CREDO Posts Record First-Quarter Financial Results.Business Editors DENVER--(BUSINESS WIRE)--March 15, 2001 CREDO Petroleum Corporation (Nasdaq:CRED) today reported record financial results for the first fiscal quarter ended January January: see month. 31, 2001. Net income rose 22% to a record $602,000, compared to $492,000 last year. On a per-diluted-share basis, net income was $.19, compared to $.16 in the last year. Prior year net income included a $237,000 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. Excluding the non-recurring gain, 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 increased 136% to $602,000, or $.19 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, compared to $255,000, or $.08 per diluted share, last year. Revenue increased 17% to a record $1,577,000, compared to $1,344,000 last year. Cash flow from operating activities (before working capital changes) rose 20% to a record $891,000. Production Volumes Increase Total natural gas and oil production rose slightly to 236 MMcfge (million cubic feet of gas-equivalent) for the first quarter. This compares with 231 MMcfge last year. Natural gas production fell 5% to 165 MMcfg while crude oil sales climbed 25% to 11,900 barrels. Gas production placed on stream during the first quarter of 2001 substantially offset production lost due to 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. Future gas production comparisons with last year should be positive due to production expected to be added in the second quarter of fiscal 2001. 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 project. Product Prices Increase Sharply 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 surged 166% to $6.20 per Mcf, compared to $2.33 last year. Wellhead oil prices rose 23% to $29.82 per barrel, compared to $24.26 last year. The company hedged approximately 50% of its estimated gas production for the months of March through August 2001 at an average price of $5.87 per Mcfg. Subsequent to first quarter-end, the March contract expired ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. and a $52,000 gain was realized on that portion of the hedge. At first quarter-end, the hedge resulted in "other comprehensive income" totaling $60,000 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. . 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 significantly during the first quarter to a record $630,000, as CREDO aggressively deployed capital into oil and gas assets in anticipation of continued strong product prices. The company's 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. fluid lift technology continued to have a significant impact on production and revenue. Calliope wells contributed 22% of first-quarter gas production compared to 16% last year. During the first quarter, the company installed a Calliope system on a 12,800 foot well in Oklahoma which was scheduled to be plugged and abandoned. The system commenced continuous operations after first quarter-end and immediately returned the well's daily production rate to 185 to 200 Mcfg and about four barrels of fluid. The company estimates that Calliope developed 500 to 750 MMcf of remaining gas reserves on this well. Another Calliope application at 12,800 feet is in progress. After repairing a casing leak (programming) leak - With a qualifier, one of a class of resource-management bugs that occur when resources are not freed properly after operations on them are finished, so they effectively disappear (leak out). This leads to eventual exhaustion as new allocation requests come in. , the company is re-evaluating its 18,600 foot Wallace Wal·lace , Alfred Russel 1823-1913. British naturalist who developed a concept of evolution that paralleled the work of Charles Darwin. well to determine if Calliope should be reinstalled on the well. CREDO owns a 75% interest in each of the Calliope wells. During the first quarter, the company participated for a 25% interest in drilling the Jimmie No. 35C well located 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). . After fracture fracture, breaking of a bone. A simple fracture is one in which there is no contact of the broken bone with the outer air, i.e., the overlying tissues are intact. In a comminuted fracture the bone is splintered. treatment, the 8,700-foot 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 well was tested flowing over 1.0 million cubic feet of gas per day. The well is currently flowing at a stabilized sta·bi·lize v. sta·bi·lized, sta·bi·liz·ing, sta·bi·liz·es v.tr. 1. To make stable or steadfast. 2. rate of approximately 400 Mcfgd. CREDO, as operator, will drill an offset well on its 35% owned acreage during the second quarter of fiscal 2001. Subsequent to first quarter-end, a second Lower Chester formation oil zone was opened in the company's 15% owned Wilkerson No. 1 well located 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 combined zones were tested flowing 500 barrels of oil per day. The well is currently choked-back to 300 barrels of oil per day to comply with Oklahoma allowable rules. The Wilkerson No. 1 well also contains several productive gas zones that are expected to be developed by a twin well. During the first quarter, the company drilled an offset to the Wilkerson No. 1 well on its 55% owned acreage. Although the well found only the edge of the Lower Chester oil sands, it encountered three gas bearing sands in the Morrow and St. Louis formations which are productive in the area and appear to be productive on logs. CREDO, as operator, will complete the well for production in March 2001. Production from 22 wells drilled on the company's 10% owned Recluse coal bed methane methane (mĕth`ān), CH4, colorless, odorless, gaseous saturated hydrocarbon; the simplest alkane. It is less dense than air, melts at −184°C;, and boils at −161.4°C;. property located in north-central Wyoming is expected to commence in May 2001 upon completion of a gas pipeline into the property. In addition to the Recluse property, the company owns interests in 20,000 gross and 4,000 net undeveloped acres in Wyoming and Utah which are prospective for coal bed methane development. The company is currently committed to participate with interests ranging from 7% to 35% in drilling six wells as rigs become available. All of these projects are located in the company's core areas along the Anadarko Shelf of Oklahoma and in the Oklahoma Panhandle “Neutral Strip” redirects here. For the area in Louisiana sometimes known as the Neutral Strip, see Sabine Free State. The Oklahoma Panhandle is the extreme western region of the state of Oklahoma, comprising Cimarron County, Texas County, and Beaver County. . Strong Financial Condition Provides Solid Foundation for Growth Working capital rose 11% to $5,208,000 at January 31, 2001. At first quarter-end, total assets were $14,660,000, 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 $5,135,000. Stockholders' equity was $11,250,000. Management Comment James T. Huffman, President, stated: "Our strategy to rapidly build CREDO's gas reserves focuses on our Calliope gas recovery technology and conventional drilling along the Anadarko Shelf of Oklahoma. These core projects have been successfully implemented and are being ramped-up using increased profits and cash flows from higher product prices." Huffman further stated: "Our Calliope technology has proven more flexible than originally expected. It is a low cost, repeatable and scalable means to develop significant gas reserves which are not recoverable using conventional technologies." For a more detailed discussion of current operations, refer to the company's Form 10-QSB for the fiscal quarter ended January 31, 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, 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
Quarter Ended Quarter Ended
Condensed Operating January 31, January 31,
Information 2001 2000
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Revenue:
Oil and Gas Sales $ 1,376,000 $ 636,000
Operating 109,000 110,000
Investment Income and Other 92,000 249,000
Non-Recurring Litigation Settlement - 349,000
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1,577,000 1,344,000
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Expenses:
Oil and Gas Production 311,000 254,000
Depreciation, Depletion and
Amortization 183,000 145,000
General and Administrative 223,000 221,000
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717,000 620,000
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Income Before Income Taxes 860,000 724,000
Income Taxes (258,000) (232,000)
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Net Income $ 602,000 $ 492,000
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Basic Net Income Per Share $ .20 $ .16
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Diluted Net Income Per Share $ .19 $ .16
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Condensed Balance Sheet
Information January 31, 2001 October 31, 2000
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Cash and Short-Term Investments $ 5,135,000 $ 5,110,000
Other Current Assets 1,469,000 807,000
Oil and Gas Properties, Net 7,214,000 6,735,000
Exclusive License Agreement, Net 670,000 688,000
Other Assets 172,000 166,000
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$ 14,660,000 $ 13,506,000
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Current Liabilities $ 1,396,000 $ 1,211,000
Deferred Income Taxes 1,514,000 1,408,000
Exclusive License Agreement
Obligation 500,000 500,000
Stockholders' Equity 11,250,000 10,387,000
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$ 14,660,000 $ 13,506,000
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