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Crimson Exploration Inc. Announces Record Third Quarter 2007 Financial Results

Posted on: Wednesday, 14 November 2007, 12:01 CST

Crimson Exploration Inc. (OTCBB:CXPO) today announced financial results for the third quarter 2007 and YTD period to supplement its operating results press release from November 5th.

Highlights

Achieved record average production of 50,320 Mcfe/day of natural gas equivalents for the third quarter of 2007, compared to an average daily rate of 7,552 Mcfe/day in the third quarter of 2006.

Third quarter 2007 total operating revenues were up 578% to $38.0 million versus the prior year quarter amount of $5.6 million.

EBITDA in the third quarter 2007 rose over 1,200% to $28.0 million versus $2.1 million in the third quarter of 2006.

LOE per unit of production decreased nearly 56% to $1.42/Mcfe versus $3.23/Mcfe in 3Q:06.

Similarly, cash G&A expenses per unit of production decreased over 63% to $0.59/Mcfe from $1.62/Mcfe in 3Q:06.

Summary Financial Results

Total operating revenues for the third quarter 2007 were $38.0 million compared to $5.6 million in the prior year quarter. For the first nine months of 2007, total operating revenues were $69.2 million compared to $16.0 million for the first nine months of 2006. Increases for both the quarter and nine month period were due to the higher overall production impact from the acquisition of certain oil and natural gas properties and related assets in the South Texas and Gulf Coast areas of Louisiana and Texas ("the STGC Properties") in May 2007.

Production for the third quarter 2007 was 4,629,441 Mcfe of natural gas equivalents, or 50,320 Mcfe per day, compared with production of 694,793 Mcfe, or 7,552 Mcfe per day, in the third quarter 2006. Production for the first nine months 2007 was 8,462,800 Mcfe of natural gas equivalents, or 30,999 Mcfe per day, compared with production of 1,924,443 Mcfe, or 7,049 Mcfe per day, in the first nine months of 2006.

Average realized prices in the third quarter 2007 (including the effects of realized gains/losses on our commodity price hedges) were $66.47 per barrel of oil, $7.60 per Mcf of natural gas, and $45.17 per barrel of natural gas liquids, or $7.11 on a Mcfe basis. For the third quarter 2006, average realized prices were $61.01 per barrel of oil and $6.72 per Mcf of natural gas. Average realized prices for the first nine months of 2007 were $64.61 per barrel of oil, $7.57 per Mcf of natural gas, and $44.71 per barrel of natural gas liquids, or $7.39 on a Mcfe basis. For the first nine months of 2006, average realized prices were $65.43 per barrel of oil, and $6.96 per Mcf of natural gas.

Total Operating Expenses for the third quarter 2007 were $22.3 million compared to $5.7 million in the third quarter of 2006. Of the $16.6 million increase in total operating expenses, field operating expenses were up approximately $4.3 million and depreciation, depletion and amortization increased by $10.6 million; both increases primarily due to the addition of the STGC Properties. Also contributing to the increase in total operating expenses for the quarter was a $1.7 million increase in general and administrative costs related to the increase in the size of the company after the STGC acquisition. Exploration expense increased by $0.6 million versus the third quarter of 2006, primarily due to $0.5 million in dry hole expense. For the first nine months 2007, total operating expenses were $44.2 million compared to $14.6 million in the first nine months of 2006, with increases similar in type and proportion to those reported for the quarter.

Other Income (Expense) was a net negative $5.7 million for the third quarter 2007 compared to a net positive of $4.3 million in the third quarter 2006. This increase in expense was primarily due to $6.0 million in interest expense associated with our outstanding debt from the acquisition of the STGC Properties, offset slightly by the $0.6 million increase in the mark-to-market valuation on our derivative instruments. Cash flow from operations for the first nine months of 2007, exclusive of changes in working capital, was $39.5 million, a $32.7 million increase over the $6.8 million reported for the first nine months of 2006.

Net income for the third quarter 2007 was $6.2 million compared to $2.6 million for the third quarter of 2006. For both the quarter and year-to-date periods, the increase resulted from the increase in he results of operations from the STGC properties, offset in part by the increase in interest expense and the non-cash change in the mark-to-market value of our commodity hedge contracts.

