________________________________________________________________
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, 2004
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
29, 2004: Common stock, $.10 par value - 4,012,121
Preferred stock, no par value - None issued
________________________________________________________________
CREDO PETROLEUM CORPORATION
Index to Form 10-QSB
For Quarter Ended January 31, 2004
________________________________________________________________
PART I - FINANCIAL INFORMATION
Consolidated Balance Sheets As of January 31, 2004
(Unaudited) and October 31, 2003
Consolidated Statements of Earnings and Changes in Retained
Earnings (Unaudited) For the Three Month Periods Ended
January 31, 2004 and 2003
Consolidated Statements of Cash Flows (Unaudited)
For the Three Month Periods Ended
January 31, 2004 and 2003
Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
31.1 Certification by Chief Executive Officer under
Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification by Chief Financial Officer under
Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification by Chief Executive Officer and
Chief Financial Officer under Section 906 of
the Sarbanes-Oxley Act (18 U.S.C. Section 1350)
(b) Reports on Form 8-K
On January 7, 2004 CREDO Petroleum Corporation filed a
current report on Form 8-K reporting under Item 9 pursuant to
Item 12 that we had issued a press release announcing our
fiscal 2003 financial results.
___________________________________________
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, 2003.
CREDO PETROLEUM CORPORATION
Consolidated Balance Sheets
A S S E T S
January 31, October 31,
2004 2003
------------ ------------
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 2,444,000 $ 1,885,000
Short term investments 5,535,000 4,778,000
Receivables:
Trade 467,000 410,000
Accrued oil and gas sales 1,684,000 1,256,000
Other 31,000 234,000
------------ ------------
Total current assets 10,161,000 8,563,000
------------ ------------
OIL AND GAS PROPERTIES, net, at cost,
using full cost method:
Unevaluated 2,081,000 2,075,000
Evaluated 12,494,000 11,986,000
------------ ------------
Net oil and gas properties 14,575,000 14,061,000
------------ ------------
EXCLUSIVE LICENSE AGREEMENT, net of
amortization of $239,000 in 2004
and $221,000 in 2003 460,000 478,000
OTHER, net 166,000 470,000
------------ ------------
$ 25,362,000 $ 23,572,000
============ ============
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 and accrued liabilities $ 2,115,000 $ 1,776,000
Income taxes payable 277,000 210,000
------------ ------------
Total current liabilities 2,392,000 1,986,000
------------ ------------
DEFERRED INCOME TAXES, net 3,720,000 3,358,000
EXCLUSIVE LICENSE OBLIGATION, less current
obligations of $53,000 355,000 355,000
ASSET RETIREMENT OBLIGATION 264,000 238,000
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,
4,334,000 shares issued in 2004 and 2003 433,000 433,000
Capital in excess of par value 12,664,000 12,664,000
Retained earnings, net of $6,277,000
related to 20% stock dividend in 2003 6,227,000 5,062,000
Other comprehensive income (loss) (183,000) 180,000
Treasury stock, at cost, 322,000 shares
in 2004 and 378,000 shares in 2003 (510,000) (704,000)
------------ ------------
Total stockholders' equity 18,631,000 17,635,000
------------ ------------
$ 25,362,000 $ 23,572,000
============ ============
See accompanying notes.
CREDO PETROLEUM CORPORATION
Consolidated Statements of Earnings And Changes in
Retained Earnings - Unaudited
Three Months Ended
January 31
2004 2003
----------- -----------
REVENUES:
Oil and gas sales $ 2,605,000 $ 1,589,000
Operating 137,000 126,000
Investment income and other 108,000 76,000
----------- -----------
2,850,000 1,791,000
----------- -----------
COSTS AND EXPENSES:
Oil and gas production 460,000 327,000
Depreciation, depletion and amortization 429,000 321,000
General and administrative 331,000 278,000
Interest 12,000 13,000
----------- -----------
1,232,000 939,000
----------- -----------
INCOME BEFORE
INCOME TAXES AND ACCOUNTING CHANGE 1,618,000 852,000
INCOME TAXES (453,000) (239,000)
----------- -----------
INCOME BEFORE ACCOUNTING
CHANGE 1,165,000 613,000
CUMULATIVE EFFECT ON PRIOR
YEARS OF SFAS 143-ACCOUNTING
FOR ASSET RETIREMENT
OBLIGATIONS (NET OF
TAXES OF $28,000) - 72,000
----------- -----------
NET INCOME 1,165,000 685,000
RETAINED EARNINGS,
BEGINNING OF PERIOD 5,062,000 8,209,000
----------- -----------
RETAINED EARNINGS,
END OF PERIOD $ 6,227,000 $ 8,894,000
=========== ===========
BASIC INCOME PER SHARE BEFORE ACCOUNTING CHANGE $ .29 $ .15
CUMULATIVE EFFECT OF A CHANGE IN
ACCOUNTING PRINCIPLE - .02
------ ------
BASIC NET INCOME PER SHARE $ .29 $ .17
====== ======
DILUTED INCOME PER SHARE BEFORE ACCOUNTING CHANGE $ .28 $ .15
CUMULATIVE EFFECT OF A CHANGE IN
ACCOUNTING PRINCIPLE - .02
------ ------
DILUTED NET INCOME PER SHARE $ .28 $ .17
====== ======
See accompanying notes.
