CREDO Posts Record Results for Fiscal 2000.Business Editors DENVER--(BUSINESS WIRE)--Jan. 8, 2001 CREDO Petroleum Corporation (Nasdaq:CRED) today announced record financial results for the fiscal year ended October 31, 2000. Net income rose 120% to a record $1,347,000, or $.43 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, on a 32% increase in revenue to $4,204,000, also a record. 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 added $245,000 to net income. Exclusive of the litigation settlement, net income would have increased 80% to a record $1,102,000, or $.35 per diluted share, on record revenue of $3,859,000. Cash flow from operating activities (before working capital changes) rose 39% to a record $2,109,000. Reserves and Reserve Additions Set New Records The company replaced 213% of reserves produced during fiscal 2000, adding a record 2.0 Bcfge (billion cubic feet of gas-equivalent units) to reserves. Fiscal 2000 finding costs were $4.00 per oil-equivalent barrel, continuing a long track record of excellent finding costs. At fiscal year-end Fiscal Year-End The completion of a one-year, or 12-month, accounting period. Notes: The reason that a company's fiscal year often differs from the calendar year and does not close on Dec 31, is due to the nature of company's needs. , the company's reserve base consisted of 77% natural gas and 23% crude oil and condensate condensate, matter in the form of a gas of atoms, molecules, or elementary particles that have been so chilled that their motion is virtually halted and as a consequence they lose their separate identities and merge into a single entity. . Total reserves rose 13% to a record 9.7 Bcfge at fiscal year-end 2000. This compares to 8.6 Bcfge last year. The undiscounted value of reserves was $31,475,000 and the discounted value (at 10%) was $18,700,000 using average prices at October 31, 2000, of $4.33 per Mcf for natural gas and $31.82 per barrel for oil and condensate. Production Volumes Fall On An Expected Major Well Production Decline and Property Divestitures Total natural gas and oil production fell 18% to 902 MMcfge (million cubic feet of gas-equivalent units) in fiscal 2000. This compares with 1,100 MMcfge last year. Natural gas production fell 22% to 668 MMcfg in fiscal 2000 due to the combined effects of selling a large producing well and the expected rapid production decline on a well that accounted for 23% of last year's production. The sold well had high deliverability but limited remaining reserves. It ceased producing eight months after the sale. The producing zone in the second well had very high deliverability but limited areal extent. As expected, the zone fully depleted de·plete tr.v. de·plet·ed, de·plet·ing, de·pletes To decrease the fullness of; use up or empty out. [Latin d during fiscal 2000 after producing 1.2 Bcfge, and the well has been recompleted in three up-hole zones. It is currently producing about 300 Mcfg per day. Crude oil volumes sold remained unchanged between the two years. 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 for fiscal 2000 rose 53% to $3.05 per Mcf compared to $2.00 last year. This year, hedging losses of $.21 per Mcf, or $141,000, reduced gas A reduced gas is a gas with a low oxidation number (or high reduction), and is usually hydrogen-rich. Strongly reduced gases include methane, ammonia, and hydrogen sulfide. Such gases are strongly associated with the origin of life. price realizations to $2.84 per Mcf. Last year, hedging gains added $.14 per Mcf, or $118,000, raising gas price realizations to $2.14 per Mcf. Net wellhead oil prices rose 78% to $27.88 per barrel in fiscal 2000 compared to $15.64 last year. In fiscal 2000, the company hedged approximately 35% of its gas production for the months of May through October 2000, or about 17% of estimated fiscal 2000 production. The hedge was closed in October 2000 and there have been no subsequent hedges. Operations Progress On Multiple Fronts Fiscal 2000 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 177% to a record $1,855,000 as the company aggressively deployed capital into oil and gas operations in anticipation of continued strong product prices. CREDO's new fluid lift technology (known as 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. Production Systems(tm)) has already made a significant impact on the company's value. Calliope wells accounted for 23% of fiscal 2000 gas production and 20% of the company's reserve values at fiscal year-end 2000. Three Calliope applications (all on dead wells that were scheduled to be plugged and abandoned) now represent CREDO's first, fifth and sixth most valuable properties. James T. Huffman, President, stated: "During fiscal 2000, we concentrated on extending Calliope's depth range and on standardizing and streamlining its application. We successfully extended Calliope's maximum operating depth The keel depth that a submarine is not to exceed during operations. This depth is determined by the submarine's national naval authority. See also test depth. from 11,900 feet to 18,600 feet. In addition, for the first time, we successfully ran concentric Coming from the center, or circles within circles. For example, tracks on a hard disk are concentric. Tracks on optical media are concentric or spiral shaped (in a coil) depending on the type. strings of coil tubing inside standard