Crimson Exploration Inc. Announces Second Quarter 2006 Financial and Operational Results.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 financial and operational results for the second quarter of 2006. Summary Financial Results Revenues for the second quarter of 2006 were $5.2 million compared to revenue of $4.4 million in the prior year quarter, an 18% increase due to higher average realized prices, partly offset by lower sales volumes, both of which are quantified below. Production for the second quarter of 2006 was 636,968 mcfe of natural gas equivalents, or 7,000 mcfe per day, compared with production of 707,264 mcfe, or 7,772 per mcfe day, in the 2005 quarter. Lower volumes in the 2006 quarter, compared to the 2005 quarter, resulted from the continued restriction on production (approximately 600 mcfepd) at our Lacassine field in Cameron Cam·er·on , Mount A peak, 4,342.6 m (14,238 ft) high, in the Rocky Mountains of central Colorado. Parish where we were finishing repairs related to Hurricane Rita Hurricane Rita was the fourth-most intense Atlantic hurricane ever recorded and the most intense tropical cyclone ever observed in the Gulf of Mexico. Rita caused $11.3 billion in damage on the U.S. Gulf Coast in September 2005. and installing production equipment to treat our high btu gas to meet more stringent pipeline requirements. In addition, we had a decline in production of 600 mcfepd from our horizontal wells in the Iola field in east Texas, where early life, flush To empty the contents of a memory buffer. See buffer. Flush Elizabeth Barrett Browning’s spaniel, subject of a biography. [Br. Lit.: Woolf Flush in Barnhart, 446] See : Dogs (data) flush production from second quarter 2005 drilling declined to a lower, but more consistent production rate. These production declines were partially offset by a 200 mcfepd average increase in production for the quarter in our Madisonville Madisonville, city (1990 pop. 16,200), seat of Hopkins co., W Ky., in a coal mining and farm area; inc. 1807. Tobacco, grain, and soybeans are grown and livestock is raised. There is coal processing, and machinery, dairy products, and ordnance are produced. , Grand Lake and Colorado Colorado, state, United States Colorado (kŏlərăd`ə, –răd`ō, –rä`dō), state, W central United States, one of the Rocky Mt. states. fields where we implemented workover and drilling projects during the current year. We are currently producing at an average net rate of approximately 7,000 mcfe per day. Average prices received in the field during the second quarter of 2006 were $67.47 per barrel of oil and $6.56 per mcf of natural gas, or $8.55 per mcfe of natural gas equivalent, compared to $50.02 per barrel of oil, $6.64 per mcf and $7.33 per mcfe for the 2005 quarter. Adjusting for the effects of realized losses Realized Loss A loss recognized when assets are sold for a price lower than the original purchase price. Notes: A portion of the realized loss may be applied against a capital gain or realized profit to reduce taxes. on our commodity price hedges, our average realized prices in the 2006 quarter were $60.48, $6.61 and $8.09 for oil, natural gas and natural gas equivalents, respectively. For 2005, average realized prices for the quarter were $37.26, $6.15 and $6.18 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 2006 quarter were $4.8 million compared to $3.5 million in the 2005 quarter. Of the $1.3 million increase in total operating expenses, lease operating expenses contributed approximately $350,000 due to higher workover costs, higher salt-water disposal costs and higher prices for supplies and services prevalent prevalent widespread occurrence. in the industry. 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 approximately $1.2 million, approximately $1.0 million of which is related to non-cash compensation expense related to the 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 stock options. Included in expense for the 2005 quarter was $389,000 in dry hole costs. Other Income and Expense was a net positive $69,000 for the 2006 quarter compared to a net positive amount of approximately $534,000 in 2005, with the main difference being higher unrealized gain Unrealized Gain A profit that results from holding on to an asset rather than cashing it in and using the funds. Notes: Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain. on derivative instruments Derivative instruments Contracts such as options and futures whose price is derived from the price of an underlying financial asset. in 2005. 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 2006, exclusive of changes in working capital, increased to $2.2 million, a 29% increase over the $1.7 million reported for the 2005 quarter, due primarily to the price-related increase in revenue. We reported net income for the second quarter of 2006 of $202,000 compared to net income of $845,000 for the second quarter of 2005. Selected Financial and Operating Data The following table reflects certain comparative financial and operating data for the three and six month periods ending June June: see month. 30, 2006 and 2005:
