_______________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For Quarter Ended January 31, 2003
Commission File Number 0-8877
CREDO PETROLEUM CORPORATION
Colorado 84-0772991
(State of Incorporation) (IRS Employer Identification)
1801 Broadway, Suite 900 80202
Denver, Colorado (Zip Code)
(Address of principal executive office)
303-297-2200
(Telephone Number)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, net of treasury stock, as of
February 28, 2003: Common stock, $.10 par value - 3,280,000
Preferred stock, no par value - None issued
_______________________________________________________________
CREDO PETROLEUM CORPORATION
Index to Form 10-QSB
For Quarter Ended January 31, 2003
_______________________________________________________________
PART I - FINANCIAL INFORMATION
Consolidated Balance Sheets
As of January 31, 2003 (Unaudited) and October 31, 2002
Consolidated Statements of Operations and Changes in
Retained Earnings (Unaudited) For the Three Month Period
Ended January 31, 2003 and 2002
Consolidated Statements of Cash Flows (Unaudited)
For the Three Month Period Ended January 31, 2003
and 2002
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Certifications
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
99.1 Certification by Chief Executive Officer under
Section 906 of the Sarbanes-Oxley Act
(18 U.S.C. Section 1350)
99.2 Certification by Chief Financial Officer under
Section 906 of the Sarbanes-Oxley Act
(18 U.S.C. Section 1350)
(b) Reports on Form 8-K
No current reports on Form 8-K were filed during the
reporting quarter.
___________________________________________
The accompanying unaudited consolidated financial statements have
been prepared in accordance with U. S. generally accepted
accounting principles for interim financial information and with
the instructions for Form 10-QSB and Article 10 of
Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by U. S. generally accepted
accounting principles for complete financial statements. In the
opinion of management, the consolidated financial statements
contain all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation of the company's
results for the periods presented. These consolidated financial
statements should be read in conjunction with the company's Form
10-KSB for the fiscal year ended October 31, 2002.
CREDO PETROLEUM CORPORATION
Consolidated Balance Sheets
A S S E T S
January 31, October 31,
2003 2002
------------ ------------
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 1,296,000 $ 1,324,000
Short term investments 5,742,000 5,586,000
Receivables:
Trade 696,000 577,000
Accrued oil and gas sales 735,000 535,000
Other 220,000 390,000
------------ ------------
8,689,000 8,412,000
------------ ------------
OIL AND GAS PROPERTIES, net,
using full cost method:
Unevaluated 1,920,000 1,690,000
Evaluated 9,034,000 7,987,000
------------ ------------
10,954,000 9,677,000
------------ ------------
EXCLUSIVE LICENSE AGREEMENT, net of
accumulated amortization of $170,000
in 2003 and $152,000 in 2002 530,000 548,000
OTHER, net 157,000 174,000
------------ ------------
$ 20,330,000 $ 18,811,000
============ ============
L I A B I L I T I E S A N D S T O C K H O L D E R S ' E Q U I T Y
CURRENT LIABILITIES:
Accounts payable $ 2,249,000 $ 1,733,000
Income taxes payable 230,000 49,000
------------ ------------
2,479,000 1,782,000
------------ ------------
DEFERRED INCOME TAXES 2,421,000 2,314,000
EXCLUSIVE LICENSE OBLIGATION,
less current portion of $48,000 408,000 408,000
ASSET RETIREMENT OBLIGATION 181,000 -
COMMITMENTS
STOCKHOLDERS' EQUITY:
Preferred stock, without par value,
5,000,000 shares authorized,
none issued - -
Common stock, $.10 par value,
20,000,000 shares authorized,
3,678,000 shares issued 367,000 367,000
Capital in excess of par value 6,453,000 6,453,000
Retained earnings 8,894,000 8,209,000
Other comprehensive income (loss) (113,000) 37,000
Treasury stock, at cost, 399,000 shares
in 2003 and 398,000 shares in 2002 (760,000) (759,000)
------------ ------------
14,841,000 14,307,000
------------ ------------
$ 20,330,000 $ 18,811,000
============ ============
See accompanying notes.
