Crimson Exploration Announces Fourth Quarter and Full Year 2007 Financial Results.HOUSTON -- Crimson Exploration Inc. (OTCBB OTCBB See OTC Bulletin Board (OTCBB). :CXPO) today announced financial results for the fourth quarter and full year 2007. Highlights * Year-end proved reserves proved reserves The quantity of minerals expected to be recoverable under current economic and operating conditions. The amount of proved reserves is important in valuing the stock of a company with significant holdings in natural resources. increased by 181%, to 130.2 Bcfe from 46.4 Bcfe * Proved developed reserves increased 141% to 97.7 Bcfe * Total annual production increased 389% to 13.2 Bcfe * Daily production for the fourth quarter of 2007 averaged 51,887, up 557% over the prior year quarter * Fourth quarter 2007 EBITDAX Earnings Before Interest, Taxes, Depreciation, Depletion, Amortization, and Exploration Expenses - EBITDAX An indicator of a company's financial performance calculated as: of $25.9 million, compared to $1.9 million in the prior year fourth quarter Summary Financial Results The Company reported a loss before income taxes for the fourth quarter of 2007 of $15.2 million compared to a loss before income taxes of $3.5 million for the fourth quarter of 2006. The loss before income taxes for the full year 2007 was $0.8 million compared to income of $3.3 million for 2006. Negatively impacting the fourth quarter results for 2007 was a $17.9 million non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. related to the mark-to-market Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value. exposure on our commodity price and interest rate hedge instruments. Recorded in the fourth quarter 2006 was a $0.5 million non-cash benefit related to the mark-to-market requirement. Exclusive of the effects of the mark-to-market exposure/benefit, income before taxes for the fourth quarter of 2007 would have been $2.8 million, compared to a loss before taxes of $3.9 million in 2006. For the years 2007 and 2006, exclusive of the $18.2 million non-cash charge in 2007 and the $6.1 million benefit in 2006, full year income before taxes would have been $17.3 million in 2007, compared to a loss before taxes of $2.8 million in 2006. Net loss for the fourth quarter of 2007 of $9.3 million compared to a net loss of $2.3 million for the fourth quarter of 2006. The net loss for the full year 2007 was $0.4 million compared to net income of $1.9 million for 2006. Net cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses for the fourth quarter of 2007, which consists of net cash, provided by operating activities plus the period change in certain working capital and other cash flow items was $19.3 million, a $17.6 million increase over the $1.7 million reported for the 2006 quarter. Net cash flow from operations for the year 2007, was $58.8 million, a $50.3 million increase over the $8.5 million reported for 2006. The increase in cash flow is attributable to the South Texas and Gulf Coast producing assets acquired in May 2007 ("STGC STGC St. George's College (Kingston, Jamaica) STGC Startec Global Communications Corporation Acquisition"), offset in part by increased interest expense and general and administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. related to the increase in debt and infrastructure growth after the acquisition. EBITDAX, earnings before interest, taxes, depreciation, amortization, exploration and non-cash stock compensation (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 123R) expense was $25.9 million and $76.0 million for the fourth quarter and year 2007, respectively, compared to $1.9 million and $9.0 million for the quarter and year 2006, respectively. Revenues for the fourth quarter of 2007 were $40.3 million compared to revenue of $5.7 million in the prior year quarter, an approximate 607% increase. For the year 2007, revenues were $109.5 million, up 405% from $21.7 million in 2006. The increase in net revenues for the 2007 quarter and year was due to the effect of the STGC Acquisition in May 2007 and higher oil and gas prices, as discussed below. Production for the fourth quarter of 2007 was 4,773,603 Mcfe of natural gas equivalents, or 51,887 Mcfe per day, compared with production of 726,516 mcfe, or 7,897 per mcfe day, in the 2006 quarter. Production for the year 2007 was 13,236,403 Mcfe of natural gas equivalents, or 36,264 Mcfe per day, compared with production in 2006 of 2,651,709 Mcfe, or 7,265 Mcfe per day, an increase of roughly 399%. The dramatic increase in production for the quarter and year is attributable to the STGC Acquisition. Average realized prices in the fourth quarter of 2007 (including the effects of realized gains/losses on our commodity price hedges) were $69.41, $7.28, $55.19 and $8.42 per barrel, Mcf, barrel and Mcfe, respectively for oil, natural gas, natural gas liquids and natural gas equivalents. For the fourth quarter of 2006, average realized prices were $56.71, $6.56 and $7.71 per barrel, Mcf and Mcfe, respectively for oil, natural gas, and natural gas equivalents. Average realized prices for the year 2007 were $66.09, $7.48, $49.92 and $8.25 per barrel, Mcf, barrel and Mcfe, respectively for oil, natural gas, natural gas liquids and natural gas equivalents. For the 2006 year, average realized prices