SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 15, 2003
__________________
CREDO Petroleum Corporation
________________________________________________________________
(Exact name of registrant as specified in its charter)
Colorado 0-8877 84-0772991
________________________________________________________________
(State or other jurisdiction Commission IRS Employer
of incorporation) File Number Identification No.
1801 Broadway, Suite 900 Denver, Colorado 80202
________________________________________________________________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: (303) 297-2200
________________________________________________________________
Item 12. Results of Operations and Financial Condition.
CREDO Petroleum Corporation Press Releases dated
September 15, 2003, entitled
"CREDO Reports Record Nine-Month Earnings, Higher Natural
Gas Prices and Stable Production Propel Earnings"
"CREDO Updates Drilling Results, Successful Drilling Expected
to Boost Produciton to Record Levels"
________________________________________________________________
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
CREDO PETROLEUM CORPORATION
(Registrant)
Date: September 16, 2003 By: /s/ James P. Garrett, Jr.
--------------------------------
James P. Garrett, Jr.
Vice President and Chief
Financial Officer
(Principal Financial and
Accounting Officer)
NEWS RELEASE
FOR IMMEDIATE RELEASE Contact: James P. Garrett
Vice President & CFO
www.credopetroleum.com
CREDO REPORTS RECORD NINE-MONTH EARNINGS
Higher Natural Gas Prices and Stable Production
Propel Earnings
DENVER, COLORADO, September 15, 2003 - CREDO Petroleum
Corporation (NASDAQ: CRED) today reported record financial
results for the nine months ended July 31, 2003. Net income
surged 118% to a record $1,984,000 on revenue of $5,718,000
compared to $908,000 on revenue of $3,975,000 last year. On a
per diluted share basis, net income was $.50 compared to
$.23 last year. Cash flow from operating activities (before
working capital changes) increased 72% to $3,517,000 compared to
$2,041,000 last year.
Fiscal 2003 net income includes $.02 per share related to a
one-time credit for the cumulative effect of adopting Financial
Accounting Standards Board Statement No. 143, Accounting for
Asset Retirement Obligations.
For the third quarter ended July 31, 2003, net income was a
record $797,000, or $.20 per diluted share, compared to $327,000,
or $.09 per diluted share last year.
PRODUCTION STABLE AND EXPECTED TO INCREASE IN FOURTH QUARTER
Nine-month production stabilized at 1.14 Bcfge (billion cubic
feet of gas-equivalent) compared to 1.17 Bcfge last year. Third
quarter gas production volumes fell to 349 MMcfge (million cubic
feet of gas) compared to 382 MMcfge last year. Natural gas
accounts for 86% of the company's total production.
James T. Huffman, President, said, "Natural gas production has
remained stable this year as new drilling has offset expected
declines on significant wells drilled during the last two years.
However, new wells coming on line during the third and fourth
quarters should again boost our production to record levels.
These wells are described in a separate press release dated
today."
PRODUCT PRICES SURGE
Net wellhead natural gas prices rose 83% to $4.75 per Mcf
compared to $2.59 last year. Hedging losses reduced nine-month
gas price realizations by $.40 per Mcf compared to last year's
hedging gains of $.35 per Mcf. As a result, total natural gas
price realizations rose 48% to $4.35 per Mcf compared to $2.94
last year. Wellhead oil prices rose 35% to $27.65 per barrel
compared to $20.54 last year.
For the quarter ended July 31, 2003, net wellhead natural gas
prices rose 70% to $4.88 per Mcf compared to $2.87 last year.
Hedging losses increased 2003 price realizations by $.14 per Mcf
compared to last year's hedging gains of $.05 per Mcf. As a
result, total natural gas price realizations rose 72% to $5.02
per Mcf compared to $2.92 last year. Wellhead oil prices rose
13% to $26.41 per barrel compared to $23.27 last year.
At third quarter-end, the company had open hedge positions
totaling 150 MMcfg covering the months of September through
November 2003 at an average NYMEX price of $6.42 per Mcf. Also
at third quarter-end, the August hedge was closed and a deferred
gain of $84,000 was realized. Subsequent to third quarter-end,
120,000 MMcfg covering the months of September through November
was added to the hedge bringing those months to 75% to 80% of
estimated production at an average NYMEX price of $5.94. Average
gas prices in the company's market areas are expected to be 15%
to 17% below NYMEX prices due to basis differentials and
transportation costs.
RECORD CAPITAL SPENDING PRODUCES GOOD RESULTS
FOR BOTH DRILLING AND CALLIOPE OPERATIONS
Capital spending in the nine-months totaled a record $4,233,000
as successful operations continued on the company's two core
projects--natural gas drilling along the Anadarko Shelf of
Oklahoma and application of the company's patented Calliope gas
recovery technology. A separate press release has been made
today updating recent drilling results. A press release dated
August 13, 2003 updated information about Calliope operations.
