CREDO Petroleum Reports 98% Increase in First Quarter 2006 Earnings; First Quarter Earnings Rise To A Record High Production Increases 13% To A First Quarter Record.DENVER -- CREDO Petroleum Corporation (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : CRED) today reported its financial results for the first quarter ended January 31, 2006. Per share data has been adjusted to reflect the three-for-two stock split effective October 12, 2005. First quarter 2006 net income increased 98% to an all time high on record first quarter production and higher product prices. For the quarter, net income was $1,695,000 compared to net income of $856,000 last year. On a per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share basis, net income was $.18 in the first quarter compared to $.09 last year. Revenue rose 74% to $4,538,000 compared to $2,606,000 last year. James T. Huffman, President, said: "We continue to meet the challenge to improve our production in order to reap the full benefit of higher product prices. As a result, new first quarter records have been established in most operational and financial categories." Huffman further stated: "Three new wells commenced production shortly after first quarter end, including the Garnet State #1-27, which is discussed below. This new production together with planned drilling and Calliope calliope, in music calliope, in music, an instrument also called steam organ or steam piano in which steam is forced through a series of whistles controlled by a keyboard. installations makes us very optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that fiscal 2006 will continue to be an excellent year for CREDO." During the first quarter 2006, the company adopted SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System No. 123 (R) related to expensing stock options. Prior-year results are restated. Adoption of the new accounting principle resulted in a $60,000, or $.01 per share, charge compared to a $53,000, or $.01 per share, last year. The company has taken an automatic five-day extension on filing its Form 10-Q Form 10-Q See 10-Q. for the first quarter ended January 31, 2006, in order to complete the information necessary to restate re·state tr.v. re·stat·ed, re·stat·ing, re·states To state again or in a new form. See Synonyms at repeat. re·state its historical Consolidated Balance Sheets consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. for adoption of the new rule. The Consolidated Statement of Operations See Income statement. has been restated as is reflected in this press release. FIRST QUARTER PRODUCTION VOLUMES RISE TO A NEW RECORD For the first quarter, production rose 13% to a new first quarter record. Production was 494 MMcfe (million cubic feet of gas-equivalent) compared to 436 MMcfe last year. Natural gas production rose 14% to 437 MMcf while oil production increased to 9,500 barrels compared to 9,000 barrels last year. PRODUCT PRICES REMAIN STRONG Net wellhead well·head n. 1. The source of a well or stream. 2. A principal source; a fountainhead. 3. The structure built over a well. wellhead Noun 1. natural gas prices for the first quarter 2006 rose 51% to $8.80 per Mcf compared to $5.84 last year. Hedging transactions reduced wellhead prices $.61 per Mcf compared to $.59 per Mcf last year. As a result, total natural gas price realizations rose 56% to $8.19 per Mcf compared to $5.25 last year. Wellhead oil prices rose 33% to $56.94 per barrel compared to $42.67 last year. There were no hedging transactions for oil. The company currently has no open hedge positions. STRONG FINANCIAL CONDITION PROVIDES SOLID FOUNDATION FOR GROWTH At January 31, 2006, working capital was $7,964,000, and cash and short-term investments totaled $8,861,000. The company's only long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. is a $355,000 exclusive license obligation. CAPITAL SPENDING capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. INCREASES First quarter capital spending totaled $3,221,000, up 36% 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, its drilling and Calliope projects Officially called the B.W. Cooper apartments, the Calliope Projects (pronounced KAL-ee-ope instead of kuh-LAI-oh-pee) is one of the Housing Projects of New Orleans located in Central City New Orleans. There are 1,546 units on 56 acres of land (or 24 city blocks. provide a superb and unique formula for achieving its goal of adding long-lived natural gas reserves and production at reasonable costs and risks. As previously reported, the company has significantly expanded both its drilling and Calliope activities. In addition to its existing core projects, drilling will commence in 2006 on new projects in South Texas and north-central Kansas, and the company's Calliope operations will be expanded into Louisiana. These new projects will increase both the volume and breadth of the company's business while providing significant opportunities for growth. The company recently reported a new discovery on its 5,760 gross acre Glacier glacier, moving mass of ice that survives year to year, formed by the compacting of snow into névé and then into granular ice and set in motion outward and downward by the force of gravity and the stress of its accumulated mass. Prospect located in Harper and Woodward Counties, Oklahoma. The Garnet State #1-27 well encountered two separate 10-foot intervals of Morrow mor·row n. 1. The following day: resolved to set out on the morrow. 2. The time immediately subsequent to a particular event. 3. Archaic The morning. sand. Testing indicated that the lower sand was damaged by mud invasion during drilling. During testing of the upper sand, the well kicked-off flowing at high rates. It was placed on production February 9, shortly after first quarter-end. The initial production rate of 2.75 MMcf per day has increased to a current rate of 3.03 MMcf per day. More importantly, flowing pressures have been very steady, indicating that the Garnet well is located in a significant reservoir. The lower sand will be fracture stimulated at a later date. The company owns a 57% working interest and is the operator. Up to three additional wells on the Glacier Prospect are included in the next drilling round scheduled to commence during May. 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 Rocky Mountain Region is a floristic region within the Holarctic Kingdom in western North America (Canada and the United States) delineated by Armen Takhtajan and Robert F. Thorne. . The company's stock is traded on the NASDAQ System under the symbol "CRED" and is quoted daily in the "NASDAQ Capital Market Originally called the NASDAQ Small Cap Market, NASDAQ announced a name change to the NASDAQ Capital Market on September 27, 2005. [1] The NASDAQ Capital Market exists for securities of smaller, less-capitalized companies (small caps) that do not qualify for " section of The Wall Street Journal. This press release includes certain statements that may be deemed to be "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " 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. Investors are encouraged to read the "Forward-Looking Statements" and "Risk Factors" sections included in the company's 2005 Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for more information. Although the company may from time to time voluntarily update its prior forward looking statements, it disclaims any commitment to do so except as required by securities laws.
CREDO PETROLEUM CORPORATION
FINANCIAL HIGHLIGHTS
Three Months Ended
January 31,
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2006 2005
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REVENUES:
Oil and gas sales........................... $4,120,000 $2,385,000
Operating................................... 173,000 159,000
Investment income and other................. 245,000 62,000
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4,538,000 2,606,000
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COSTS AND EXPENSES:
Oil and gas production...................... 1,004,000 488,000
Depreciation, depletion and amortization.... 738,000 477,000
General and administrative.................. 433,000 443,000
Interest.................................... 9,000 9,000
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2,184,000 1,417,000
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INCOME BEFORE INCOME TAXES.................... 2,354,000 1,189,000
INCOME TAXES.................................. (659,000) (333,000)
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NET INCOME.................................... $1,695,000 $856,000
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EARNINGS PER SHARE OF
COMMON STOCK - BASIC........................ $ .19 $ .09
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EARNINGS PER SHARE OF
COMMON STOCK - DILUTED...................... $ .18 $ .09
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Weighted average number of shares of
Common Stock and dilutive securities:
Basic...................................... 9,137,000 9,056,000
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Diluted.................................... 9,475,000 9,249,000
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Condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. Balance Sheet information is currently being restated for the effects of adopting SFAS No. 123 (R) related to expensing stock options. The new rules were adopted during the first quarter of 2006. The restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. is not expected to have a material effect on the Consolidated Balance Sheets. |
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