OEDVQ Osage Exploration and Development Inc (CE)

Osage Exploration and Development, Inc. (OTCBB:OEDV), an independent exploration and production company focused on the Horizontal Mississippian and Woodford plays in Oklahoma, reported its operational and financial results for the quarter ended June 30, 2014. The full text of the Company’s Form 10-Q is available on the SEC EDGAR system or on Osage’s website: http://www.osageexploration.com. Highlights include:

• An increase in average daily production from 411 barrels of oil equivalent per day (BOEPD) in the first quarter of 2014 to 425 BOEPD in the second quarter of 2014;
• Production of 38,756 BOE, 123% higher than the second quarter of 2013;
• Revenue from continuing operations of $2.5 million, an 88% increase over the prior year and in line with first quarter 2014 revenues;
• Adjusted EBITDA* of $1.25 million, up 185% over the second quarter of 2013 and also in line with Adjusted EBITDA of $1.38 million from the first quarter of 2014: and,
• Decreased operating expenses per BOE from $12.77 in the first quarter to $10.08 in the second quarter of 2014.

Operational Update

Since the end of the second quarter, Osage has brought two operated wells into production, the Whitten 1-3MH and 1-2WH. For the purposes of long-term reservoir management, flow rates have been restricted and significant backpressure has been maintained on both wells in order to flatten their overall declines. Cumulative production on the Whitten 1-3MH is 12,957 BOE, with a product mix composed of 75% oil. The Whitten 1-3MH was produced on an average casing choke of 8/64 during its early weeks of production. Cumulative production on the Whitten 1-2WH is 10,380 BOE, with a product mix composed of 71% oil. Similarly, the Whitten 1-2WH was produced on an average casing choke of 5/64 during its early weeks of production.

Since drilling the two Whitten wells, Osage has reached total depth on its third well, the McNally 1-20WH, and is currently drilling the lateral on its fourth operated well, the McNally 1-29MH. Fracture stimulation of the McNally 1-20WH and McNally 1-29MH is scheduled for the first half of September.

2014 Drilling and Exit Rate

Osage’s operational plan envisions drilling six total operated wells by year-end 2014, with four of those wells being in production by December 31. Osage should exit the year with a daily production rate of approximately 850 BOE, or double its average rate during the second quarter given just baseline drilling success.

Management Comments

“With Osage's transition from non-operator to operator being complete, the second quarter of 2014 was the final chapter in a book that has now been shelved. At the end of the second quarter, Osage had interests in 43 non-operated wells, average daily production of 425 barrels of oil equivalent, and largely stable revenues quarter-over-quarter. These numbers do not yet reflect any contribution from the Osage-operated wells that came online in early July,” stated Mr. Kim Bradford, Chairman and CEO of Osage Exploration.

Mr. Bradford continued, “We are now well into prosecuting our operated drilling program, and have a much greater working interest per well than we did as a non-operator. As a result, growth in quarterly production and revenue should be much sharper than in the past. We are targeting a 2014 production exit rate that is double our average rate during the second quarter, and the employment of a second rig in Logan County sometime next year. We have stated in the past that the period beginning in the second half of this year would be one of rapid growth and positive change for Osage, and reiterate that statement and sentiment now.”

*GAAP Reconciliation

In addition to revenue and net income determined in accordance with GAAP, we have provided a reconciliation of our Adjusted EBITDA in this release. Adjusted EBITDA is a non-GAAP financial measure that we use as a supplemental measure of our performance. Adjusted EBITDA is not a measurement of our financial performance under GAAP and should not be considered as an alternative to revenue, net income, operating income or any other performance measure derived in accordance with GAAP. It should not be assumed that Adjusted EBITDA is comparable to similarly named figures disclosed by other companies. We define Adjusted EBITDA as net income before the effects of the items listed in the table below. Management believes Adjusted EBITDA is a useful measure of performance, along with operating income (loss) and net income (loss) from continuing operations.

                     

Q2, 2014

Q2, 2013

Net loss from continuing operations $ (4,397,749 ) $ (1,097,863 ) Interest expense, net 1,211,170 1,128,617 Depreciation, depletion and accretion 1,346,123 344,527 Stock-based compensation 2,923,252 26,750

Unrealized losses on derivatives

243,422 36,690 Gain on sale of land interests (77,950 ) - Taxation -   -  

Adjusted EBITDA

$

1,248,268

$

438,721

 

About Osage Exploration and Development, Inc.

Based in San Diego, California, with production offices in Oklahoma City, Oklahoma, Osage Exploration and Development, Inc. is an independent exploration and production company with interests in oil and gas wells and prospects in the U.S. http://www.osageexploration.com

Safe Harbor Statement

The information in this release includes certain forward-looking statements as defined by the Securities and Exchange Commission that are based on assumptions that in the future may prove not to have been accurate. Those statements and Osage Exploration and Development, Inc. are subject to a number of risks, including production variances from expectations, volatility of product prices, inability to raise sufficient capital to fund its operations, environmental risks, competition, government regulation, and the ability of the Company to execute its business strategy, among others.

Osage Exploration and Development, Inc.Jack Zedlitz, VP of Corporate Development405-270-0989jzedlitz@osageexploration.comorKim Bradford, President and CEO619-677-3956kbradford@osageexploration.comhttp://www.osageexploration.com