STRONG FINANCIAL CONDITION PROVIDES
SOLID FOUNDATION FOR GROWTH
At July 31, 2003, working capital was $6,130,000. Total assets
were $23,387,000 including cash and short-term investments of
$7,309,000. Stockholders' equity was $16,512,000. The company's
only debt is a $456,000 exclusive license obligation that is
payable over seven years.
NEW VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
The Board of Directors has employed James P. Garrett as the
company's Vice President and Chief Financial Officer.
Mr. Garrett has an extensive oil and gas industry background. He
was formerly employed by Columbus Energy Corporation and its
successor, Cimarex, Energy Co.
MANAGEMENT COMMENT
"We continue to be very pleased with the progress of our
business," Huffman said. "We have excellent momentum in our
Calliope and drilling projects. In addition, we are optimistic
about energy prices and significant production to be added by new
wells coming on line during the third and fourth quarters."
* * * * *
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 Small-Cap Issues" 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.
CREDO PETROLEUM CORPORATION
FINANCIAL HIGHLIGHTS
Nine Months Nine Months Quarter Quarter
Ended Ended Ended Ended
Condensed Operating July 31, July 31, July 31, July 31,
Information (Unaudited) 2003 2002 2003 2002
---------- ---------- ---------- ----------
Revenue:
Oil and Gas Sales $5,014,000 $3,519,000 $1,980,000 $1,342,000
Operating 386,000 365,000 135,000 123,000
Investment Income
and Other 318,000 91,000 128,000 17,000
---------- ---------- ---------- ----------
5,718,000 3,975,000 2,243,000 1,482,000
---------- ---------- ---------- ----------
Expenses:
Oil and Gas Production 1,159,000 987,000 467,000 329,000
Depreciation, Depletion
and Amortization 930,000 911,000 325,000 353,000
General and
Administrative 939,000 742,000 333,000 257,000
Interest 34,000 38,000 11,000 13,000
---------- ---------- ---------- ----------
3,062,000 2,678,000 1,136,000 952,000
---------- ---------- ---------- ----------
Income Before Income
Taxes and Accounting
Change 2,656,000 1,297,000 1,107,000 530,000
Income Taxes (744,000) (389,000) (310,000) (159,000)
---------- ---------- ---------- ----------
Income Before
Accounting Change 1,912,000 908,000 797,000 371,000
Cumulative Effect of
Change in Accounting
Principle 72,000 - - -
---------- ---------- ---------- ----------
Net Income $1,984,000 $ 908,000 $ 797,000 $ 371,000
========== ========== ========== ==========
Basic Income Per Share
Before Accounting Change $ .48 $ .23 $ .20 $ .09
Cumulative Effect of Change in
Accounting Principle .02 - - -
------ ------ ------ ------
Basic Net Income Per Share $ .50 $ .23 $ .20 $ .09
====== ====== ====== ======
Diluted Income Per Share
Before Accounting Change $ .48 $ .23 $ .20 $ .09
Cumulative Effect of Change in
Accounting Principle .02 - - -
------ ------ ------ ------
Diluted Net Income Per Share $ .50 $ .23 $ .20 $ .09
====== ====== ====== ======
Condensed Balance Sheet Information July 31, 2003 October 31, 2002
------------ ------------
Cash and Short-Term Investments $ 7,309,000 $ 6,910,000
Other Current Assets 2,060,000 1,502,000
Oil and Gas Properties, Net 13,372,000 9,677,000
Exclusive License Agreement, Net 495,000 548,000
Other Assets 151,000 174,000
------------ ------------
$ 23,387,000 $ 18,811,000
============ ============
Current Liabilities $ 3,239,000 $ 1,782,000
Deferred Income Taxes 3,017,000 2,314,000
Exclusive License Agreement Obligation 408,000 408,000
Asset Retirement Obligation 211,000 -
Stockholders' Equity 16,512,000 14,307,000
------------ ------------
$ 23,387,000 $ 18,811,000
============ ============
NEWS RELEASE
FOR IMMEDIATE RELEASE Contact: James P. Garrett
Vice President & CFO
www.credopetroleum.com
CREDO UPDATES DRILLING RESULTS
Successful Drilling Expected to Boost Production
to Record Levels
DENVER, COLORADO, September 15, 2003 - CREDO Petroleum
Corporation (NASDAQ: CRED) today updated developments on its
Oklahoma drilling program.
ANADARKO SHELF OF NORTHWEST OKLAHOMA
Harper and Ellis Counties
The company's drilling program centers on its 14,000 gross acre
Sand Creek Prospect and its 6,000 gross acre Two Springs
Prospect, both located in Harper and Ellis Counties, Oklahoma.