CREDO PETROLEUM CORPORATION
Consolidated Statements of Operations And Changes in
Retained Earnings - Unaudited
Three Months Ended
January 31,
2003 2002
----------- -----------
REVENUES:
Oil and gas sales $ 1,589,000 $ 1,046,000
Operating 126,000 126,000
Investment income and other 76,000 9,000
----------- -----------
1,791,000 1,181,000
----------- -----------
COSTS AND EXPENSES:
Oil and gas production 327,000 360,000
Depreciation, depletion and
amortization 321,000 266,000
General and administrative 278,000 243,000
Interest 13,000 12,000
----------- -----------
939,000 881,000
----------- -----------
INCOME BEFORE
INCOME TAXES AND ACCOUNTING CHANGE 852,000 300,000
INCOME TAXES (239,000) (90,000)
----------- -----------
INCOME BEFORE ACCOUNTING CHANGE 613,000 210,000
CUMULATIVE EFFECT ON PRIOR YEARS OF
SFAS 143-ACCOUNTING FOR ASSET RETIREMENT
OBLIGATIONS (NET OF TAXES OF $28,000) 72,000 -
----------- -----------
NET INCOME 685,000 210,000
RETAINED EARNINGS,
BEGINNING OF PERIOD 8,209,000 6,927,000
----------- -----------
RETAINED EARNINGS,
END OF PERIOD $ 8,894,000 $ 7,137,000
=========== ===========
BASIC INCOME PER SHARE BEFORE
ACCOUNTING CHANGE $ .19 $ .07
CUMULATIVE EFFECT OF A CHANGE IN
ACCOUNTING PRINCIPLE .02 -
------ ------
BASIC NET INCOME PER SHARE $ .21 $ .07
====== ======
DILUTED INCOME PER SHARE BEFORE
ACCOUNTING CHANGE $ .19 $ .06
CUMULATIVE EFFECT OF A CHANGE IN
ACCOUNTING PRINCIPLE .02 -
------ ------
DILUTED NET INCOME PER SHARE $ .21 $ .06
====== ======
See accompanying notes.
CREDO PETROLEUM CORPORATION
Consolidated Statements of Operations And Changes in
Retained Earnings - Unaudited
Three Months Ended
January 31,
2003 2002
----------- -----------
OPERATING ACTIVITIES:
Net income $ 685,000 $ 210,000
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation, depletion and amortization 321,000 266,000
Deferred income taxes 79,000 86,000
Cumulative effect on change in
accounting principle (72,000) -
Other 2,000 -
Deferred hedging gains - 110,000
Changes in operating assets and liabilities:
Proceeds from short term investments 724,000 1,006,000
Purchase of short term investments (880,000) (1,283,000)
Trade receivables (119,000) 44,000
Accrued oil and gas sales (200,000) 27,000
Other 20,000 (80,000)
Accounts payable 516,000 (147,000)
Income tax payable 181,000 70,000
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,257,000 309,000
----------- -----------
INVESTING ACTIVITIES:
Additions to oil and gas properties, net (1,291,000) (157,000)
Changes in other long-term assets 7,000 (36,000)
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (1,284,000) (193,000)
----------- -----------
FINANCING ACTIVITIES:
Proceeds from exercise of stock options
(35,000 options in 2002) - 68,000
Purchase of treasury stock
(100 shares in 2003 and 4,000 in 2002) (1,000) (23,000)
----------- -----------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES (1,000) 45,000
----------- -----------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (28,000) 161,000
CASH AND CASH EQUIVALENTS:
Beginning of Period 1,324,000 819,000
----------- -----------
End of Period $ 1,296,000 $ 980,000
=========== ===========
Supplemental Cash Flow Information:
Cash paid for income taxes $ - $ 20,000
=========== ===========
See accompanying notes.
CREDO PETROLEUM CORPORATION
Management's Discussion and Analysis of Financial
Condition and Results of Operations
January 31, 2003
LIQUIDITY AND CAPITAL RESOURCES
The company's working capital and cash flow represent a
significant capital resource and source of liquidity. At January
31, 2003, working capital was $6,210,000, compared to $6,630,000
at October 31, 2002. Cash flow from operating activities before
working capital changes totaled $1,015,000 for the three months,
compared to $672,000 from the same period last year.
Existing working capital and anticipated cash flow are
expected to be sufficient to fund fiscal 2003 operations.