Three Months
------------
Ending June 30,
---------------
2006 2005 %
---- ----
Total Volumes Sold:
Crude oil (barrels) 45,187 47,771 -5%
Natural gas (mcf) 365,846 420,638 -13%
Natural gas equivalents (mcfe) 636,968 707,264 -10%
Daily sales volumes:
Crude oil (barrels) 497 525 -5%
Natural gas (mcf) 4,020 4,622 -13%
Natural gas equivalents (mcfe) 7,000 7,772 -10%
Daily Sales Volumes (mcfe) by Area:
Cameron Parish LA 3,509 3,981 -12%
Texas Onshore 2,682 3,143 -15%
DJ Basin CO 777 596 30%
Other 32 52 -38%
------------ ------------
7,000 7,772 -10%
Average oil sales price ($ per bbl):
Average price received in field $67.47 $50.02 35%
Realized effects of hedging
instruments $(6.99) (12.76) -45%
------------ ------------
Net realized price, after hedging $60.48 $37.26 62%
Average basis differential (NYMEX
-WTI) $(3.24) $(3.21) 1%
Average gas sales price ($ per mcf):
Average price received in field $6.56 $6.64 -1%
Realized effects of hedging na
instruments 0.05 (0.49)
------------ ------------
Net realized price, after hedging $6.61 $6.15 7%
Average basis differential (Houston
Ship Channel) $0.05 $0.07 -29%
Selected Costs ($ per mcfe):
Lease operating expenses $2.68 $1.93 39%
Depreciation and depletion expense $1.44 $1.18 22%
General and administrative $3.36 $1.32 36%
Interest $0.09 $0.03 243%
Cash provided by (used in) operating
activities, exclusive of changes in
working capital $2,222,423 $(1,660,275) 34%
Capital expenditures
Leasehold acquisition $403,391 $41,982
Exploratory 363,869 2,331,171
Development 2,765,717 1,949,059
Other 25,362 48,211
------------ ------------
$3,558,339 $4,370,423
Capital Expenditures (by area)
Cameron Parish LA $1,771,656 $824,767
Texas Onshore 1,107,675 1,165,442
Texas Offshore - 2,331,171
DJ Basin CO 653,646 1,082
Other 25,362 47,961
------------ ------------
$3,558,339 $4,370,423
Earnings per Common Share
Basic $(0.02) $(0.00)
Fully Diluted $(0.02) $(0.00)
Six Months
----------
Ending June 30,
---------------
2006 2005 %
---- ----
Total Volumes Sold:
Crude oil (barrels) 91,033 92,479 -2%
Natural gas (mcf) 683,452 764,653 -11%
Natural gas equivalents (mcfe) 1,229,650 1,319,527 -7%
Daily sales volumes:
Crude oil (barrels) 503 511 -2%
Natural gas (mcf) 3,776 4,225 -11%
Natural gas equivalents (mcfe) 6,794 7,290 -7%
Daily Sales Volumes (mcfe) by Area:
Cameron Parish LA 3,312 3,941 -16%
Texas Onshore 2,754 2,703 2%
DJ Basin CO 689 5,995 16%
Other 39 51 -24%
------------ ------------
6,794 7,290 -7%
Average oil sales price ($ per bbl):
Average price received in field $64.23 $48.95 31%
Realized effects of hedging
instruments (4.94) (12.38) -60%
------------ ------------
Net realized price, after hedging $59.29 $36.57 62%
Average basis differential (NYMEX
-WTI) $(2.90) $(2.70) 7%
Average gas sales price ($ per mcf):
Average price received in field $7.14 $6.47 10%
Realized effects of hedging
instruments (0.02) (0.43) -95%
------------ ------------
Net realized price, after hedging $7.12 $6.04 18%
Average basis differential (Houston
Ship Channel) $0.15 $0.23 -35%
Selected Costs ($ per mcfe):
Lease operating expenses $2.68 $2.10 28%
Depreciation and depletion expense $1.36 $1.13 20%
General and administrative $3.14 $1.18 47%
Interest $0.05 $0.92 -94%
Cash provided by (used in) operating
activities, exclusive of changes in
working capital $4 ,714,590 $2,551,668 85%
Capital expenditures
Leasehold acquisition $8,322,685 $727,513
Exploratory 363,869 2,331,171
Development 3,645,542 3,325,030
Other 76,629 93,935
------------ ------------
$12,408,725 $6,477,649
Capital Expenditures (by area)
Cameron Parish LA $2,175,335 $779,886
Texas Onshore 9,453,012 3,261,825
Texas Offshore - 2,331,171
DJ Basin CO 703,749 11,082
Other 76,629 93,685
------------ ------------
$12,408,725 $6,477,649
Earnings per Common Share
Basic $(0.01) $(0.15)
Fully Diluted $(0.01) $(0.15)
Non - GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (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. 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,
-------------- --------------
2006 2005 2006 2005
---- ---- ---- ----
Net cash provided by
(used in) operating
activities, per
Statement of Cash
Flows $2,888,720 $(2,273,133) $5,631,630 $(530,387)
Changes in working
capital
Accounts receivable (105,422) (61,424) (672,850) 1,010,646
Prepaid Expenses (162,729) 81,856 128,154 92,212
Accounts payable
and accrued
expenses (398,146) 592,426 (372,344) 1,979,197
----------- ------------ ----------- -----------
Net cash flow from
operations,
exclusive of working
capital items $2,222,423 $(1,660,275) $4,714,590 $2,551,668