Drilling targets Morrow and Chester zones from 7,400 to 7,900
feet. In total, 24 wells have been drilled on the two prospects
in the last two years, of which 19 were either completed as
producers or are awaiting completion.
The company recently drilled four new wells on the two prospects.
One well is producing, two are currently being completed for
production, and one is a dry hole.
The first of these wells, the 7,280-foot Gillenwaters #1-34,
extended Morrow production one mile north of the Wills #1-3. It
was completed naturally (without acid or fracture treatments)
from one Morrow sand totaling 10 feet, and is a very good well
for the area. Pipeline sales commenced in early September and
the well is currently producing on a 15/64-inch choke at the
daily rate of 1.1 million cubic feet of gas (MMcfg). CREDO is
the operator and owns a 34% working interest.
On the Sand Creek Prospect, the Derby #1-22 well was drilled
about one mile west of the Easterwood #11-23 (discussed below).
The 7,450-foot well encountered one Morrow sand totaling seven
feet. The well tested good amounts of gas from a "natural"
completion and is currently awaiting pipeline connection before
being fracture stimulated. CREDO owns a 36% working interest and
is the operator.
The Glendena #2-5 well was drilled as a 2,700-foot south offset
to the Glendena #1-5 which, in October 2001, opened the recent
drilling play in the area. The 7,700-foot well encountered three
Morrow sands totaling 28 feet that calculate productive on logs.
The lower eight-foot sand tested good amounts of gas during
"natural" completion testing. The well is connected to the
pipeline and the lower sand is scheduled to be fracture
stimulated. The upper two sands correlate to the prolific
producing sands in the Glendena #1 and Redfearn wells and will be
opened for production after the lower sand is stimulated. CREDO
is the operator and owns a 39.5% working interest.
The Norman Trust #1-10 was the last of the four wells recently
drilled on the two prospects. The 7,850-foot well was a dry
hole.
Elsewhere on the Sand Creek Prospect, CREDO has participated in
drilling five previously announced wells that are operated by
third parties and were classified as "tight holes". Two of the
wells are now producing and appear to be very good wells for the
area. The other three wells are currently being completed for
production.
On the northeast side of the Sand Creek Prospect, the Easterwood
#11-23 discovered Morrow production about two miles north of
existing production. It was completed from one Morrow sand
totaling 12 feet and was fracture stimulated. Pipeline sales
commenced in early August and the well is currently producing on
a 16/64-inch choke at the daily rate of 2.1 MMcfg. CREDO owns a
24% working interest.
Five miles south of the Easterwood #11-23, the Deanna #1-15
discovered new Morrow production on the southeast corner of the
prospect. The 7,850-foot well was completed naturally (without
acid or fracture treatments) from one Morrow sand totaling eight
feet. Pipeline sales commenced in early August and the well is
currently producing on a 16/64-inch choke at the daily rate of
2.0 MMcfg and 35 barrels of condensate. CREDO owns a 37% working
interest.
On the northwest side of the prospect, three new wells have been
drilled. The Daphne Jane #1-20 encountered two Chester zones
totaling 22 feet which calculate productive on logs. A drill
stem test yielded gas at rates exceeding 5.0 MMcfg per day. The
operator is currently perforating and testing the lower Chester
zone and will test the primary zone shortly. CREDO owns a 12%
working interest.
The other two wells in which CREDO owns small interests,
Blackstone #1-8 (7%) and Patch #1-17 (12%) are currently being
completed for production but are expected to be marginal to below
average wells.
OKLAHOMA PANHANDLE
Beaver County
Development drilling is continuing on the company's 1,280 gross
acre Traxler Prospect. The 7,700-foot Ronnie #1-6 encountered
two Chester zones totaling 27 feet that calculate productive on
logs. It also encountered a Morrow sand that appears to be
productive. The lower Chester zone produces oil in the area and
the middle Chester and Morrow produce gas. The Ronnie is
expected to be a very good well and is awaiting pipeline
connection prior to being completed for production. CREDO is the
operator and owns a 60% working interest.
ANADARKO SHELF OF NORTHWEST OKLAHOMA
Woods County
Successful drilling is continuing in the South Fork Field located
in Woods County, Oklahoma. To date, the company has joined for
its 7% interest in drilling 13 development wells in the field.
Several additional wells are projected.
MANAGEMENT COMMENT
James T. Huffman, President, stated, "Our recent drilling results
have added at least five very good wells in which CREDO owns
substantial interests. These wells are expected to boost our
production to record levels." Huffman further stated, "Our
drilling momentum should continue with ten new locations already
on the books which are expected to be drilled during the next
12 months."
* * * * *
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 Small-Cap Issues" 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.