CREDO Posts Record First Half Financial Results.Business Editors DENVER--(BUSINESS WIRE)--June 18, 2001 CREDO Petroleum Corporation (Nasdaq: CRED) today reported record financial results for the six months ended April 30, 2001. Net income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the (excluding a non-recurring litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. settlement gain last year) rose 135% to a record $1,132,000 compared to $481,000 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 from continuing operations was a record $.35 compared to $.15 last year. Including the $235,000 (net of tax) non-recurring litigation settlement gain last year, net income increased 58% to $1,132,000, or $.35 per diluted share, compared to $716,000, or $.23 per diluted share, last year. Revenue increased 37% to a record $3,042,000 compared to $2,218,000 last year. Cash flow from operating activities (before working capital changes) rose 34% to a record $1,690,000. For the second quarter ended April 30, 2001, net income increased 137% to a record $530,000, or $.16 per diluted share, on a 68% increase in revenue to $1,465,000, also a record. This compares to net income of $224,000, or $.07 per diluted share, on revenue of $874,000 for the same quarter last year. PRODUCTION VOLUMES INCREASE Total natural gas and oil production rose 5% to 483 MMcfge (million cubic feet of gas-equivalent) for the first half of fiscal 2001. This compares with 460 MMcfge last year. Natural gas production rose slightly to 346 MMcfg while crude oil sales climbed 19% to 22,800 barrels. Gas production placed on stream during the first half of 2001 offset production lost due to property sales and the expected rapid depletion depletion n. when a natural resource (particularly oil) is being used up. The annual amount of depletion may, ironically, provide a tax deduction for the company exploiting the resource because if the resource they are exploiting runs out, they will no longer be able of a major well. Crude oil sales increased significantly due to new discoveries and continued positive results from an Oklahoma Oklahoma (ōkləhō`mə), state in SW United States. It is bordered by Missouri and Arkansas (E); Texas, partially across the Red R. (S, W); New Mexico, across the narrow edge of the Oklahoma Panhandle (W); and Colorado and Kansas (N). waterflood Wa´ter`flood` n. 1. A flood of water; an inundation. project. Second quarter production volumes rose 8% to 247 MMcfge compared to 228 MMcfge last year. Natural gas production rose 6% to 181 MMcfg while crude oil sales volumes rose 14%. PRODUCT PRICES INCREASE SHARPLY Total natural gas price realizations for the first half of 2001 rose 151% to $5.99 per Mcf compared to $2.39 last year. Hedging transactions added $.19 per Mcf to 2001 gas price realizations. First half 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 rose 143% to $5.80 per Mcf compared to $2.39 last year. Wellhead oil prices rose 9% to $28.02 per barrel compared to $25.66 last year. For the quarter ended April 30, 2001, total natural gas price realizations rose 136% to $5.80 per Mcf compared to $2.46 last year. Hedging transactions added $.37 per Mcf to 2001 gas price realizations. Net wellhead natural gas prices rose 121% to $5.43 per Mcf compared to $2.46 last year. Wellhead oil prices fell 4% to $26.06 per barrel compared to $27.04 last year. Hedging activities at April 30, 2001, resulted in "other comprehensive income" totaling $61,000 which has been reflected in Stockholders' Equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. . The company currently has open hedge positions totaling 180,000 Mcf covering the months of July July: see month. , August and September September: see month. at an average price of $4.55 per Mcf. This hedge represents approximately 85% of the company's estimated gas production for those months. OPERATIONS PROGRESS ON MULTIPLE FRONTS 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. increased to a record $1,456,000 for the first half, as CREDO aggressively deployed capital into oil and gas assets in anticipation of continued strong product prices. CREDO's growth strategy focuses on two core projects -- application of its patented 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. gas recovery technology and drilling along the Anadarko Shelf of Oklahoma. Both projects have been successfully implemented and are being ramped-up. As previously reported, the company owns the exclusive right to patented technology known as Calliope Production System(TM). The Calliope technology significantly enhances the recovery of gas reserves from existing low pressure reservoirs using a repeatable, cost effective and low pressure process. The technology is proven to work in a wide range of depths (down to 18,600 feet) and applications, including the most rigorous scenario of completely dead wells. Excluding prototype applications, Calliope is currently installed on five company-owned wells, four of which were dead and scheduled to be plugged and abandoned. Combined production for those wells is now approximately 1,100 Mcfgd and their remaining economic lives are estimated to range from seven to 20 years. For the first half of fiscal 2001, Calliope wells contributed 23% of the company's gas production. During the first half of 2001, five successful wells were drilled in connection with the company's drilling program along the Anadarko Shelf of Oklahoma, of which four were gas wells and one was oil. CREDO's interest in the wells ranged from seven percent to 60%. The most important of these wells to the company is the recently completed 7,800-foot Bill-Judy Brown No. 1-6 well in Beaver County, Oklahoma Beaver County is a county located in the U.S. state of Oklahoma. As of 2000, the population is 5,857. Its county seat is Beaver6. The land where Beaver County is located has been under several jurisdictions. . The well is currently producing on a 20/64-inch choke (jargon) choke - To fail to process input