CREDO Petroleum Reports That Financial Condition Remains Strong
13 October 2008 - 11:00PM
Business Wire
CREDO Petroleum Corporation (NASDAQ: CRED) today reported that its
financial condition is sound and that the company is well
positioned to capitalize on opportunities that may arise due to
recent events in the U.S. and world financial markets. In July
CREDO completed a $16,675,000 stock sale. Working capital is
approximately $27,400,000, consisting primarily of cash and short
term investments, and the company has no debt. As of the company�s
2007 fiscal year end, proved reserves, reported on an SEC basis,
were 20.5�billion cubic feet of natural gas equivalent. The
discounted value (at 10%) of those reserves was�approximately
$62,000,000 based on $5.89 per Mcf for natural gas reserves and
$86.61 for oil reserves, which are roughly equivalent to today�s
prices. Reserve quantities are updated quarterly and have not
materially changed. Reserves are currently being updated for the
upcoming fiscal year-end 2008. In addition to SEC basis booked
reserves, the company believes that it has very substantial
unbooked reserves in other categories which provide significant
upside potential. Currently, the company has open natural gas hedge
positions for the production months of November�2008 though October
2009 covering 830�MMBtu. All of the hedges are currently
profitable. In the aggregate, these hedges are intended to cover
the company�s estimated future production for the applicable months
hedged as follows: approximately 50% for the Fall and Winter of
2008/2009 and approximately 30%�for the Spring, Summer and Fall of
2009. The monthly hedge prices (NYMEX basis) range from an average
of approximately $9.80 for the Fall and Winter months of 2008/2009
and $8.20 for the Spring, Summer and Fall months of 2009. All open
hedge contracts are indexed to the NYMEX. Average prices in the
company�s primary market are expected to be 15% to 17%�below NYMEX
prices due to basis differentials and transportation costs. James
T. Huffman, Chairman and CEO, stated, �This year marks our 30th
year as a public company. In that time we have experienced a number
of turbulent cycles. I am proud that we have always provided a
financially sound and profitable business for our shareholders,
employees, and customers. In our 30-year history, there has been
only one unprofitable year when low energy prices forced a non-cash
write down of property costs. Over the years, CREDO has received
accolades from many sources, including Forbes, Fortune and U.S.A.
Today, for outstanding long term performance in both good and bad
times. �This year is no different. Our business is sound and we are
ready to seize opportunities as they become available. Our people
are seasoned and we have plenty of cash, no debt, and an excellent
reserve base. In addition to our Calliope Gas Recovery System, we
have outstanding drilling projects in Oklahoma, Kansas, Texas and
North Dakota.� Huffman further stated, �Our Calliope Gas Recovery
System continues to provide enormous upside for CREDO because, with
its 'all-in' finding and production costs of about $1.00 per Mcf,
it provides very attractive, low risk returns across a wide range
of gas prices. We expect Calliope to become increasingly attractive
to other companies as they deal with changing economics in our
industry.� 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 company�s stock is
traded on the NASDAQ System under the symbol �CRED� and is quoted
daily in the �NASDAQ Global Market� section of The Wall Street
Journal. This press release includes certain statements that may be
deemed to be "forward-looking statements" 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. Investors are encouraged to read the "Forward-Looking
Statements" and "Risk Factors" sections included in the company's
2007�Annual Report on Form 10-K for more information. Although the
company may from time to time voluntarily update its prior forward
looking statements, it disclaims any commitment to do so except as
required by securities laws.
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