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 14, 2004
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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 2.02 Results of Operations and Financial Condition.
CREDO Petroleum Corporation Press Releases dated
September 14, 2004, entitled
"CREDO Reports Record Nine-Month Earnings, Increased
Production Propels Earnings Growth"
_____________________________________________________________________
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 14, 2004 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
Increased Production Propels Earnings Growth
DENVER, COLORADO, September 14, 2004 - CREDO Petroleum Corporation (NASDAQ:
CRED) today reported record financial results for the nine months ended July
31, 2004. Net income rose 39% to a record $2,757,000 on revenue of
$7,562,000 compared to $1,984,000 on revenue of $5,718,000 last year. On a
per diluted share basis, net income was $.45 compared to $.33 last year.
Cash flow from operating activities (before changes in operating assets and
liabilities) jumped 40% to $4,915,000.
James T. Huffman, President, said, "For the nine months, we established
significant new records in most operational and financial categories,
highlighted by strong production growth and a 21% annualized return on
equity without using leverage."
For the third quarter ended July 31, 2004, net income increased to a record
$806,000. Fully diluted per share earnings in both periods were $.13.
Huffman further stated, "Fiscal 2004 drilling resulted in significant third
quarter production growth. However, third quarter results were suppressed
primarily because $429,000 was left-on-the-table due to hedging transactions."
PRODUCTION VOLUMES SET ANOTHER NEW RECORD
Nine-month production surged 30% to a record 1.48 Bfge (billion cubic feet
of gas-equivalent) compared to 1.14 Bfge last year. Natural gas production
rose 29% to a record 1.28 Bcfg and oil production rose 27% to 32,900
barrels. Natural gas accounts for 87% of the company's total production.
Third quarter production rose 19% to 487 MMcfge (million cubic feet of
gas-equivalent) compared to 408 MMcfge last year. Natural gas production
rose 17% to 417 MMcfg and oil production rose 36% to 11,700 barrels.
PRODUCT PRICES SHOW CONTINUED STRENGTH
Net wellhead natural gas prices for the nine months rose 25% to $4.96 per
Mcf compared to $3.96 last year. Hedging transactions reduced wellhead
prices $.38 per Mcf in the nine-month period compared to a reduction of $.39
per Mcf last year. As a result, total natural gas price realizations rose
5% to $4.58 per Mcf compared to $4.35 last year. Wellhead oil prices rose
18% to $32.66 per barrel compared to $27.65 last year.
For the third quarter, net wellhead natural gas prices rose 13% to $5.40 per
Mcf compared to $4.77 last year. Hedging transactions reduced wellhead
prices $1.03 per Mcf this year and increased them by $.14 per Mcf last year.
As a result, total natural gas price realizations fell 11% to $4.37 per Mcf
compared to $4.91 last year. Wellhead oil prices rose 31% to $34.63 per
barrel compared to $26.41 last year.
At third quarter-end, the company had open hedge positions totaling 200
MMcfg covering the months of September and October 2004 at an average NYMEX
price of $4.80 per Mcf. Also at third quarter-end, the August hedge was
closed and a deferred loss of $112,000 was realized. Subsequent to third
quarter end, the September hedge was closed and a deferred loss of $31,000
was realized. The only remaining hedge is for the month of October 2004.
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
Capital spending for the nine months totaled a record $4,129,000 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 those
results.
STRONG FINANCIAL CONDITION PROVIDES
SOLID FOUNDATION FOR GROWTH
At July 31, 2004, working capital was $6,942,000. Total assets were
$27,945,000 including cash and short-term investments of $7,417,000.
Stockholders' equity was $20,200,000. The company's only long-term debt is
a $355,000 exclusive license obligation that is payable over seven years.
* * * * *
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.
For 2004, cash flow from operating activities (before changes in operating
assets and liabilities) consists of net income of $2,757,000, DD&A of
$1,227,000, and deferred income taxes of $931,000. For 2003, such cash flow
consists of net income of $1,984,000, DD&A of $930,000, deferred income
taxes of $675,000, and net of other credits of $72,000.
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
July 31, July 31, July 31, July 31,
2004 2003 2004 2003
---------- ---------- ---------- ----------
Condensed Operating
Information (Unaudited)
Revenue:
Oil and Gas Sales $6,932,000 $5,014,000 $2,226,000 $1,980,000
Operating 444,000 386,000 152,000 135,000
Investment Income and Other 186,000 318,000 61,000 128,000
---------- ---------- ---------- ----------
7,562,000 5,718,000 2,439,000 2,243,000
---------- ---------- ---------- ----------
Expenses:
Oil and Gas Production 1,464,000 1,159,000 532,000 467,000
Depreciation, Depletion and
Amortization 1,227,000 930,000 436,000 325,000
General and Administrative 1,011,000 939,000 344,000 333,000
Interest 30,000 34,000 7,000 11,000
---------- ---------- ---------- ----------
3,732,000 3,062,000 1,319,000 1,136,000
---------- ---------- ---------- ----------
Income Before Income Taxes and
Accounting Change 3,830,000 2,656,000 1,120,000 1,107,000
Income Taxes (1,073,000) (744,000) (314,000) (310,000)
---------- ---------- ---------- ----------
Income Before
Accounting Change 2,757,000 1,912,000 806,000 797,000
Cumulative Effect of Change in
Accounting Principle - 72,000 - -
---------- ---------- ---------- ----------
Net Income $2,757,000 $1,984,000 $ 806,000 $ 797,000
========== ========== ========== ==========
Basic Income Per Share Before
Accounting Change $ .46 $ .32 $ .14 $ .13
Cumulative Effect of Change in
Accounting Principle - .01 - -
------ ------ ------ ------
Basic Income Per Share $ .46 $ .33 $ .14 $ .13
====== ====== ====== ======
Diluted Income Per Share
Before Accounting Change $ .45 $ .32 $ .13 $ .13
Cumulative Effect of Change in
Accounting Principle - .01 - -
------ ------ ------ ------
Diluted Income Per Share $ .45 $ .33 $ .13 $ .13
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Condensed Balance Sheet Information July 31, 2004 October 31, 2003
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Cash and Short-Term Investments $ 7,417,000 $ 6,663,000
Other Current Assets 2,334,000 1,900,000
Oil and Gas Properties, Net 16,938,000 14,061,000
Exclusive License Agreement, Net 425,000 478,000
Other Assets 831,000 470,000
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$27,945,000 $23,572,000
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Current Liabilities $ 2,809,000 $ 1,986,000
Deferred Income Taxes 4,289,000 3,358,000
Exclusive License Agreement Obligation 355,000 355,000
Asset Retirement Obligation 292,000 238,000
Stockholders' Equity 20,200,000 17,635,000
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$27,945,000 $23,572,000
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