NEWS RELEASE
| FOR IMMEDIATE RELEASE | Contact: James P. Garrett |
| Vice President & CFO | |
| Web Site: www.credopetroleum.com |
CREDO REPORTS RECORD NINE-MONTH EARNINGS
Higher Natural Gas Prices and Stable Production Propel Earnings
DENVER, COLORADO, September 15, 2003 – CREDO Petroleum Corporation (NASDAQ: CRED) today reported record financial results for the nine months ended July 31, 2003. Net income surged 118% to a record $1,984,000 on revenue of $5,718,000 compared to $908,000 on revenue of $3,975,000 last year. On a per diluted share basis, net income was $.50 compared to $.23 last year. Cash flow from operating activities (before working capital changes) increased 72% to $3,517,000 compared to $2,041,000 last year.
Fiscal 2003 net income includes $.02 per share related to a one-time credit for the cumulative effect of adopting Financial Accounting Standards Board Statement No. 143, Accounting for Asset Retirement Obligations.
For the third quarter ended July 31, 2003, net income was a record $797,000, or $.20 per diluted share, compared to $327,000, or $.09 per diluted share last year.
PRODUCTION STABLE AND EXPECTED TO INCREASE IN FOURTH QUARTER
Nine-month production stabilized at 1.14 Bcfge (billion cubic feet of gas-equivalent) compared to 1.17 Bcfge last year. Third quarter gas production volumes fell to 349 MMcfge (million cubic feet of gas) compared to 382 MMcfge last year. Natural gas accounts for 86% of the company’s total production.
James T. Huffman, President, said, "Natural gas production has remained stable this year as new drilling has offset expected declines on significant wells drilled during the last two years. However, new wells coming on line during the third and fourth quarters should again boost our production to record levels. These wells are described in a separate press release dated today."
PRODUCT PRICES SURGE
Net wellhead natural gas prices rose 83% to $4.75 per Mcf compared to $2.59 last year. Hedging losses reduced nine-month gas price realizations by $.40 per Mcf compared to last year’s hedging gains of $.35 per Mcf. As a result, total natural gas price realizations rose 48% to $4.35 per Mcf compared to $2.94 last year. Wellhead oil prices rose 35% to $27.65 per barrel compared to $20.54 last year.
For the quarter ended July 31, 2003, net wellhead natural gas prices rose 70% to $4.88 per Mcf compared to $2.87 last year. Hedging losses increased 2003 price realizations by $.14 per Mcf compared to last year’s hedging gains of $.05 per Mcf. As a result, total natural gas price realizations rose 72% to $5.02 per Mcf compared to $2.92 last year. Wellhead oil prices rose 13% to $26.41 per barrel compared to $23.27 last year.
At third quarter-end, the company had open hedge positions totaling 150 MMcfg covering the months of September through November 2003 at an average NYMEX price of $6.42 per Mcf. Also at third quarter-end, the August hedge was closed and a deferred gain of $84,000 was realized. Subsequent to third quarter-end, 120,000 MMcfg covering the months of September through November was added to the hedge bringing those months to 75% to 80% of estimated production at an average NYMEX price of $5.94. 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.
RECORD CAPITAL SPENDING PRODUCES GOOD RESULTS
FOR BOTH DRILLING AND CALLIOPE OPERATIONS
Capital spending in the nine-months totaled a record $4,233,000 as successful operations continued on the company's two core projects—natural gas drilling along the Anadarko Shelf of Oklahoma and application of the company’s patented Calliope gas recovery technology. A separate press release has been made today updating recent drilling results. A press release dated August 13, 2003 updated information about Calliope operations.
STRONG FINANCIAL CONDITION PROVIDES
SOLID FOUNDATION FOR GROWTH
At July 31, 2003, working capital was $6,130,000. Total assets were $23,387,000 including cash and short-term investments of $7,309,000. Stockholders’ equity was $16,512,000. The company’s only debt is a $456,000 exclusive license obligation that is payable over seven years.
NEW VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
The Board of Directors has employed James P. Garrett as the company’s Vice President and Chief Financial Officer. Mr. Garrett has an extensive oil and gas industry background. He was formerly employed by Columbus Energy Corporation and its successor, Cimarex, Energy Co.
MANAGEMENT COMMENT
"We continue to be very pleased with the progress of our business," Huffman said. "We have excellent momentum in our Calliope and drilling projects. In addition, we are optimistic about energy prices and significant production to be added by new wells coming on line during the third and fourth quarters."
* * * * *
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.
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
Nine Nine
Condensed Months Months Quarter Quarter
Operating Ended Ended Ended Ended
Information July 31, July 31, July 31, July 31,
(Unaudited) 2003 2002 2003 2002
---- ---- ---- ----
Revenue:
Oil and Gas
Sales $5,014,000 $ 3,519,000 $1,980,000 $ 1,342,000
Operating 386,000 365,000 135,000 123,000
Investment
Income and
Other 318,000 91,000 128,000 17,000
---------- ----------- ---------- -----------
5,718,000 3,975,000 2,243,000 1,482,000
---------- ----------- ---------- -----------
Expenses:
Oil and Gas
Production 1,159,000 987,000 467,000 329,000
Depreciation,
Depletion and
Amortization 930,000 911,000 325,000 353,000
General and
Administrative 939,000 742,000 333,000 257,000
Interest 34,000 38,000 11,000 13,000
---------- ----------- ---------- -----------
3,062,000 2,678,000 1,136,000 952,000
---------- ----------- ---------- -----------
Income Before
Income Taxes and
Accounting
Change 2,656,000 1,297,000 1,107,000 530,000
Income Taxes (744,000) (389,000) (310,000) (159,000)
---------- ----------- ---------- -----------
Income Before
Accounting Change 1,912,000 908,000 797,000 371,000
Cumulative Effect
of Change in
Accounting
Principle 72,000 - - -
---------- ----------- ---------- -----------
Net Income $1,984,000 $ 908,000 $ 797,000 $ 371,000
========== =========== ========== ===========
Basic Income Per
Share Before
Accounting
Change $ .48 $ .23 $ .20 $ .09
Cumulative Effect
of Change in
Accounting
Principle .02 - - -
---------- ----------- ---------- -----------
Basic Net Income
Per Share $ .50 $ .23 $ .20 $ .09
========== =========== ========== ===========
Diluted Income Per
Share
Before
Accounting
Change $ .48 $ .23 $ .20 $ .09
Cumulative Effect
of Change in
Accounting
Principle .02 - - -
---------- ----------- ---------- -----------
Diluted Net Income
Per Share $ .50 $ .23 $ .20 $ .09
========== =========== ========== ===========
Condensed Balance July 31, 2003 October 31, 2002
Sheet Information ------------- ----------------
Cash and Short-
Term Investments $ 7,309,000 $ 6,910,000
Other Current
Assets 2,060,000 1,502,000
Oil and Gas
Properties, Net 13,372,000 9,677,000
Exclusive License
Agreement, Net 495,000 548,000
Other Assets 151,000 174,000
----------- -----------
$23,387,000 $18,811,000
=========== ===========
Current
Liabilities $ 3,239,000 $ 1,782,000
Deferred Income
Taxes 3,017,000 2,314,000
Exclusive License
Agreement
Obligation 408,000 408,000
Asset Retirement
Obligation 211,000 -
Stockholders'
Equity 16,512,000 14,307,000
----------- -----------
$23,387,000 $18,811,000
=========== ===========
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reserved. |
