Crimson Exploration Inc. Announces Second Quarter 2005 Conference Call.HOUSTON Houston, city (1990 pop. 1,630,553), seat of Harris co., SE Tex., a deepwater port on the Houston Ship Channel; inc. 1837. Economy The fourth largest city in the nation and the largest in the entire South and Southwest, Houston is a port of entry; -- Crimson Exploration Inc. (OTCBB OTCBB See OTC Bulletin Board (OTCBB). :CXPI) today announced the following financial and operational results for the second quarter of 2005. Highlights of those results are as follows: --Completed the restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). of the Company from GulfWest Energy Inc. to Crimson Exploration Inc. by completion of the reorganization The process of carrying out, through agreements and legal proceedings, a business plan for winding up the affairs of, or foreclosing a mortgage upon, the property of a corporation that has become insolvent. from a Texas corporation to a Delaware corporation A Delaware corporation is a corporation chartered in the U.S. state of Delaware. Delaware is well known as a corporate haven, and thus, over 50% of US publicly-traded corporations and 58% of the Fortune 500 companies are incorporated in the state. , and by completing the transition to the newly elected e·lect v. e·lect·ed, e·lect·ing, e·lects v.tr. 1. To select by vote for an office or for membership. 2. To pick out; select: elect an art course. board of directors. --Increased production to 707,283 mcf of natural gas equivalent, (mcfe - one barrel barrel: see English units of measurement. of oil equals 6 mcfe) an increase of 47% over the second quarter of 2004 and 16% over the first quarter of 2005, through continuation of its development plan on existing properties. --Revenue increased 73% to $4.4 million. --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. decreased 28% to $1.93 per mcfe. --Expanded the Company's capacity to pursue its acquisition strategy by finalizing a $100 million senior secured credit facility with Wells Fargo Wells Fargo armored carriers of bullion. [Am. Hist.: Brewer Dictionary, 1147] See : Protectiveness Wells Fargo company that handled express service to western states; often robbed. [Am. Hist. Bank, N.A., with an initial borrowing base of $20 million. Summary Second Quarter 2005 Financial Results Revenues increased to $4.4 million in the second quarter of 2005, a 73% increase over the 2004 quarter, due to an increase in sales volumes to an average of 7,772 mcfe of natural gas equivalents per day in the 2005 quarter, compared to an average of 5,274 mcfe per day in the 2004 quarter, and the increase in our average realized price to $6.18 per mcfe, compared to $5.20 per mcfe in the 2004 quarter. 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 , exclusive of changes in working capital, for the second quarter of 2005 increased to $1,660,275 compared to a deficit of $498,849 in the 2004 quarter. Crimson reported a net loss for the 2005 quarter of $79,400 or $(.00) per share, compared to a net loss of $3,626,800, or $(.15) per share, for the 2004 second quarter. The net loss for the 2005 quarter included a $.6 million gain for the accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. of unrealized mark-to-market Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value. exposure under our oil and gas price hedging hedging, in commerce, method by which traders use two counterbalancing investment strategies so as to minimize any losses caused by price fluctuations. It is generally used by traders on the commodities market. instruments, while the 2004 quarter included a $1.4 million unrealized charge related to the derivative instruments Derivative instruments Contracts such as options and futures whose price is derived from the price of an underlying financial asset. . The 2004 quarter also included a forgiveness Forgiveness Angelica, Suor is forgiven by the Virgin Mary for ill-considered suicide. [Ital. Opera: Puccini, Suor Angelica, Westerman, 364] Bishop of Digne of debt of $12.5 million. Exclusive of these special items, net loss for the second quarter of 2005 would have been $698,100 or $.02 per share, compared to a net loss of $1,714,100, for the second quarter of 2004. Selected Financial and Operating Data The following table reflects certain comparative financial and operating data for the three and six month periods ending June June: see month. 30, 2005 and 2004:
Three Months Six Months