Selected Financial and Operating Data

The following table reflects certain comparative financial and operating data for the three and nine month periods ended September 30, 2007 and 2006:

Three Months Ended

Nine Months Ended

September 30,

September 30,

2007

2006

%

2007

2006

%

Total Volumes Sold:

Crude oil (barrels)

129,824

45,484

185

%

261,117

136,517

91

%

Natural gas (Mcf)

3,196,683

421,889

658

%

6,032,848

1,105,341

446

%

Natural gas liquids (barrels)

108,969

--

NA

143,875

--

NA

Natural gas equivalents (Mcfe)

4,629,441

694,793

566

%

8,462,800

1,924,443

340

%

Daily Sales Volumes:

Crude oil (barrels)

1,411

494

186

%

956

500

91

%

Natural gas (Mcf)

34,747

4,586

658

%

22,098

4,049

446

%

Natural gas liquids (barrels)

1,184

--

NA

527

--

NA

Natural gas equivalents (Mcfe)

50,320

7,552

566

%

30,999

7,049

340

%

Daily Sales Volumes (Mcfe) by Area:

Cameron Parish LA

7,708

3,977

94

%

5,663

3,536

60

%

Texas Onshore

31,733

2,664

1,091

%

19,964

2,723

633

%

DJ Basin CO

703

873

-19

%

688

751

-8

%

Other

31

0

NA

41

0

NA

Non-Operated

10,145

38

NA

4,643

39

NA

50,320

7,552

566

%

30,999

7,049

340

%

Average oil sales price ($ per bbl):

Average price received in field

$

73.97

$

67.83

9

%

$

67.38

$

65.43

3

%

Realized effects of hedging instruments

(7.50

)

(6.82

)

-10

%

(2.77

)

(5.57

)

50

%

Net realized price, after hedging

$

66.47

$

61.01

9

%

$

64.61

$

59.86

8

%

Average basis differential (NYMEX -- WTI)

$

(1.72

)

$

2.32

-174

%

$

(2.05

)

$

(2.70

)

24

%

Average gas sales price ($ per Mcf):

Average price received in field

$

6.24

$

6.67

-6

%

$

6.84

$

6.96

-2

%

Realized effects of hedging instruments

1.36

0.05

NA

0.73

0.01

NA

Net realized price, after hedging

$

7.60

$

6.72

13

%

$

7.57

$

6.97

9

%

Average basis differential

(Houston Ship Channel)

$

0.24

$

0.58

$

0.22

$

0.31

Average NGL sales price ($ per bbl):

Average price received in field

$

45.17

$

--

NA

$

44.71

$

--

NA

Realized effects of hedging instruments

--

--

NA

--

--

NA

Net realized price, after hedging

$

45.17

$

--

NA

$

44.71

$

--

NA

Average basis differential (NYMEX -- WTI)

$

(1.72

)

$

2.32

$

(2.05

)

$

(2.70

)

Selected Costs ($ per Mcfe):

Lease operating expenses

$

1.42

$

3.23

-56

%

$

1.61

$

2.88

-44

%

Depreciation and depletion expense

$

2.52

$

1.48

70

%

$

2.44

$

1.40

74

%

General and administrative expense

$

0.82

$

3.07

-73

%

$

1.04

$

3.11

-67

%

Interest

$

1.30

$

0.05

2,535

%

$

1.11

$

0.05

2,044

%

Cash provided by operating activities, exclusive of changes in working capital

$

22,452,069

$

2,090,924

974

%

$

39,533,476

$

6,817,670

480

%

Capital expenditures

Leasehold acquisition --proved

$

(326,662

)

$

347,532

$

226,548,676

$

8,670,217

Leasehold acquisition --unproved

--

--

28,584,129

Exploratory

--

3,478,893

5,668,313

3,842,762

Development

6,232,710

2,337,244

16,801,314

5,982,786

Prospects

7,337,880

--

9,815,973

--

Other

510,362

61,018

1,295,353

137,647

$

13,754,290

$

6,224,687

$

288,713,758

$

18,633,412

Capital expenditures by Area

Cameron Parish LA

$

353,806

$

1,683,904

$

11,259,503

$

3,859,239

Texas Onshore

13,246,209

3,931,349

276,117,360

13,384,361

Texas Offshore

--

--

--

--

DJ Basin CO

--

548,416

45,400

1,252,165

Other

154,275

61,018

1,291,495

137,647

$

13,754,290

$

6,224,687

$

288,713,178

$

18,633,412

Earnings per Common Share

Basic

$

0.93

$

0.51

$

1.33

$

0.45

Fully Diluted

$

0.63

$

0.28

$

0.95

$

0.45

CRIMSON EXPLORATION INC.