However, if the company were to make one or more major
acquisition during the coming year, bank borrowing, issuance of
additional stock, or other forms of debt financing would be
considered. Because earnings are anticipated to be reinvested in
operations, cash dividends are not expected to be paid in the
foreseeable future.
Pending deployment into oil and gas assets, cash is
primarily invested with money managers who specialize in
short-term timing of mutual funds. The average return on the
company's portfolio was 2% for the three months of fiscal 2003
compared to less than 1% in the same period last year. Relatively
low investment returns in 2002 and 2003 compared to prior years
are primarily due to market conditions that have limited
investment opportunities for the market timers which manage the
bulk of the company's investments. Management considers the
potential for adverse impact from major unexpected events, such
as September 11, 2001, to be the major significant risk to its
investment strategies.
Commitments for future capital expenditures were not
material at January 31, 2003. The timing of most capital
expenditures for exploration and development is relatively
discretionary. Therefore, the company can plan expenditures to
coincide with available funds in order to minimize business
risks.
PRODUCT PRICES, PRODUCTION AND OPERATIONS
Numerous uncertainties exist in the oil and gas exploration
and production industry which are beyond the company's ability to
predict with reasonable accuracy.
Gas price decontrol, the advent of an active spot market for
natural gas, changes in supply and demand for natural gas, and
weather patterns cause prices received by the company to be
subject to significant fluctuations. Gas prices generally
accelerate in peak demand periods such as the winter months and
subside during lower demand periods.
Significant world events and OPEC's production and pricing
policies influence OPEC and worldwide supply and demand and
prices for crude oil and petroleum products.
Although product prices are key to the company's ability to
operate profitably and to budget capital expenditures, they are
beyond the company's control and are difficult to predict. The
company periodically hedges the price of its natural gas
production when the potential for significant downward price
movement is anticipated. Hedging transactions take the form of
forward, or "short", selling in the NYMEX futures market, and are
closed by purchasing offsetting "long" positions. Such hedges,
which are accounted for as cash flow hedges, do not exceed
anticipated production volumes, are expected to have reasonable
correlation between price movements in the futures market and the
cash markets where the company's production is located, and are
authorized by the company's Board of Directors. Hedges are
expected to be closed and gains or losses recognized for
financial reporting purposes as related production occurs.
However, hedges may be closed earlier if the anticipated downward
price movement occurs or if the company believes that the
potential for such movement has abated. Such hedges may also be
reinstated if the potential for such movement re-occurs or if
management concludes that it has misjudged information used to
make its decisions. All other futures transactions are accounted
for as speculative transactions and gains and losses are
immediately recognized.
At January 31, 2003, open natural gas hedge positions
totaled 110 MMcf covering the month of March 2003 at an average
price of 4.07 per Mcf. Subsequent to first quarter-end, the
hedge was closed at expiration of the March contract and a loss
of $558,000, or $5.07 per Mcf, was incurred. The futures market
loss will be fully, or substantially, offset by the increase in
Index cash prices in the market areas to which the hedge related.
For March, the Index cash price in those market areas was
approximately $8.50 Mcf.
The company recognizes all derivatives on the balance sheet
at fair value at the end of each period. Changes in the fair
value of a cash flow hedge are recorded in Other Comprehensive
Income (Loss) on the Consolidated Balance Sheets and then are
reclassified into the Consolidated Statement of Earnings as the
underlying hedged item affects earnings. Amounts reclassified
into earnings related to natural gas hedges are included in oil
and gas sales. At January 31, 2003, a net deferred loss of
approximately $157,000 ($113,000 net of tax) related to natural
gas hedging transactions was accumulated in Other Comprehensive
Income (Loss) of which $167,000 in unrealized deferred losses
were offset by $10,000 in realized deferred gains.
The following table sets forth the components of
Comprehensive Income for each of the periods presented:
Three Months Ended
January 31,
2003 2002
---------- ----------
Net Income $ 685,000 $ 210,000
Other comprehensive income,
net of tax:
Change in fair value of
futures contracts used
for natural gas hedging (150,000) 187,000
---------- ----------
Comprehensive income $ 535,000 $ 397,000
========== ==========
Oil and gas sales volume and price comparisons for the
indicated periods are set forth below.