Ended June 30, Ended June 30,
2005 2004 2005 2004
---- ---- ---- ----
Total Volumes Sold:
Crude oil (barrels) 47,771 41,613 92,479 86,797
Natural gas (mcf) 420,657 230,247 764,672 484,003
Natural gas equivalents
(mcfe) 707,283 479,925 1,319,546 1,004,785
Daily Sales Volumes:
Crude oil (barrels) 525 457 511 480
Natural gas (mcf) 4,623 2,530 4,225 2,674
Natural gas equivalents
(mcfe) 7,772 5,274 7,290 5,551
Average oil sales price
(per bbl):
Average price received
in field $50.02 $35.15 $48.95 $33.82
Realized effects of
hedging instruments $(12.76) $(14.74) $(12.38) $(4.68)
Net realized price,
after hedging $37.26 $30.41 $36.57 $29.14
Average basis
differential (NYMEX -
WTI) $(3.21) $(3.08) $(2.70) $(2.86)
Average gas sales price
(per mcf):
Average price received
in field $6.64 $5.90 $6.47 $5.71
Realized effects of
hedging instruments $(.49) $(.56) $(.43) $(.62)
Net realized price,
after hedging $6.15 $5.34 $6.04 $5.09
Average basis
differential (Houston
Ship Channel) $.07 $(.03) $.23 $.09
Selected Costs (per mcfe):
Lease operating expenses $1.93 $2.68 $2.10 $2.59
Depreciation and
depletion expense $1.18 $.91 $1.13 $.87
General and
administrative
expense $1.32 $.98 $1.18 $.87
Interest $.03 $2.11 $.92 $1.93
Cash provided by (used in)
operating activities,
exclusive of changes in
working capital $1,660,275 $(498,849) $2,551,668 $(534,718)
Capital expenditures
Exploratory $2,331,171 $- $2,331,171 $-
Development $1,949,059 $891,431 $3,325,030 $975,513
Other $90,193 $- $821,448 $-
---------- --------- ----------- ----------
$4,370,423 $891,431 $6,477,649 $975,513
Earnings per Common Share
Basic $(.00) $.50 $(.15) $.49
Fully Diluted $(.00) $.29 $(.15) $.34
Lease Operating Expenses. Overall, lease operating expenses increased 6% from $1,285,000 in 2004 to $1,365,000 in 2005. Excluding property sales in the third quarter of 2004, operating expenses increased 35% from 2004 to 2005. Approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. two-thirds of this increase was due to increased production taxes, compression costs and salt water disposal costs related to higher sales volumes. The remainder was due to higher vendor prices. On a per unit basis, expenses decreased from $2.68 per Mcfe in 2004, to $1.93 per Mcfe in 2005. This decrease in lifting cost was due to the higher sales volumes and the sale of the two higher lifting cost fields in the third quarter of 2004. Depreciation, 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 and Amortization (DD&A). DD&A increased 91% from $437,000 in 2004 to $835,200 in 2005 due to higher production volumes, and from an increase in the DD&A rate per unit from $.91 per Mcfe in 2004 to $1.18 per Mcfe in 2005. General and Administrative (G&A) Expenses. Our G&A expenses increased 98% from $472,400 in 2004 to $934,900 in 2005 due to the recent additions to our management team to carry out our growth plan. On a per unit basis, expenses increased from $.98 per Mcfe in 2004 to $1.32 per Mcfe in 2005. Interest Expense. Interest expense decreased 98% from $1,014,600 in 2004 to $18,100 in 2005, primarily due to retirement of debt associated with our February February: see month. , 2005 recapitalization Recapitalization Restructuring a company's debt and equity mixture often with the aim of making a company's capital structure more stable. Notes: Companies often want to diversify their debt-to-equity ratio to improve liquidity. . 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. , 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 operational activities to net cash flow from operations, exclusive of working capital items:
Three Months Six Months
Ended June 30, Ended June 30,
------------------------ ------------------------
2005 2004 2005 2004
----------- ------------ ----------- ------------
Net Cash provided
by (used in)
operational
activities $2,273,133 $(1,855,060) $(530,387) $(2,023,885)
Changes in working
capital
Accounts
receivable 61,424 180,075 1,010,646 449,463
Prepaid expenses 81,856 (295,398) 92,212 (58,446)
Accounts payable
and accrues
expenses (592,426) 1,471,534 1,979,197 1,098,150
----------- ------------ ----------- ------------
Net cash flow from
operations,
exclusive of
working capital
items $1,660,275 $(498,849) $2,551,668 $(534,718)
=========== ============ =========== ============
CRIMSON EXPLORATION INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
ASSETS 2005 2004
(Unaudited) (Audited)
------------ ------------
Total current assets $4,000,577 $2,214,542
