NEWS RELEASE
| FOR IMMEDIATE RELEASE | |
CREDO PETROLEUM REPORTS 50%
INCREASE IN SECOND QUARTER 2005 EARNINGS
Both Six-Month and Second Quarter Earnings Rise to All Time Highs
DENVER, COLORADO (BUSINESS WIRE) - June 14, 2005 - CREDO Petroleum Corporation (NASDAQ: CRED) today reported record financial results for the second quarter and six months ended April 30, 2005.
Second quarter 2005 net income increased 50% to an all time quarterly high. For the quarter, net income was $1,180,000 on revenue of $3,202,000 compared to $786,000 on revenue of $2,273,000 last year. On a per diluted share basis, net income was $.19 in the second quarter compared to $.13 last year. Cash flow from operating activities (before changes in operating assets and liabilities) increased 56% to $2,193,000, up $786,000 from last year.
For the first six months of 2005, net income increased 7% to $2,089,000 on revenue of $5,808,000 compared to net income of $1,951,000 on revenue of $5,123,000 last year. On a per diluted share basis, net income was $.34 this year compared to $.32 last year. Cash flow from operating activities (before changes in operating assets and liabilities) was $3,994,000, up 19% from last year.
James T. Huffman, President, said, "We achieved new earnings milestones for the company and its shareholders in the first half of 2005. Looking forward, the recently completed Connor, Freeman and Easterwood wells will come on line shortly and new drilling and Calliope installations are scheduled for the second half of 2005. These combine to make us optimistic that we will continue to achieve new performance records this year." Huffman further stated, "For the longer range, we made major commitments this year to increase both the volume and breadth of CREDO's exploration program by expanding into South Texas and North-Central Kansas. These 3-D seismic driven projects should begin generating drilling opportunities late this year and early next year."
PRODUCTION VOLUMES RISE 11% IN THE SECOND QUARTER
A strong increase in second quarter 2005 production spurred production for the first half, bringing it virtually even with last year. Natural gas accounts for 88% of the company's total production.
Second quarter production rose 11% to 523 MMcfge (million cubic feet of gas-equivalent) compared to 470 MMcfge last year. Natural gas production rose 14% to 460 MMcfg and oil production was 10,500 barrels compared to 11,200 barrels last year.
For the first six months, production was 959 MMcfge compared to 988 MMcfge last year. Natural gas production was 842 MMcfg and oil production 19,500 barrels.
PRODUCT PRICES SHOW CONTINUED STRENGTH
For the second quarter, net wellhead natural gas prices rose 21% to $5.63 per Mcf compared to $4.64 last year. Hedging transactions reduced wellhead prices $.12 per Mcf compared to $.34 per Mcf last year. As a result, total natural gas price realizations rose 28% to $5.51 per Mcf compared to $4.30 last year. Wellhead oil prices rose 36% to $44.49 per barrel compared to $32.77 last year.
Net wellhead natural gas prices for the first six months rose 20% to $5.72 per Mcf compared to $4.76 last year. Hedging transactions reduced wellhead prices $.33 per Mcf compared to $.07 per Mcf last year. As a result, total natural gas price realizations rose 15% to $5.39 per Mcf compared to $4.69 last year. Wellhead oil prices rose 38% to $43.66 per barrel compared to $31.58 last year.
The company has open hedge positions consisting of "collars." For July through September 2005, such collars total 300 MMbtu with a weighted average floor price of $6.02 and ceiling price of $7.15, and are estimated to cover 50% to 55% of equivalent production for those months. In addition, for December 2005 and January 2006, such collars total 120 MMbtu with a weighted average floor price of $7.00 and ceiling price of $8.68, and are estimated to cover 25% to 30% of equivalent production for those months. Subsequent to second quarter-end, hedges for May and June were closed and a futures loss of $51,000 was realized. Average gas prices in the company's market areas are expected to be 15% to 17% below NYMEX prices due to basis differentials and transportation costs.
STRONG FINANCIAL CONDITION PROVIDES
SOLID FOUNDATION FOR GROWTH
At April 30, 2005, working capital was $7,296,000. Total assets were $33,179,000 including cash and short-term investments of $5,968,000. Stockholders' equity was $23,564,000. The company's only long-term debt is a $355,000 exclusive license obligation.
CAPITAL SPENDING INCREASES 49%;
BOTH EXPLORATION AND CALLIOPE PROJECTS SIGNIFICANTLY EXPANDED
Capital spending for first half 2005 totaled $3,621,000, up 49% from last year. CREDO's business focuses on two core projects -- natural gas drilling and application of its patented Calliope Gas Recovery System. The company believes that, in combination, these two projects provide an excellent (and possibly unique) balance for achieving its goal of adding long-lived reserves and production at reasonable costs and risks.