    CONDENSED CONSOLIDATED BALANCE SHEETS

    (UNAUDITED)

September 30,

December 31,

2007

2006

ASSETS

Total current assets

$

44,286,849

$

4,231,983

Net property and equipment

347,222,668

76,546,892

Total other assets

4,315,823

3,923,847

Total Assets

$

395,825,340

$

84,702,722

LIABILITIES AND STOCKHOLDERS' EQUITY

Total current liabilities

$

39,378,245

$

10,932,155

Total non-current liabilities

278,811,983

12,444,784

Total stockholders' equity

77,635,112

61,325,783

Total Liabilities & Stockholders' Equity

$

395,825,340

$

84,702,722

   CRIMSON EXPLORATION INC.

     CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

    (UNAUDITED)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2007

2006

2007

2006

OPERATING REVENUES

Oil and gas sales

$

37,852,689

$

5,609,961

$

68,980,733

$

15,873,521

Operating overhead and other income

155,961

26,218

231,942

82,500

Total Operating Revenues

38,008,650

5,636,179

69,212,675

15,956,021

OPERATING EXPENSES

Lease operating expenses

6,565,045

2,245,161

13,590,821

5,534,562

Exploration expenses

867,582

227,648

1,520,025

287,952

Depreciation, depletion and amortization

11,666,837

1,028,112

20,685,730

2,701,919

Impaired assets

--

--

--

8,036

Asset retirement obligations

131,970

20,994

315,521

62,982

General and administrative

3,786,110

2,129,634

8,771,256

5,994,371

Gain on sale of assets

(681,224

)

--

(682,874

)

--

Total Operating Expenses

22,336,320

5,651,549

44,200,479

14,589,822

INCOME FROM OPERATIONS

15,672,330

(15,370

)

25,012,196

1,366,199

OTHER INCOME (EXPENSE)

Interest expense

(6,001,759

)

(34,189

)

(9,425,199

)

(99,989

)

Other financing cost

(351,388

)

(50,910

)

(1,001,452

)

(139,474

)

Loss from equity in investments

--

--

--

(1,843

)

Unrealized gain (loss) on derivative instruments

618,264

4,343,441

(258,576

)

5,620,388

Total Other Income (Expense)

(5,734,883

)

4,258,342

(10,685,227

)

5,379,082

INCOME BEFORE INCOME TAXES

9,937,446

4,242,972

14,326,969

6,745,281

INCOME TAX EXPENSE

(3,783,592

)

(1,635,936

)

(5,480,356

)

(2,563,571

)

NET INCOME

$

6,153,855

$

2,607,036

$

8,846,613

$

4,181,710

Non--GAAP Financial Measures

Crimson also presents earnings before interest, taxes, depreciation and amortization ("EBITDA") and 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, other current assets and accounts payable and accrued expenses. Management uses these measures to assess the company's ability to generate cash to fund operations, exploration and development activities. Management interprets trends in these measures in a similar manner as trends in operations, cash flow and liquidity. Neither EBITDA, nor net cash flows from operations, exclusive of working capital items, should be considered as alternatives to net income, income from operations or net cash provided by operational activities as defined by GAAP. The following is a reconciliation of net cash provided by operating activities to net cash flow from operations, exclusive of working capital items and EBITDA:

Three Months Ended

Nine Months Ended

September 30,

September 30,

2007

2006

2007

2006

Net cash provided by operating activities

$

38,303,478

$

3,065,767

$

45,997,639

$

8,697,397

Changes in working capital

Accounts receivable

396,782

784,731

20,749,231

111,881

Prepaid expenses

159,502

(57,250

)

247,071

70,904

Accounts payable and accrued expenses

(16,407,693

)

(1,702,324

)

(27,460,462

)

(2,062,512

)

Net cash flow from operations, exclusive of working capital items

22,452,069

2,090,924

39,533,479

6,817,670

Interest expense and other financing

6,039,129

57,301

9,606,827

157,722

Other

(520,560

)

(54,644

)

(542,978

)

(40,186

)

EBITDA

$

27,970,638

$

2,093,581

$

48,597,328

$

6,935,206

This press release includes "forward-looking statements" 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. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond Crimson's control. Statements regarding future production, revenue and cash flow 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, commodity price changes, inflation or lack of availability of goods and services, 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 for the year ended December 31, 2006 and our subsequent Form 10-Q's for a further discussion of these risks.

Source: Business Wire

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