Net property and equipment 54,946,544 50,123,316
Total other assets 4,446,006 5,538,306
------------ ------------
Total Assets $63,393,127 $57,876,164
============ ============
June 30, December 31,
2005 2004
LIABILITIES AND STOCKHOLDERS' EQUITY (Unaudited) (Audited)
------------ ------------
Total current liabilities $7,039,050 $37,249,217
Total non-current liabilities 1,267,310 1,950,304
Derivative instruments 743,245 -
Total stockholders' equity 54,343,522 18,676,643
------------ ------------
Total Liabilities & Stockholders' Equity $63,393,127 $57,876,164
============ ============
CRIMSON EXPLORATION INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Six Months
Ended June 30, Ended June 30,
2005 2004 2005 2004
----------- ----------- ------------ -----------
OPERATING REVENUES
Oil and gas sales $4,367,751 $2,494,347 $8,001,911 $4,994,987
Operating overhead
and other income 25,289 40,919 55,462 79,008
----------- ----------- ------------ -----------
Total operating
revenues 4,393,040 2,535,266 8,057,373 5,073,995
----------- ----------- ------------ -----------
OPERATING EXPENSES
Lease operating
expenses 1,364,998 1,284,972 2,765,862 2,599,256
Depreciation,
depletion and
amortization 835,231 437,043 1,491,009 876,245
Dry holes,
abandoned property
and impaired
assets 389,183 326,512 391,339 326,512
Accretion expense 19,161 20,358 38,322 40,716
General and
administrative 934,902 472,441 1,553,129 873,633
----------- ----------- ------------ -----------
Total operating
expenses 3,543,475 2,541,326 6,239,661 4,716,362
----------- ----------- ------------ -----------
INCOME (LOSS) FROM
OPERATIONS 849,565 (6,060) 1,817,712 357,633
----------- ----------- ------------ -----------
OTHER INCOME AND
EXPENSE
Interest expense (18,099) (1,014,609) (1,216,600) (1,934,777)
Other financing
costs (5,000) (369,270) (1,910,159) (369,270)
Loss from
unconsolidated
investments (36,159) - (36,159) -
Loss on sale of
assets (25,894) (226,809) (38,916) (226,809)
Unrealized gain
(loss) on
derivative
instruments 618,775 (1,438,249) (1,394,706) (1,150,402)
Forgiveness of debt - 12,475,612 - 12,475,612
----------- ----------- ------------ -----------
Total other
income and
expense 533,623 9,426,675 (4,596,540) 8,794,354
----------- ----------- ------------ -----------
INCOME (LOSS) BEFORE
INCOME TAXES 1,383,188 9,420,615 (2,778,828) 9,151,987
INCOME TAXES (537,889) - 849,802 -
----------- ----------- ------------ -----------
NET INCOME (LOSS) 845,299 9,420,615 (1,929,026) 9,151,987
DIVIDENDS ON
PREFERRED STOCK (924,661) (97,334) (1,697,781) (131,709)
(Paid 2005 -
$1,031,504; 2004 -
0)
----------- ----------- ------------ -----------
NET INCOME (LOSS)
AVAILABLE TO
COMMON SHAREHOLDERS $(79,362) $9,323,281 $(3,626,807) $9,020,278
=========== =========== ============ ===========
NET INCOME (LOSS) PER
COMMON SHARE,
BASIC $(.00) $.50 $(.15) $.49
=========== =========== ============ ===========
DILUTED $(.00) $.29 $(.15) $.34
=========== =========== ============ ===========
Operational Update Production For the second quarter of 2005, Crimson produced an average of 4,623 mcf of natural gas and 525 barrels of crude oil per day, or 7,772 mcfe per day of natural gas equivalents. That compares to an average 5,274 mcfe per day in the second quarter of 2004 and 6,804 mcfe per day in the first quarter of 2005. Production is higher in 2005 primarily due to the commencement of production from two wells in our Iola Field in east Texas in 2005, from three major workovers completed in our Grand Lake Field over the last seven months and from the 15 workovers we completed and brought online during the second quarter of 2005. As of the date of this release, we were producing a daily average of 5,000 mcf of natural gas and 575 barrels of oil, or 8,400 mcfe of natural gas equivalents. For the second quarter of 2005, approximately 50%, 42% and 8% of our daily production came from our Louisiana Louisiana (ləwē'zēăn`ə, l  ē'–), state in the S central United States. It is bounded by Mississippi, with the Mississippi R. 