CREDO Updates Successful Drilling Results, Hedging Program and Investments.Business Editors DENVER--(BUSINESS WIRE)--Oct. 11, 2002 CREDO Petroleum Corporation (Nasdaq:CRED) today updated its drilling results in the Northern Anadarko Basin The Anadarko Basin is one of the most prolific natural gas reserves in North America, with ultimate gas production in excess of 100 trillion cubic feet of gas.[1] External links
References 1. of Oklahoma and provided current information regarding its hedging program and investments. DRILLING CONTINUES TO YIELD SUCCESSFUL RESULTS Two additional successful wells have recently been drilled on the company's 2,900-acre Sand Creek Sand Creek, Colorado, site of a massacre (1864) of Cheyenne by Col. John M. Chivington and his Colorado Volunteers. The Cheyennes, led by their chief, Black Kettle, had offered to make peace and, at the suggestion of military personnel, had encamped at Sand Creek Prospect and 2,300-acre Two Springs Prospect. Of the eight total wells drilled to date, seven have been successful. The 7,400-foot Hudson #1 well is located about one mile north of the previously announced Weiszbrod #1 well on the Sand Creek Prospect. It encountered 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. sands which electric logs indicated are productive. The well is currently classified as a "tight hole," meaning that for proprietary business reasons the company is not releasing detailed information about the well. It is awaiting pipeline connection prior to being completed for production. CREDO owns 39% and is the operator. About five miles north on the Two Springs Prospect, the 7,300-foot Emet #1 well encountered nine feet of Morrow sand and three feet of Chester limestone limestone, sedimentary rock wholly or in large part composed of calcium carbonate. It is ordinarily white but may be colored by impurities, iron oxide making it brown, yellow, or red and carbon making it blue, black, or gray. The texture varies from coarse to fine. which electric logs indicate are productive. This well is located about one mile east of the previously announced Wills #1 well. It is also awaiting pipeline connection. CREDO owns 35% and is the operator. About one mile east of the Sand Creek Prospect, CREDO owns a 25% interest in the 1,920-acre Dunlap prospect. A well is currently drilling on the prospect that targets the Morrow and Chester formations at 7,400 feet. James T. Huffman, President, stated, "Our activity level in this area continues to ramp-up. We are currently drilling one well, completing three new wells, and preparing to drill six additional wells. We expect the developing play to create additional drilling opportunities on our large acreage position in the area." HEDGING AND NATURAL GAS PRICE OUTLOOK The company's most recent natural gas hedge data shows 280 MMcfg hedged for the months of December 2002 through February 2003. This hedge is at an average NYMEX See New York Mercantile Exchange. NYMEX See New York Mercantile Exchange (NYM). (Henry Hub Henry Hub is the pricing point for natural gas futures contracts traded on the New York Mercantile Exchange (NYMEX). It is a point on the natural gas pipeline system in Erath, Louisiana. It is owned by Sabine Pipe Line LLC. , Louisiana delivery point) price of $4.19 per Mcf, and represents approximately 83% of the company's total estimated gas production for those three months. Hedges for the months of October and November were closed prior to contract expiration EXPIRATION. Cessation; end. As, the expiration of, a lease, of a contract, or statute. 2. In general, the expiration of a contract puts an end to all the engagements of the parties, except to those which arise from the non- fulfillment of obligations created and a $106,000 gain was realized. The company hedges only its Oklahoma production where the "basis" for its pipeline index prices is generally $.15 to $.30 below the Henry Hub. "Since the current hedge was initiated in March 2001, CREDO has realized about $1,250,000 of hedging gains," Huffman said. "Our strategy is to hedge natural gas prices when fundamentals suggest impending im·pend intr.v. im·pend·ed, im·pend·ing, im·pends 1. To be about to occur: Her retirement is impending. 2. price weakness so long as prices available to be hedged are adequate to ensure a reasonable return on our assets." Huffman further stated, "Data reported by several sources indicates that demand for natural gas has increased over last year while domestic gas production has declined. This supply-demand imbalance imbalance /im·bal·ance/ (im-bal´ans) 1. lack of balance, such as between two opposing muscles or between electrolytes in the body. 2. dysequilibrium (2). together with a return to normal winter temperatures would be very bullish Bullish Word used to describe an investor's attitude. Bullish refers to an optimistic outlook, while bearish means a pessimistic outlook. bullish for natural gas prices, despite current high storage levels due to gas left over from last winter. Accordingly, we have reduced the company's gas hedge, maintaining only the winter months at hedge prices above $4.00 per Mcf (Henry Hub Basis)." INVESTMENTS REMAIN PROFITABLE IN BEAR MARKET Pending deployment into oil and gas assets, the company's cash is primarily invested with money managers who specialize spe·cial·ize v. 1. To limit one's profession to a particular specialty or subject area for study, research, or treatment. 2. To adapt to a particular function or environment. in short-term timing of mutual funds. The average return on CREDO's investment portfolio through September 30, 2002 was approximately 3%. For fiscal 2001, the investment portfolio returned 4% and for fiscal 2000 it returned 14%. These positive returns compare favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. to very significant losses in all of the major stock market indexes during those periods. "We are pleased with the performance of our investment portfolio, particularly in view of unfavorable market conditions over the past few years. We continue to believe that our investment strategy represents a responsible approach to cash management," Huffman said. 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 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, 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. |
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