=========== ============ =========== ===========
CRIMSON EXPLORATION INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
June 30, December 31,
ASSETS 2006 2005
------ ------------ ------------
Total current assets $4,074,360 $5,825,078
Net property and equipment 64,953,592 54,223,059
Total other assets 709,498 3,066,812
------------ ------------
Total Assets $69,737,450 $63,114,949
============ ============
June 30, December 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 2006 2005
------------------------------------ ------------ ------------
Total current liabilities $6, 359,356 $6,855,735
Total non-current liabilities 4,440,664 3,453,952
Total stockholders' equity 58,937,430 52,805,262
------------ ------------
Total Liabilities & Stockholders' Equity $69,737,450 $63,114,949
============ ============
CRIMSON EXPLORATION INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Six Months
Ending June 30, Ending June 30,
2006 2005 2006 2005
----------- ----------- ------------ -----------
OPERATING REVENUES
Oil and gas sales $5,150,063 $4,367,751 $10,263,560 $8,001,911
Operating overhead
and other income 30,130 25,289 56,282 55,462
----------- ----------- ------------ -----------
Total Operating
Revenues 5,180,193 4,393,040 10,319,842 8,057,373
----------- ----------- ------------ -----------
OPERATING EXPENSES
Lease operating
expenses 1,710,081 1,364,998 3,289,401 2,765,862
Geological and
geophysical 47,141 - 55,918 -
Depreciation,
depletion and
amortization 919,431 835,231 1,673,807 1,491,009
Dry holes, abandoned
property and
impaired assets 8,036 389,183 12,422 391,339
Asset retirement
obligations 20,994 19,161 41,988 38,322
General and
administrative 2,141,074 934,902 3,864,737 1,553,129
----------- ----------- ------------ -----------
Total Operating
Expenses 4,846,757 3,543,475 8,938,273 6,239,661
----------- ----------- ------------ -----------
INCOME FROM
OPERATIONS 333,436 849,565 1,381,569 1,817,712
----------- ----------- ------------ -----------
OTHER INCOME AND
EXPENSE
Interest expense (55,878) (18,099) (65,800) (1,216,600)
Financing cost (43,447) (5,000) (88,564) (1,910,159)
Loss from equity in
investments - (36,159) (1,843) (36,159)
Loss on sale of
assets - (25,894) - (38,916)
Unrealized gain
(loss) on
derivative
instruments 168,667 618,775 1,276,947 (1,394,706)
----------- ----------- ------------ -----------
Total Other
Income and
(Expense) 69,342 533,623 1,120,740 (4,596,540)
----------- ----------- ------------ -----------
INCOME (LOSS) BEFORE
INCOME TAXES 402,778 1,383,188 2,502,309 (2,778,828)
INCOME TAX (EXPENSE)
BENEFIT (200,913) (537,889) (927,635) 849,802
----------- ----------- ------------ -----------
NET INCOME (LOSS) 201,865 845,299 1,574,674 (1,929,026)
=========== =========== ============ ===========
Operational Review by Area Madisonville Area The Company continues to devote substantial time and effort to its Madisonville-Rodessa development project with significant progress being made during the second quarter of 2006. During the second quarter, we received 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 approval of our waste disposal well and plan, received verbal acknowledgment acknowledgment, in law, formal declaration or admission by a person who executed an instrument (e.g., a will or a deed) that the instrument is his. The acknowledgment is made before a court, a notary public, or any other authorized person. that receipt of the Commission's order granting access to the field gas plant is eminent Eminent may refer to:
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. for the Rodessa as of January January: see month. 1, 2006 because we had not obtained the necessary 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. permits as of that time. D-J Basin, CO During the second quarter of 2006, the Company drilled two successful wells in Colorado. The Kissler #2 well (99.5% WI) was drilled in the Wattenberg  Wattenberg Field located in Weld County and has been completed in the Codell sand at approximately 7200'. It is currently producing at approximately 250 mcfe per day, net. The Amoco State 41-16 well (93.9% WI) was drilled in the Wattenberg Field in Adams County Adams County is the name of twelve counties in the United States. Most of them are named either for John Adams, second President of the United States, or for his son, John Quincy Adams, sixth President. and has been completed in the J Sand at approximately 8000'. It is currently waiting on facility hook-up hook-up Noun the linking of broadcasting equipment or stations to transmit a special programme expected in the third quarter. The net cost of these two wells was approximately $935,000. Also during the quarter, the Company 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 to analyze an·a·lyze v. 1. To examine methodically by separating into parts and studying their interrelations. 