Three Months Three Months
Ended Ended
January 31, 2003 January 31, 2002 Percent Percent
---------------- ---------------- Volume Price
Product Volume Price Volume Price Change Change
------- ------- ------- ------- ------- ------ ------
Gas (Mcf) 313,000 $ 4.31(1) 290,600 $ 3.02(2) + 8% + 43%
Oil (bbls) 9,200 $26.25 9,600 $17.33 - 4% + 51%
____________________________
(1) Includes $.36 Mcf hedging gain.
(2) Includes $.64 Mcf hedging gain.
The company's growth strategy focuses on two core
projects--drilling along the Anadarko Shelf of Oklahoma and
application of its patented Calliope gas recovery technology.
Anadarko Shelf Drilling Program. The company's drilling
program centers on its 12,000 gross acre Sand Creek Prospect and
its 3,000 gross acre Two Springs Project, both located in Harper
and Ellis Counties, Oklahoma. Drilling targets the Morrow and
Chester sands from 7,400 to 7,600 feet. In addition, the company
has recently completed three wells on other prospects located in
northwest Oklahoma.
In total, 14 wells have been drilled on the prospects of
which three wells were dry holes. One well is currently drilling
and eight additional wells are scheduled. Six of these wells
will be drilled as soon as practical based on rig availability
and various state regulatory approvals. The company is operator
of most of the wells and, with minor exceptions, owns interests
ranging from 30% to 40%.
The Hudson Trust #1 well located on the Sand Creek Prospect
commenced pipeline sales in mid-February from Morrow sands
totaling 14 feet. The naturally completed well (without acid or
fracture treatments) produced at an initial rate of 1.5 million
cubic feet of gas per day (MMcfgd), six barrels of condensate,
and one barrel of water. Production has since declined to
500 thousand cubic feet of gas per day (Mcfgd) indicating that
fracture stimulation will be required to optimize the production
rate.
About one mile east of the Hudson Trust #1 well, the company
is currently drilling the Arley #1 well. The well targets the
Morrow sands at 7,400 feet.
The Pittman #1 well encountered 11 feet of Morrow sand and,
after fracture stimulation, was placed on production in late
January at an initial rate of 1.0 MMcfgd. Although the company
owns a very small interest in the well, it provided significant
data about the area.
Elsewhere on the Sand Creek prospect, the Hudson #1 well,
located about one mile north of the Hudson Trust #1 well,
produced water during testing and will be plugged. The well,
which appeared to be productive based on electric logs and
drilling data, apparently encountered a fracture system that
caused water migration into the Morrow zones.
On the Two Springs Prospect, the Wills #1-10 well commenced
pipeline sales in late January from a Morrow sand totaling seven
feet. The naturally completed well produced at an initial rate
of 800 Mcfgd. Completion information indicated substantial
depletion in the Morrow sand, however, there is an up-hole zone
that appears productive on electric logs and will be opened once
Morrow production becomes uneconomic.
Elsewhere on the Two Springs Prospect, the Brown #1 well
encountered nine feet of Morrow sand and, after fracture
stimulation, commenced pipeline sales in mid-February at an
initial rate of 300 Mcfgd.
In other areas of northwest Oklahoma, the company has
participated in drilling three wells. In Beaver County, the
company participated for a 15% interest in the 8,100-foot
Wilkerson #2 well. The well encountered 36 feet of Chester
limestone. It has been completed for production and should be
connected to pipeline sales shortly. During testing, the well
produced at an approximate rate of 3.0 MMcfgd. The company has
participated in two other wells that electric logs indicate are
productive. Both wells are classified as "tight holes" due to
competitive leasing situations. One of the wells is connected to
the pipeline and is awaiting results of fracture stimulation.
The company owns a 37.5% interest in the well. The other well is
awaiting both pipeline connection and completion for production.
The company owns a 30% interest in the well.
Calliope Gas Recovery Technology. The company owns the
exclusive right to a patented technology known as the Calliope
Gas Recovery System. Calliope can achieve substantially lower
flowing bottom hole pressure than conventional production methods
because it does not rely on reservoir pressure to lift liquids.
In many gas wells, lower bottom hole pressure translates into
recovery of substantial additional gas reserves.
