,743,000 )     (1,301,000 )     (513,000 )     (530,000 )
 
                       
 
                               
NET INCOME
  $ 4,373,000     $ 3,345,000     $ 1,286,000     $ 1,362,000  
 
                       
 
                               
EARNINGS PER SHARE OF COMMON STOCK BASIC
  $ .48     $ .37     $ .14     $ .15  
 
                       
 
                               
EARNINGS PER SHARE OF COMMON STOCK DILUTED
  $ .46     $ .36     $ .14     $ .15  
 
                       
 
                               
Weighted average number of shares of Common Stock and dilutive securities:
                               
Basic
    9,191,000       9,069,000       9,231,000       9,087,000  
 
                       
 
                               
Diluted
    9,512,000       9,331,000       9,498,000       9,339,000  
 
                       
The accompanying notes are an integral part of these consolidated financial statements.

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