The company currently drills primarily on its 40,000 gross acre inventory located along the shelf of the Northern Anadarko Basin in Oklahoma. During fiscal 2005, the company significantly expanded both the volume and breadth of its exploration program with new projects in South Texas and North-Central Kansas. Drilling is expected to commence on both projects late in 2005.
The Calliope segment of the company's business is focused on two areas: increasing the number of Calliope installations through joint ventures with larger companies and expanding its effort to directly purchase Calliope candidate wells from third parties. The acquisition portion of this project has recently been expanded into Texas, including hiring highly qualified, full time personnel.
* * * * *
CONTACT: David W. Vreeman
Vice President & CFO
303-297-2200
WEBSITE: www.credopetroleum.com
CREDO Petroleum Corporation is a publicly traded independent energy company headquartered in Denver, Colorado. The company is engaged in the exploration for and the acquisition, development and marketing of natural gas and crude oil in the Mid-Continent and Rocky Mountain regions. The company's stock is traded on the NASDAQ System under the symbol "CRED" and is quoted daily in the "NASDAQ Small-Cap Issues" section of The Wall Street Journal.
For 2005, cash flow from operating activities (before changes in operating assets and liabilities) consists of net income of $2,089,000, DD&A of $1,042,000, deferred income taxes of $833,000, and other of $30,000. For 2004, such cash flow consists of net income of $1,951,000, DD&A of $791,000, and deferred income taxes of $621,000.
This press release includes certain statements that may be deemed to be "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements included in this press release, other than statements of historical facts, address matters that the company reasonably expects, believes or anticipates will or may occur in the future. Such statements are subject to various assumptions, risks and uncertainties, many of which are beyond the control of the company. Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those described in the forward-looking statements.
CREDO PETROLEUM CORPORATION
FINANCIAL HIGHLIGHTS
Six Months Ended Three Months Ended
April 30, April 30,
----------------------- -----------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
REVENUES:
Oil and gas sales $5,389,000 $4,706,000 $3,004,000 $2,101,000
Operating 323,000 292,000 164,000 155,000
Investment income
and other 96,000 125,000 34,000 17,000
----------- ----------- ----------- -----------
5,808,000 5,123,000 3,202,000 2,273,000
----------- ----------- ----------- -----------
COSTS AND EXPENSES:
Oil and gas
production 1,130,000 932,000 642,000 472,000
Depreciation,
depletion and
amortization 1,042,000 791,000 565,000 362,000
General and
administrative 715,000 667,000 346,000 336,000
Interest 19,000 23,000 10,000 11,000
----------- ----------- ----------- -----------
2,906,000 2,413,000 1,563,000 1,181,000
----------- ----------- ----------- -----------
INCOME BEFORE INCOME
TAXES 2,902,000 2,710,000 1,639,000 1,092,000
INCOME TAXES (813,000) (759,000) (459,000) (306,000)
----------- ----------- ----------- -----------
NET INCOME $2,089,000 $1,951,000 $1,180,000 $ 786,000
=========== =========== =========== ===========
EARNINGS PER SHARE OF
COMMON STOCK - BASIC $ .35 $ .32 $ .20 $ .13
=========== =========== =========== ===========
EARNINGS PER SHARE OF
COMMON STOCK -
DILUTED $ .34 $ .32 $ .19 $ .13
=========== =========== =========== ===========
Weighted average
number of shares of
Common Stock and
dilutive securities:
Basic 6,040,000 6,011,000 6,042,000 6,018,000
=========== =========== =========== ===========
Diluted 6,204,000 6,162,000 6,213,000 6,182,000
=========== =========== =========== ===========
Condensed Balance Sheet Information April 30, 2005 October 31, 2004
--------------- ----------------
Cash and Short-Term Investments $ 5,968,000 $ 6,889,000
Other Current Assets 4,301,000 3,128,000
Oil and Gas Properties, Net 22,133,000 19,509,000
Exclusive License Agreement, Net 373,000 408,000
Other Assets, Net 404,000 1,042,000
---------------- ----------------
$ 33,179,000 $ 30,976,000
================ ================
Current Liabilities $ 2,973,000 $ 4,406,000
Deferred Income Taxes, Net 5,602,000 4,605,000
Exclusive License Agreement
Obligation, Net of Current 297,000 297,000
Asset Retirement Obligation 743,000 748,000
Stockholders' Equity 23,564,000 20,920,000
---------------- ----------------
$ 33,179,000 $ 30,976,000
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©2000-2005 CREDO Petroleum Corporation. All rights
reserved. |