The company has recently installed its patented Calliope gas
recovery system on two of the nine wells acquired for such
applications late last year. Calliope was installed on the
11,100-foot Fee #37 well located in Hemphill County, Texas in
mid-February. The well has produced 8.0 billion cubic feet of
gas (Bcfg) and had been dead for about a year. Calliope
immediately restored daily production to 250 Mcfg and six barrels
of condensate, and added approximately 500 MMcfg to recoverable
reserves. At today's gas prices, the reserves have a gross value
of about $3,000,000. CREDO owns an approximate 80% working
interest and is the operator.
In early March, Calliope was installed on the 12,400-foot
Horn #1 well located in Grady County, Oklahoma. The well has
produced 12.9 Bcfg and had been dead for three years. Prior to
being shut-in, the well apparently experienced a packer leak and
soap was used to stimulate production. Both compromised the
permeability of the reservoir. Nevertheless, Calliope
immediately restored production to approximately 160 Mcfg per day
and production is increasing as the well appears to be
"cleaning-up" from the previous reservoir damage. Additional
reserves added by Calliope could range up to 1.0 Bcfg depending
on how the reservoir ultimately cleans-up. At today's prices,
1.0 Bcfg has a gross value of about $6,000,000. CREDO owns an
approximate
80% working interest and is the operator.
Work will commence next week to install Calliope on the
12,300-foot Meacham #1 well located in Custer County, Oklahoma.
The well has produced 20 Bcfg and 322,000 barrels of oil, and is
currently producing minor amounts of gas. Calliope reserves are
expected to exceed 1.0 Bcfg. CREDO owns an approximate 60%
working interest in the well and is the operator.
The company is also considering installing Calliope on its
18,400-foot Green Estate well located in Beckham County,
Oklahoma. The well has produced 28.8 Bcfg and is currently dead.
Testing and well data indicate that significant reservoir damage
was caused by a previous workover. Thus, Calliope production
could be significantly compromised. However, based on expected
gas prices, estimated remaining reserves of over 1.0 Bcfg, and
the potential for Calliope to clean-up the reservoir damage, an
installation may be performed. The Green Estate would also
provide the opportunity to test and operate Calliope at a new
record depth. CREDO owns a 65% working interest in the well and
is the operator.
CHANGE IN ACCOUNTING PRINCIPLE
In June 2001, the Financial Accounting Standards Board
issued SFAS No. 143, "Accounting for Asset Retirement
Obligations" that requires entities to record the fair value of a
liability for an asset retirement obligation in the period in
which it is incurred and a corresponding increase in the carrying
amount of the related long-lived asset. This statement is
effective for fiscal years beginning after June 15, 2002. The
company adopted SFAS No. 143 on November 1, 2002 and recorded an
asset and related liability of $179,000 (using a 5% discount
rate) and a cumulative effect on change in accounting principle
on prior years of $72,000 (net of taxes of $28,000). For the
three months ended January 31, 2003, the company recognized
$2,000 of accretion on the liability and a decrease of $5,000 in
depletion expense as a result of adopting SFAS No. 143.
INCOME TAXES
The company accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109, Accounting
for Income Taxes (SFAS 109), which requires the asset and
liability method of accounting for deferred income taxes.
Deferred tax assets and liabilities are determined based on the
temporary differences between the financial statement and tax
basis of assets and liabilities. Deferred tax assets or
liabilities at the end of each period are determined using the
tax rate in effect at that time.
The total future deferred income tax liability under SFAS
109 is extremely complicated for any oil company to estimate due
in part to the long-lived nature of depleting oil and gas
reserves and variables such as product prices. Accordingly, the
liability is subject to continual recalculation, revision of the
numerous estimates required, and may change significantly in the
event of such things as major acquisitions, divestitures, product
price changes, changes in reserve estimates, changes in reserve
lives, and changes in tax rates or tax laws.
RESULTS OF OPERATIONS
Quarter Ended January 31, 2003 Compared to Quarter Ended
January 31, 2002
For the quarter ended January 31, 2003, net income rose
226% to a record $685,000 compared to $210,000 for the same
quarter last year. Higher net income resulted primarily from an
increase in product prices, higher production volumes, and a
one-time (after taxes) credit of $72,000 for the cumulative
effect of adopting Financial Accounting Standards Board Statement
No. 143, "Accounting for Asset Retirement Obligations."