or, more generally, to fail at any endeavor. E.g. "NULs make System V's "lpr(1)" choke." See barf, gag. at a daily rate of approximately 1.5 MMcfg and eight barrels of oil. CREDO owns a 60% working interest in the well and is the operator. In Ellis County, Oklahoma Ellis County is a county located in the U.S. state of Oklahoma. As of 2000, the population is 4,075. Its county seat is Arnett6. Geography According to the U.S. Census Bureau, the county has a total area of 3,190 km² (1,232 mi²). , CREDO recently completed its 8,800-foot Thurmond-State No. 1-36 well in two separate 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. formation sands. The well was tested at an absolute open flow rate of approximately 3.8 MMcfgd and 10 barrels of oil. It is currently producing on a 16/64-inch choke at a daily rate of 1.5 MMcfg and eleven barrels of oil. CREDO owns a 17.5% working interest in the well and is the operator. In Harper County, Oklahoma Harper County is a county located in the U.S. state of Oklahoma. As of 2000, the population is 3,562. Its county seat is Buffalo6. Geography According to the U.S. Census Bureau, the county has a total area of 2,696 km² (1,041 mi²). , the company participated for a 21% interest in the 7,600-foot Audrey Audrey awkward rural wench who jilts a countryman for a clown. [Br. Drama: Shakespeare As You Like It] See : Rusticity Marie No. 1-29 well. The well encountered two Morrow sands which wireline logs calculate are productive. The well is currently waiting on pipeline connection prior to being completed for production. The company is currently committed to participate in drilling five wells along the Anadarko Shelf with interests ranging from seven percent to 40%. STRONG FINANCIAL CONDITION PROVIDES SOLID FOUNDATION FOR GROWTH At April 30, 2001, working capital was $5,180,000, up 10% from October October: see month. 31, 2000, fiscal year end. Total assets were $15,367,000 including cash and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments of $5,279,000. Stockholders' equity was a record $11,784,000. MANAGEMENT COMMENT James James, person in the Bible James, in the Gospel of St. Luke, kinsman of St. Jude. The original does not specify the relationship. James, rivers, United States James. T. Huffman Huffman may refer to several things, such as surnames, place names which are derived from these surnames (mainly German and sometimes Danish), and other things, names of which are derived from these surnames. It is related to the names Hoffman, Hoffmann, and Hofmann. , President stated: "For the half of fiscal 2001, CREDO's earnings from continuing operations exceeded earnings for all of last year. We had significant success with our Anadarko Shelf drilling program and made major advances in application of our Calliope technology." Huffman further stated, "The momentum from our drilling program and successful Calliope applications give us an opportunity to maintain the current pace of earnings and cash flow for the balance of fiscal 2001, despite lower natural gas prices and investment returns." For a more detailed discussion of current operations, refer to the company's Form 10-QSB for the fiscal quarter ended April 30, 2001, and its Form 10-KSB for fiscal year ended October 31, 2000. CREDO Petroleum Corporation is a publicly traded independent energy company headquartered in Denver Denver, city (1990 pop. 467,610), alt. 5,280 ft (1,609 m), state capital, coextensive with Denver co., N central Colo., on a plateau at the foot of the Front Range of the Rocky Mts., along the South Platte River where Cherry Creek meets it; inc. 1861. , 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 Small-Cap Small-cap A stock with a small capitalization, meaning a total equity value of less than $500 million. small-cap 1. Of or relating to the common stock of a relatively small firm having little equity and few shares of common stock Issues" 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 a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , 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
Condensed Operating
Information (Unaudited)
Six Months Six Months Quarter Quarter
Ended Ended Ended Ended
April 30, April 30, April 30, April 30,
2001 2000 2001 2000
---- ---- ---- ----
Revenue:
Oil and Gas Sales $2,710,000 $1,316,000 $1,334,000 $ 680,000
Operating 223,000 212,000 114,000 102,000
Investment Income
and Other 109,000 345,000 17,000 92,000
Non-Recurring
Litigation Settlement - 345,000 - -
--------- --------- --------- ----------
3,042,000 2,218,000 1,465,000 874,000
--------- --------- --------- ----------
Expenses:
Oil and Gas Production 599,000 434,000 288,000 180,000
Depreciation, Depletion
and Amortization 364,000 305,000 181,000 156,000
General and
Administrative 462,000 426,000 239,000 209,000
--------- --------- --------- ----------
1,425,000 1,165,000 708,000 545,000
--------- --------- --------- ----------
Income Before
Income Taxes 1,617,000 1,053,000 757,000 329,000
Income Taxes (485,000) (337,000) (227,000) (105,000)
--------- --------- --------- ----------
Net Income 1,132,000 716,000 530,000 224,000
========= ========= ========= ==========
Basic Net Income
Per Share $ .37 $ .24 $ .17 $ .08
===== ===== ====== =====
Diluted Net Income
Per Share $ .35 $ .23 $ .16 $ .07
===== ===== ====== =====
Condensed Balance
Sheet Information April 30, 2001 October 31, 2000
-------------- ----------------
(Unaudited)
Cash and Short-Term Investments $ 5,279,000 $ 5,110,000
Other Current Assets 1,382,000 807,000
Oil and Gas Properties, Net 7,878,000 6,735,000
Exclusive License Agreement, Net 653,000 688,000
Other Assets 175,000 166,000
----------- ------------
$15,367,000 $13,506,000
=========== ============
Current Liabilities $ 1,481,000 $ 1,211,000
Deferred Income Taxes 1,602,000 1,408,000
Exclusive License Agreement
Obligation 500,000 500,000
Stockholders' Equity 11,784,000 10,387,000
----------- ------------
$15,367,000 $ 13,506,000
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