tubing on three wells. These are major advances which significantly increase the population of wells having potential for application of Calliope and reduce workover risks during Calliope installations." CREDO participated in drilling 32 wells during fiscal 2000, including 22 shallow 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;. wells in the Powder River Basin The Powder River Basin is a region in southeast Montana and northeast Wyoming about 120 miles east to west and 200 miles north to south known for its coal deposits. It is both a topographic drainage and geologic structural basin. of Wyoming. The most significant of these wells is 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. , where CREDO owns 15% of a new oil discovery which has 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. producing 220 barrels of oil, 220 Mcfg and no water from the Lower Chester formation. A second Chester oil zone in the well also appears to be productive and will be tested in early 2001. The well also contains several productive 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. gas zones which will be developed by a twin well. Most importantly Adv. 1. most importantly - above and beyond all other consideration; "above all, you must be independent" above all, most especially , the discovery well sets up a direct offset location on acreage owned 53% by CREDO. The offset well will be drilled in January 2001 and CREDO will be 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 owns 25% of a new well which appears to be gas productive. The well will be completed for production in the first quarter of 2001. If the completion is successful, CREDO will drill a direct offset well on acreage in which it owns a 60% interest. In the Powder River Basin of Wyoming, CREDO participated for a 10% interest in drilling 22 coal bed methane wells. These wells are expected to commence production during the first quarter of 2001. CREDO owns interests in 17,000 gross (3,900 net) acres on the east side of the Powder River Basin which are prospective for coal bed methane development. Strong Financial Condition Provides Solid Foundation for Growth Notwithstanding record capital spending, working capital increased 11% to $4,706,000 at October 31, 2000. At fiscal year-end, total assets were $13,506,000 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. cash investments of $5,110,000. Shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. (book value) was $10,387,000. Management Comment Mr. Huffman stated: "CREDO had a very successful year in 2000, from both a financial and operational standpoint The Standpoint is a newspaper published in the British Virgin Islands. It was originally published under the name Pennysaver, largely as a shopping-coupon promotional newspaper, but since emerged as one of the most influential sources of journalism in the . While record financial results and reserve growth highlighted the year, our diversified diversified (di·verˑ·s portfolio of ongoing projects hold considerable promise for the future." Huffman further stated: "We expect strong natural gas prices to continue for several years as our industry seeks to satisfy much higher demand for natural gas. The decisive upturn in natural gas demand and prices puts our Calliope technology in the right place at the right time. We enter 2001 with considerable momentum fueled by the most diverse and high-potential projects in the company's history." For a more detailed discussion of current operations, refer to the company's Form 10-KSB for the 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
Year Ended Year Ended
Condensed Operating October 31, October 31,
Information 2000 1999
----------------- ----------------
Revenue:
Oil and Gas Sales $ 2,971,000 $ 2,445,000
Operating 417,000 428,000
Investment Income and
Other 471,000 323,000
Non-Recurring Litigation
Settlement 345,000 -
------------- -------------
4,204,000 3,196,000
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Expenses:
Oil and Gas Production 934,000 818,000
Depreciation, Depletion and
Amortization 481,000 706,000
General and Administrative 892,000 774,000
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2,307,000 2,298,000
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Income Before Income Taxes 1,897,000 898,000
Income Taxes (550,000) (287,000)
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Net Income $ 1,347,000 $ 611,000
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Basic Income Per Share $ .45 $ .20
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Diluted Income Per Share $ .43 $ .20
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Condensed Balance Sheet Information
October 31, 2000 October 31, 1999
---------------- ----------------
Cash and Short-Term Investments $ 5,110,000 $ 4,239,000
Other Current Assets 807,000 882,000
Oil and Gas Properties, Net 6,735,000 5,914,000
Exclusive License Agreement, Net 688,000 -
Other Assets 166,000 43,000
-------------- --------------
$ 13,506,000 $ 11,078,000
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Current Liabilities $ 1,211,000 $ 886,000
Deferred Income Taxes 1,408,000 1,227,000
Exclusive License Agreement
Obligation 500,000 -
Stockholders' Equity 10,387,000 8,965,000
-------------- --------------
$ 13,506,000 $ 11,078,000
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