Total revenues rose 52% to $1,791,000 in the first quarter
compared to $1,181,000 for the same quarter last year. Oil and
gas sales rose 52% to $1,589,000 compared to $1,046,000 last
year. Refer to the table on page 7 for details of oil and gas
prices and volumes for the applicable periods. Net wellhead
natural gas prices rose 66% to $3.95 per Mcf compared to $2.38
last year. Hedging transactions increased first quarter price
realizations $.36 per Mcf, or 9%, compared to $.64, or 27%, last
year. As a result, total natural gas price realizations were
$4.31 per Mcf compared to $3.02 last year. Net wellhead prices
for oil rose 51% to $26.25 per barrel compared to $17.33 last
year. The net effect of these price changes and hedging
transactions was to increase oil and gas sales $459,000. Gas
volumes increased 8% and oil volumes fell 4%. The net effect of
volume changes was to increase oil and gas sales $84,000.
Operating income remained comparable between the two periods.
Investment income increased to $76,000 in the first quarter
compared to $9,000 last year due to improved performance from
certain market timers.
Total costs and expenses increased 7% to $939,000 in the
first quarter of 2003 compared to $881,000 last year. Oil and
gas production expenses fell 9% due primarily to the cost of a
major well workover included in last year. Depreciation,
depletion and amortization increased 21% primarily due to an
increase in the amortizable full cost pool base. General and
administrative expenses increased 14% due to inflationary
pressures. Interest expense primarily relates to the accrual of
interest on the exclusive license agreement obligation. Income
taxes were provided at 28% in the current quarter and 30% last
year.
CONTROLS AND PROCEDURES
Within 90 days prior to the filing date of this report, the
company carried out an evaluation, under the supervision and with
the participation of the company's Chief Executive Officer and
Chief Financial Officer, of the effectiveness of the design and
operation of its disclosure controls and procedures pursuant to
Securities Exchange Act Rule 13a-14(c). "Disclosure controls and
procedures" are controls and procedures that are designed to
ensure that information required to be disclosed by the company
in reports filed or submitted under the Exchange Act is recorded,
processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and
forms. Based upon that evaluation, the company's Chief Executive
Officer and Chief Financial Officer concluded that the company's
disclosure controls and procedures are effective for these
purposes as of the date of the evaluation.
There have been no significant changes in the company's internal
controls or in other factors that could significantly affect
these controls subsequent to the date of their evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
FORWARD-LOOKING STATEMENTS
Certain information included in this quarterly report and
other materials filed by the company with the Commission contain
forward-looking statements relating to the company's operations
and the oil and gas industry. Such forward-looking statements
are based on management's current projections and estimates and
are identified by words such as "expects," "intends," "plans,"
"projects," "anticipates," "believes," "estimates" and similar
words. These statements are not guarantees of future performance
and involve certain risks, uncertainties and assumptions that are
difficult to predict. Therefore, actual results may differ
materially from what is expressed or forecasted in such
forward-looking statements. Among many factors that could cause
actual results to differ materially are: (i) natural gas and
crude oil price fluctuations, (ii) the company's ability to
acquire oil and gas properties that meet its objectives and to
identify prospects for drilling, and (iii) potential delays or
failure to achieve expected production from existing and future
exploration and development projects. In addition, such
forward-looking statements may be affected by general domestic and
international economic and political conditions.
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.
Date: March 14, 2003 By: /s/ James T. Huffman
----------------------------
James T. Huffman
President and
Chief Executive Officer
(Principal Executive Officer)
By: /s/ John A. Alsko
----------------------------
John A. Alsko
Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
CERTIFICATION UNDER SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
CERTIFICATIONS
I, James T. Huffman, Chief Executive Officer of CREDO Petroleum
Corporation, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of CREDO
Petroleum Corporation;
2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not
misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for,
the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and
15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which
this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officer and I have
indicated in this quarterly report whether there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of
our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: March 14, 2003
/s/ James T. Huffman
--------------------------------
James T. Huffman
Chief Executive Officer
I, John A. Alsko, Vice President and Chief Financial Officer of
CREDO Petroleum Corporation, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of CREDO
Petroleum Corporation;
2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not
misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for,
the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and
15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which
this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officer and I have
indicated in this quarterly report whether there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of
our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: March 14, 2003
/s/ John A. Alsko
--------------------------------
John A. Alsko
Vice President and
Chief Financial Officer