were $59.00, $6.85 and $8.10 per barrel, Mcf and Mcfe, respectively for oil, natural gas, and natural gas equivalents. No natural gas liquids were sold in 2006. Lease operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. for the fourth quarter of 2007 were $10.1 million compared to $2.0 million in the prior year quarter, primarily due to the addition of the STGC Acquisition. For the year 2007, lease operating expenses were $23.7 million versus $7.5 million in 2006. On a per Mcfe produced basis, lease operating expenses were $2.13 and $1.79 per Mcfe for the fourth quarter and year 2007, respectively, compared to $2.74 and $2.84 per Mcfe for the fourth quarter and year 2006, respectively. Exploration expenses were $1.6 million for the fourth quarter of 2007 compared to $0.2 million for the prior year quarter. For the year 2007, exploration expenses were $3.1 million compared to $0.5 million in 2006. Of the $3.1 million in 2007, G&G costs made up $1.4 million, while dry hole and abandoned property costs accounted for an additional $1.4 million. DD&A expense for the fourth quarter of 2007 was $9.7 million, or $2.03 per mcfe, compared to $1.2 million, or $1.72 per mcfe, in the prior year quarter. For the year 2007, DD&A expense was $30.4 million, or $2.29 per mcfe, compared to $4.0 million, or $1.49 per mcfe, in 2006. We recorded non-cash asset impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charges of $4.4 million and $3.1 million in the fourth quarters of 2007 and 2006 respectively, related to year end reserve revisions on certain marginal properties. General and administrative expense in the fourth quarter of 2007 was $5.8 million, or $1.21 per mcfe, compared to $2.7 million, or $3.76 per mcfe, in the prior year quarter. For the year 2007, G&A expense was $14.5 million versus $8.7 million in 2006. The increase for the quarter and year was primarily due to higher personnel costs, information technology costs, professional fees and office rent incurred in expanding our infrastructure after the STGC Acquisition. On a per unit basis, G&A expense decreased to $1.10 per mcfe in 2007 from $3.29 per mcfe in 2006, due to the incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. volumes from the STGC Acquisition. Cash general and administrative expenses for 2007, exclusive of the non-cash stock option expense recognized pursuant to SFAS 123R, were $0.97 and $0.78 per mcfe for the fourth quarter and year, respectively. Other income (expense) was a net charge of $23.8 million for the fourth quarter of 2007 compared to a net benefit of approximately $0.4 million in the prior year quarter. For the year 2007, other income (expense) was a net charge of $34.5 million compared to a net benefit of $5.7 million in 2006. The major factors causing the increases in the quarterly and year-over-year amounts were increased interest expense of $14.9 million in 2007, compared to $0.1 million in 2006, due to the higher outstanding balances on our credit facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities related to the STGC Acquisition acquisition, and a non-cash charge of $18.2 million in 2007 ($17.9 million in the fourth quarter) related to the unrealized loss Unrealized Loss A loss that results from holding onto an asset rather than cashing it in and officially taking the loss. Notes: Let's say you own a stock that is down 50%, but you haven't sold it to realize the loss yet. This is said to be an unrealized loss. on derivative instruments Derivative instruments Contracts such as options and futures whose price is derived from the price of an underlying financial asset. for the mark-to-market exposure under our commodity price hedging instruments and our interest rate swap Interest Rate Swap A deal between banks or companies where borrowers switch floating-rate loans for fixed rate loans in another country. These can be either the same or different currencies. , compared to a non-cash earnings benefit of $6.1 million in 2006. Selected Financial and Operating Data The following table reflects certain comparative financial and operating data for the three and twelve month periods ending December 31, 2007 and 2006: [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] Non-GAAP Financial Measures Crimson also presents earnings before interest, taxes, depreciation, amortization and exploration expenses ("EBITDAX") and net cash flow from operations, which consists of net cash, provided by operating activities plus the period change in certain working capital and other cash flow items. Exploration expenses include geological ge·ol·o·gy n. pl. ge·ol·o·gies 1. The scientific study of the origin, history, and structure of the earth. 2. The structure of a specific region of the earth's crust. 