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. , Texas onshore and Colorado Colorado, state, United States Colorado (kŏlərăd`ə, –răd`ō, –rä`dō), state, W central United States, one of the Rocky Mt. states. DJ Basin properties, respectively. For the first six months of 2005, we produced a daily average of 4,225 mcf of natural gas and 511 barrels of oil, or 7,290 mcfe of natural gas equivalents, compared to 2,674 mcf of gas and 480 barrels of crude oil, or 5,551 mcfe of natural gas equivalents for the first six months of 2004. The reason for the increase over 2004 is the same as that described for the second quarter. Capital Program During the second quarter of 2005, we completed 15 workovers on our existing properties, spending approximately $1.8 million and adding approximately 1,400 mcfe of natural gas equivalents of production to our daily production profile. Details by major area are noted below. We currently project that we will undertake another 40 to 45 workovers and recompletions through the end of 2005, spending an estimated $3.0 million on those projects. During the second quarter, Crimson participated for a non-operated 25% WI in the drilling of a development well within the Mustang Island Mustang Island is a barrier island on the Gulf Coast of Texas in the United States. The island is 18 miles (29 km) long, stretching from Corpus Christi to Port Aransas. The island is oriented generally northeast-southwest, with the Gulf of Mexico on the east and south, and Corpus 749 Field. The Mustang Island 749-L #2 was drilled to a total depth of 10,600'MD and a completion attempt was made in the pre-drill objective. Although the completion is still underway, results to date are not encouraging as water has possibly encroached the objective reservoir reservoir (rĕz`əvôr, -vwär), storage tank or wholly or partly artificial lake for storing water. Building an embankment or dam to preserve a supply of water for irrigation is an ancient practice; India and Egypt have many old and from the field's This article is about the shopping centre in Denmark. For the Canadian chain of department stores, see Fields (department store). Field's is the biggest shopping centre in Denmark and the second-largest in Scandinavia, surpassed only by Nordstan in previous downdip completions. An additional shallower zone may warrant testing pending the final results of the current zone. Final results are expected no later than early Q4 '05. Crimsons total net exposure in this well is approximately $2.75 million and could be reflected in the third quarter exploration expense. Additionally in the second quarter, Crimson participated for a non-operated 40% WI in an exploratory well in Jim Hogg County, Texas Jim Hogg County is a county located in the U.S. state of Texas. As of 2000, the population is 5,281. Its county seat is Hebbronville6. Jim Hogg is named for James Stephen Hogg, a governor of Texas. Geography According to the U.S. . The Lalydia #1 encountered non-commercial A non-commercial enterprise is work that values other considerations above and beyond that of making a profit. It differs from a non-profit enterprise in that seeking a profit is a part of their business, just not the main part. hydrocarbons hydrocarbons (hīˈ·drō·kärˑ·b  nz),n. and thereby elected to plug and abandon abandon v. to intentionally and permanently give up, surrender, leave, desert, or relinquish all interest or ownership in property, a home or other premises, a right of way, and even a spouse, family, or children. the well. Additional opportunities exist on the 800 acre tract and will be evaluated for future activity. Crimson's total net exposure in this well is approximately $389,000 and is reflected in the second quarter exploration expense. We currently anticipate that we will spend another $1.5 to $4 million during the year on drilling either proved undeveloped locations on our existing properties, or on other projects that we might participate in with other operators. A review of second quarter activity for each major area is as follows: Iola Field, Grimes Grimes is a surname, that is believed to be of a Scandinavian decent and may refer to
During the second quarter of 2005, production from the Iola Field averaged 800 mcfe per day of natural gas equivalents compared to 540 mcfe per day of equivalents in the first quarter of 2005; it was not producing in the second quarter of 2004. Production increases are a result of drilling the two wells and bringing them online in the first quarter of 2005. Currently we are evaluating additional drilling opportunities in the area as well as means to increase production of the existing wells through gas compression. Cameron Cam·er·on , Mount A peak, 4,342.6 m (14,238 ft) high, in the Rocky Mountains of central Colorado. Parish, LA (100% working interest; approximate ap·prox·i·mate v. To bring together, as cut edges of tissue. adj. 1. Relating to the contact surfaces, either proximal or distal, of two adjacent teeth; proximate. 