2. To separate a chemical substance into its constituent elements to determine their nature or proportions. 3. its entire holdings in the D-J Basin to identify additional potential drilling opportunities. The Company owns approximately 14,300 gross (10,700 net) undeveloped acres in the D-J basin. Further drilling in this field during 2006 will be based on the results of this 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 During the second quarter of 2006, in the Grand Lake Field (WI 100%) production commenced at a net rate of 350 mcfe from the #33 well which was recompleted in the first quarter. The #38 well was recompleted during the second quarter and commenced production at approximately 225 mcfe per day. A workover on the #17 well was in progress at quarter-end and is expected to commence production in August. These increases allowed us to offset normal production decline and restore production levels to pre-hurricane rates. Total capital expended ex·pend tr.v. ex·pend·ed, ex·pend·ing, ex·pends 1. To lay out; spend: expending tax revenues on government operations. See Synonyms at spend. 2. during the quarter on these projects was approximately $1,000,000. At Lacassine Field (WI 100%), production rates have been limited by salt water disposal capacity caused as a result of the shut-in shut-in n. A person confined indoors by illness or disability. adj. 1. Confined to a home or hospital, as by illness. 2. Disposed to avoid social contact; excessively withdrawn or introverted. from the hurricanes last fall. At the end of the quarter, we began converting the Lacassine Co. B-11 well to an additional salt water disposal well with work expected to be completed early in the third quarter of 2006. Once this work is complete, we will perform remedial REMEDIAL. That which affords a remedy; as, a remedial statute, or one which is made to supply some defects or abridge some superfluities of the common law. 1 131. Com. 86. The term remedial statute is also applied to those acts which give a new remedy. Esp. Pen. Act. 1. work on two shut-in wells in order to restore them to production. Total net capital expenditures for these projects is estimated to be approximately $700,000. 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;. During the second quarter, we also finalized plans to drill 3 stratigraphic stra·tig·ra·phy n. The study of rock strata, especially the distribution, deposition, and age of sedimentary rocks. strat core wells to evaluate the feasibility of developing and producing coal bed methane from Wilcox Wilcox may refer to: Place names in the United States
See Wilcox (surname) Other
qualitative pertaining to observations of a categorical nature, e.g. breed, sex. data to determine their producibility. The actual drilling of those wells should commence in the third quarter. The Company anticipates spending approximately $400,000 on this feasibility study The analysis of a problem to determine if it can be solved effectively. The operational (will it work?), economical (costs and benefits) and technical (can it be built?) aspects are part of the study. Results of the study determine whether the solution should be implemented. during the latter half of 2006. Crimson will pay 85% of the cost of the core wells to earn a 70% WI in the project. Exploratory Joint Venture In July July: see month. 2006 we entered into a joint exploration agreement with a privately owned prospect generation company focused on generating exploratory drilling opportunities primarily in the 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. Gulf Coast area. Under this agreement, which has an initial term of one year with an option for a second, we are entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: to a first right of refusal for up to 50% working interest on all prospects generated during the term of the agreement. If we elect to participate in any of the prospects generated, it will be on a normal third for a quarter basis. Teleconference Call Crimson management will hold a conference call to discuss the information described in this press release at 1:30 p.m. CDT CDT abbr. Central Daylight Time CDT Central Daylight Time CDT n abbr (US) (= Central Daylight Time) → hora de verano del centro; (BRIT on Monday Monday: see week. , August 14, 2006. Those interested in participating may do so by calling the following phone number: (800) 811-8845, (International (913) 981-4905) and entering the participant code 9557249. A replay of the call will be available from August 14, 2006 through August 21, 2006 by dialing toll free (888) 203-1112, (International (719) 457-0820) and asking for replay ID code 9557249. 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 December: see month. 31, 2005 for a further discussion of these risks. |
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