3. A book on geology. and geophysical ge·o·phys·ics n. (used with a sing. verb) The physics of the earth and its environment, including the physics of fields such as meteorology, oceanography, and seismology. costs, lease rental costs and dry hole costs expensed under the successful efforts method of accounting, but capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. under the alternative full cost accounting rules. Management uses these measures to assess the company's ability to generate cash to fund operations, exploration and development activities. Management interprets trends in these measures in a similar manner as trends in operations, cash flow and liquidity. Neither EBITDAX, nor net cash flows from operations, should be considered as alternatives to net income (loss), income from operations or net cash provided by operational activities as defined by GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). . The following is a reconciliation of net cash provided by operating activities to net cash flow from operations and EBITDAX: [TABLE OMITTED] Year End Proved Reserves Crimson's total proved reserves at December 31, 2007 are estimated at 130.2 billion cubic feet ("Bcf") of natural gas equivalents, consisting of approximately 2.9 million barrels of crude oil and 112.8 Bcfe of natural gas and natural gas liquids, as engineered by Netherland, Sewell and Associates, Inc., the Company's independent, third-party engineering firm. This compares to total proved reserves of 46.4 Bcfe at December 31, 2006. Approximately 78% of proved crude oil reserves Oil reserves refer to portions of oil in place that are claimed to be recoverable under economic constraints. Oil in the ground is not a "reserve" unless it is claimed to be economically recoverable, since as the oil is extracted, the cost of recovery increases incrementally , 75% of natural gas and natural gas liquids reserves, and 75% of natural gas equivalents were classified as proved developed at the end of 2007. The present value, using a 10% discount rate on the future net cash flows before income taxes, of the estimated total proved reserves at the end of 2007 is approximately $531 million, based on the December 31, 2007 West Texas Intermediate posted price of $92.50 per barrel for oil and natural gas liquids, and the posted 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. spot market price of $6.795 per Mcf for natural gas, adjusted for average energy content, transportation fees and regional price differentials. Guidance for 2008 The Company is providing the following guidance, on an annual basis for the calendar year 2008. Ranges for lease operating expenses and cash general and administrative expenses are based on the midpoint mid·point n. 1. Mathematics The point of a line segment or curvilinear arc that divides it into two parts of the same length. 2. A position midway between two extremes. of production guidance. [TABLE OMITTED] Teleconference Call Crimson management will hold a conference call to discuss the information described in this press release on Friday, April 4, 2008 at 9:30 a.m. CDT CDT abbr. Central Daylight Time CDT Central Daylight Time CDT n abbr (US) (= Central Daylight Time) → hora de verano del centro; (BRIT . Those interested in participating may do so by calling the following phone number: 877-856-1969, (International 719-325-4820) and entering the following participation code 9472555. A replay of the call will be available from Friday, April 4, 2008 at 12:30 p.m. CDT through Friday, April 11, 2008 at 12:30 p.m. CDT by dialing toll free 888-203-1112, (International 719-457-0820) and asking for replay ID code 9472555. Crimson Exploration is an independent oil and gas company based in Houston, Texas “Houston” redirects here. For other uses, see Houston (disambiguation). Houston (pronounced /'hjuːstən/) is the largest city in the state of Texas and the , with producing assets primarily focused in South Texas, the Texas Gulf Coast and South Louisiana Louisiana (ləwē'zēăn`ə, l  ē'–), state in the S central United States. It is bounded by Mississippi, with the Mississippi R. .
Additional information on Crimson Exploration Inc. is available on the Company's website at http://crimsonexploration.com. This press release includes "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. " as defined by the Securities and Exchange Commission ("SEC"). Such statements include those concerning Crimson's strategic plans, expectations and objectives for future operations. All statements included in this press release that address activities, events or developments that Crimson expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements are based on certain assumptions Crimson made based on its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate under the circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or . Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond Crimson's control. Statements regarding future production, revenue, costs and cash flow are subject to all of the risks and uncertainties normally incident to the exploration for and development and production of oil and gas. These risks include, but are not limited to, inflation or lack of availability of goods and services In economics, economic output is divided into physical goods and intangible services. Consumption of goods and services is assumed to produce utility (unless the "good" is a "bad"). It is often used when referring to a Goods and Services Tax. , environmental risks, drilling risks and regulatory changes and the potential lack of capital resources. Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements. Please refer to our filings with the SEC, including our 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 the year ended December 31, 2007, for a further discussion of these risks. |
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