2. Close together. 76% revenue interest) Second quarter 2005 production from our Lacassine and Grand Lake fields averaged 3,950 mcfe per day of natural gas equivalents, compared to 1,800 mcfe per day of equivalents in the second quarter of 2004 and 3,500 mcfe per day of equivalents in the first quarter of 2005. The increases resulted from workover activity and facility enhancements in both fields during late 2004 and first half 2005. Also, during the second quarter we were finishing 2 new workovers at the Grand Lake field, with one well coming online in May and the second in July July: see month. of this year. The impact of these 2 workovers will be seen in the second half of 2005. We have spent approximately $0.8 million in these 2 fields during the first half of 2005, with a production increase of 700 mcfepd seen so far. We anticipate spending another $1 million during the second half of the year on additional recompletions and facility enhancements. D-J Basin wells, east of Denver Denver, city (1990 pop. 467,610), alt. 5,280 ft (1,609 m), state capital, coextensive with Denver co., N central Colo., on a plateau at the foot of the Front Range of the Rocky Mts., along the South Platte River where Cherry Creek meets it; inc. 1861. , Colorado (74% working interest; 55% revenue interest) Second quarter 2005 production from our Colorado wells averaged 615 mcfe per day of natural gas equivalents, compared to 550 mcfe per day of equivalents in the second quarter of 2004 and 600 mcfe per day of equivalents in the first quarter of 2005. We had originally identified 8 workovers and re-fracs to perform on our D-J basin acreage during 2005, at an estimated total cost of $600,000; however, we have been delayed in this effort by a lack of rig availability. We also had planned to drill two J Sand wells during the second half of this year at a projected cost of $400,000 each. The workovers are designed primarily to add the J Sand natural gas zone to existing producing wells and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. to acid stimulate stimulate /stim·u·late/ (stim´u-lat) to excite functional activity. stim·u·late v. To arouse a body or a responsive structure to increased functional activity. or "frac" the J Sand natural gas zones. In late July we contracted a workover rig and have started our initial workovers; it is possible we may still get this plan completed by yearend. East Texas and South Texas (90% to 100% working interest; 68% to 78% revenue interest) Second quarter 2005 production from our other east and south Texas fields averaged 2,400 mcfe per day of natural gas equivalents, compared to 2,100 mcfe per day of equivalents in the second quarter of 2004 and 1,980 mcfe per day of equivalents in the first quarter of 2005. During the first half of 2005, we have completed and brought online 13 workovers at an approximate cost of $1.2 million. Through July, these wells have added approximately 700 mcfe per day of equivalent daily production. The primary focus in these fields is in recompleting wells to new gas zones, and in optimizing artificial lift operations on existing or previously abandoned oil zones to achieve higher production from old oil completions. Our plan for the second half of 2005 is to perform 30 to 35 more workovers and recompletions at an estimated cost of $1.4 million. Teleconference Call Crimson Exploration management will hold a conference call to discuss the information described in this press release on Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , August 19, 2005 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: 1-800-289-0496 (International 1-913-981-5519) and entering the participant code 6743087. A replay of the call will be available from August 19, 2005 through August 26, 2005 by dialing toll free 1-888-203-1112 (International 1-719-457-0820) and entering conference ID 6743087. This press release will be posted on our website at www.crimsonxp.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 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 reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. 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 December: see month. 31, 2004 and our Form 10-Q Form 10-Q See 10-Q. for the quarter ended June 30, 2005 for a further discussion of these risks. |
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