Crimson Exploration Inc. Announces First Quarter 2007 Financial Results and Operational Update.HOUSTON -- Crimson Exploration Inc. (OTCBB OTCBB See OTC Bulletin Board (OTCBB). :CXPO) today announced financial results for the first quarter 2007 and an operational update. Highlights * Acquisition in May 2007 of 96 Bcfe of South Texas and upper Gulf Coast onshore on·shore adj. 1. Moving or directed toward the shore: an onshore wind. 2. Located on the shore: an onshore beacon; an onshore patrol. adv. properties from EXCO Resources, Inc. for approximately $289.6 million * Completion of two successful wells in the Rodessa formation of our Madisonville Field; initial production projected in early June * Acquired 2,500 acres to date in the Fort Worth Barnett Shale The Barnett Shale is a geological formation of economic significance. It consists of sedimentary rocks of Mississippian age in the U.S. State of Texas. The formation is estimated to stretch from the city of Dallas to west of the city of Fort Worth and south, covering 5,000 square play in Johnson and Tarrant Counties, Texas; initial well projected in early June * Drilled three stratigraphic stra·tig·ra·phy n. The study of rock strata, especially the distribution, deposition, and age of sedimentary rocks. strat core tests on our 125,000 option acreage on our Mississippi Mississippi, state, United States Mississippi (mĭs'əsĭp`ē), one of the Deep South states of the United States. It is bordered by Alabama (E), the Gulf of Mexico (S), Arkansas and Louisiana, with most of the border formed by 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;. project, with encouraging initial results Summary Financial Results Revenues for the first quarter of 2007 were $4.5 million compared to revenue of $5.1 million in the prior year's quarter, an approximate 12% decrease due to lower production volumes and lower average realized prices, both of which are quantified below. Production for the first quarter of 2007 was 542,818 mcfe of natural gas equivalents, or 6,031 mcfe per day, compared with production of 592,682 mcfe, or 6,585 per mcfe day, in the 2006 quarter. Average realized prices in the 2007 quarter (including the effects of realized gains/losses on our commodity price hedges) were $60.28, $7.07 and $8.33 per barrel, mcf and mcfe, respectively. For the 2006 quarter, average realized prices were $58.11, $7.71 and $8.63 per barrel, mcf and mcfe, respectively. Total 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 2007 quarter were $5.1 million compared to $4.1 million in the 2006 quarter. Of the $1.0 million increase in total operating expenses, field operating expenses were up approximately $0.2 million due to higher costs of restoring production in certain fields. 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. increased by $0.6 million, approximately $0.3 million of which was related to non-cash compensation expense related to the 2006 adoption of 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 for employee stock options. Exploration expense was $136,000 in the 2007 quarter, compared to $9,000 in the 2006 quarter. Other Income and Expense was a net negative $2.0 million for the 2007 quarter compared to a net positive of $1.1 million in the 2006 quarter. This change is primarily due to the change in the mark-to-market valuation on our derivative instruments Derivative instruments Contracts such as options and futures whose price is derived from the price of an underlying financial asset. . 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 first quarter of 2007, exclusive of changes in working capital, was $1.3 million, a $1.1 million decrease over the $2.4 million reported for the 2006 quarter. Net loss for the first quarter of 2007 was $1.6 million compared to net income of $1.4 million for the first quarter of 2006. For the quarter, the changes period over period, net of taxes, were as follows: < < Net Income $ 1,372,809 < < Lower field (723,223) < < Other (330,449) < < Change in (1,881,731) < < Net Loss $ (1,562,594) Selected Financial and Operating Data The following table reflects certain comparative financial and operating data for the three month periods ending March 31, 2007 and 2006: [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] Non-GAAP Financial Measures Crimson also presents net cash flow from operations, exclusive of working capital items, which consists of net cash provided by operating activities plus the period change in accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying , other current assets Other Current Assets A balance sheet item that includes the value of non-cash assets due within one year. Notes: Examples are things like prepaid expenses and accounts receivable. and accounts payable and accrued expenses Accrued Expense An accounting expense recognized in the books before it is paid for. It is a liability, usually current. These expenses are typically periodic and documented upon a company's balance sheet due to the high probability of collection. . Management uses this measure to assess the company's ability to generate cash to fund exploration and development activities. Management interprets trends in this measure in a similar manner as trends in cash flow and liquidity. Net cash flows from operations, exclusive of working capital items should not be considered as an alternative to 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, exclusive of working capital items: [TABLE OMITTED] Property Acquisition On May 8, 2007, Crimson Exploration Inc. acquired a package of producing gas fields and undeveloped acreage in South Texas and South Louisiana from EXCO Resources, Inc. ("EXCO") for $285.0 million in cash and 750,000 shares of Crimson common stock. Based on the $6.10 closing price of Crimson's common stock on May 7, the total purchase price was approximately $289.6 million. The effective date of the acquisition was January 1, 2007, and after adjustment for interim activity subsequent to the effective date and other customary purchase price adjustments, the cash consideration paid at closing was approximately $245.4 million. EXCO acquired these properties as part of a larger property package on May 4, 2007. The acquired assets are located primarily in Liberty and Lavaca counties of the Upper Texas Gulf Coast, Brooks County Brooks County is the name of several counties in the United States:
In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as of a portion of the purchase price to unproved reserves and undeveloped acreage. For additional information, please see the press release issued on May 8, 2007 regarding this acquisition. Operational Update Production Crimson produced approximately 543,000 mcfe of natural gas equivalents, or 6,031 mcfe per day, during the first quarter of 2007 compared to approximately 593,000 mcfe, or 6,585 mcfe per day, during the first quarter 2006. The decrease in production is primarily due to the loss of a well in our Madisonville field. Our April 2007 average daily production rate of approximately 6,000 mcfe is in line with the first quarter average. Production from the recent drilling success of our Rodessa project, also located in the Madisonville area, is expected to commence in June 2007. Capital Expenditure Programs General Capital expenditures for the quarter 2007 were $6.4 million and related primarily to the completion, fracing and testing of the two Rodessa wells in the Madisonville field and work on completing the waste disposal facilities as noted below. Madisonville Area During the first quarter 2007 we successfully completed the Fuhlberg #1 well (78% WI) in the Rodessa formation in our Madisonville Field in Madison County, Texas Madison County is a county located in the U.S. state of Texas. In 2000, its population was 12,940. Its seat is Madisonville6, and it is named for James Madison, the fourth president of the United States. Geography According to the U.S. . The well tested at an average rate of approximately 9,000 mcf per day (gross gas, including 30% inerts) through two sets of perforations. We are currently completing the Johnston #2 well. Shortly after the end of the quarter, we were successful in plugging two non-producing wells in the vicinity of the disposal well, as was required by the Texas Railroad railroad or railway, form of transportation most commonly consisting of steel rails, called tracks, on which freight cars, passenger cars, and other rolling stock are drawn by one locomotive or more. Commission before we can begin injecting waste gas into the disposal well. As previously disclosed, the acid gas processing plant in the field is being expanded by its owner from a current capacity of approximately 17,000 mcf per day to approximately 70,000 mcf per day. The expansion, previously expected to be completed in December 2006, is now projected to be completed and fully operational in June, which should coincide with our commencement of production. D-J Basin, CO As previously disclosed, we have retained a Denver based consulting firm Noun 1. consulting firm - a firm of experts providing professional advice to an organization for a fee consulting company business firm, firm, house - the members of a business organization that owns or operates one or more establishments; "he worked for a that is analyzing our entire holdings in the D-J Basin to identify additional potential drilling opportunities. That study is expected to be completed during the second quarter and further drilling in this area during 2007 will be based on the results of that study, and contingent upon Adj. 1. contingent upon - determined by conditions or circumstances that follow; "arms sales contingent on the approval of congress" contingent on, dependant on, dependant upon, dependent on, dependent upon, depending on, contingent rig availability. Cameron Parish, LA While first quarter 2007 production in this area was comparable to first quarter 2006 production, it has declined from the fourth quarter 2006 because of field decline. We believe that more recompletion opportunities exist in the field, however, additional technical staff will be necessary to properly review, plan and execute these opportunities. Fort Worth Barnett Shale, Johnson and Tarrant Counties, Texas During the first quarter 2007, we continued to acquire acreage related to our 12.5% non-operated working interest in the prolific Fort Worth Barnett Shale play in Johnson and Tarrant Counties. We and our partners have acquired 2,500 acres to date and will continue to pursue opportunities to accumulate Accumulate Broker/analyst recommendation that could mean slightly different things depending on the broker/analyst. In general, it means to increase the number of shares of a particular security over the near term, but not to liquidate other parts of the portfolio to buy a security additional acreage in the area throughout the year. Current plans are to drill the first well in June 2007, given rig availability. South Texas We have recently acquired a 15% working interest in the El Papalote Prospect in Zapata County, Texas Zapata County is a county located in the U.S. state of Texas. In 2000, its population was 12,182. Its county seat is Zapata6. Zapata is named for Antonio Zapata, a rancher in the area and rebel against Mexico. History Geography According to the U.S. . The prospect lies within the prolific Lobo/Perdido Trend of South Texas. The well commenced drilling in May 2007 and should be near completion in mid June 2007. Given success with this well, we anticipate the drilling of as many as 2-4 development wells. A second prospect in the region, the Ramirez Prospect, in which we will have a 30% working interest in this development-type well, is expected to be drilled immediately following the El Papalote Prospect. Within this exploratory program, we anticipate that we will have the option to participate in at least three additional prospects in this region throughout 2007. We have also acquired a 75% working interest in the Cabernet and Merlot prospects in Matagorda County, Texas Matagorda County is a county located in the U.S. state of Texas. As of 2000, the population was 37,957. Its county seat is Bay City6. Matagorda County is named for the canebrakes which once grew along the coast (Matagorda is a Spanish word meaning "thick bush"). . We own approximately 900 gross acres covering both prospects. Mississippi Coal Bed Methane We have completed the drilling of three stratigraphic test wells and will now evaluate the data collected to date. Once this evaluation is completed, we will determine a long-term strategy for the project. Existing well control in the area shows the existence of coal beds, but limited quantitative and qualitative data is available to determine their producibility. The Company anticipates spending approximately $400,000 on the test wells and evaluation during 2007. Crimson will pay 85% of the cost of the core wells to earn an 85% working interest in the project. 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 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, 2006 for a further discussion of these risks. |
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