CREDO PETROLEUM CORPORATION
Consolidated Statements of Cash Flows - Unaudited
Three Months Ended
January 31
2004 2003
----------- -----------
OPERATING ACTIVITIES:
Net income $ 1,165,000 $ 685,000
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation, depletion and amortization 429,000 321,000
Deferred income taxes 362,000 79,000
Cumulative effect of change in
accounting principle - (72,000)
Other - 2,000
Changes in operating assets and liabilities:
Proceeds from short term investments 176,000 724,000
Purchase of short term investments (933,000) (880,000)
Trade receivables (57,000) (119,000)
Accrued oil and gas sales (428,000) (200,000)
Other (160,000) 20,000
Accounts payable and accrued costs
and expenses 485,000 516,000
Income tax payable 67,000 181,000
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,106,000 1,257,000
----------- -----------
INVESTING ACTIVITIES:
Additions to oil and gas properties, net (881,000) (1,291,000)
Proceeds from sale of oil and gas properties 102,000 -
Changes in other long-term assets 38,000 7,000
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (741,000) (1,284,000)
----------- -----------
FINANCING ACTIVITIES:
Proceeds from exercise of stock options
(58,500 options in 2004) 233,000 -
Purchase of treasury stock
(2,000 shares in 2004 and 100 shares in 2003) (39,000) (1,000)
----------- -----------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 194,000 (1,000)
----------- -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 559,000 (28,000)
CASH AND CASH EQUIVALENTS:
Beginning of Period 1,885,000 1,324,000
----------- -----------
End of Period $ 2,444,000 $ 1,296,000
=========== ===========
Supplemental Cash Flow Information:
Cash paid (refunds received) for income taxes $ 25,000 $ -
=========== ===========
See accompanying notes.
CREDO PETROLEUM CORPORATION
Management's Discussion and Analysis of Financial
Condition and Results of Operations
January 31, 2004
LIQUIDITY AND CAPITAL RESOURCES
At January 31, 2004, working capital was $7,769,000,
compared with $6,577,000 at October 31, 2003. Net cash provided
by operating activities for the first three months of 2004 and
2003 was $1,106,000 and $1,257,000, respectively and comprises
primarily net income, depreciation, depletion and amortization
("DD&A"), deferred income taxes, reduced by net increases in
short-term investments, and increases in accrued oil and gas
sales in each of the two periods. For 2004, such amounts are
$1,165,000, $429,000, $362,000, $(757,000), and $(428,000),
respectively. For 2003, such amounts are $685,000, $321,000,
79,000, $(156,000), and $(200,000), respectively. In the first
quarter 2004 and 2003, cash used in investing activities was
$741,000 and $1,284,000, respectively, and was used primarily to
fund oil and gas exploration and development expenditure,
including Calliope, totaling $881,000 and $1,291,000,
respectively.
The average return on CREDO's investments during the first
three months was 3% in 2004 and 2% in 2003. At January 31,
approximately 70% of the investments were directly invested in
mutual funds and brokerage accounts managed by professional money
managers. Remaining investments are in managed partnerships that
use various strategies to minimize their correlation to stock
market movements. Most of the investments are highly liquid, and
the company believes they represent a responsible approach to
cash management. In the company's opinion, the greatest
investment risk is the potential for negative market impact from
unexpected, major adverse news, such as the September 11th
terrorist attacks.
Existing working capital and anticipated cash flow are
expected to be sufficient to fund 2004 operations. Because
earnings are anticipated to be reinvested in operations, cash
dividends are not expected to be paid in the foreseeable future.
Commitments for future capital expenditures were not material at
January 31, 2004. The company has no defined benefit plans and
no obligations for post retirement employee benefits.
PRODUCT PRICES AND PRODUCTION
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. Since
1991, the company has periodically hedged natural gas prices by
forward selling a portion of its estimated production in the
NYMEX futures market. This is generally done when (i) the price
relationship (the "basis") between the futures markets and the
cash markets where the company sells its gas is stable within
historical ranges, and (ii) in the company's opinion, the current
price is adequate to insure reasonable returns at a time when
downside price risks appear to be substantial. The company closes
its hedges by purchasing offsetting "long" positions in the
futures market at then prevailing prices. Accordingly, the gain
or loss on the hedge position will depend on futures prices at
the time offsetting "long" positions are purchased. Hedging
gains and losses are included in revenues from oil and gas sales.
The company believes its most significant hedging risk is that
expected correlations in price movements as discussed above do
not occur, and thus, that gains or losses in one market are not
fully offset by opposite moves in the other market.
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 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.
The company realized hedging gains of $80,000 and $111,000
for the quarters ended January 31, 2004 and 2003, respectively.
At January 31, 2004 the company has recorded in other
comprehensive income net deferred losses of approximately
$264,000 ($183,000 net of tax) related to natural gas hedging
transactions.
Subsequent to first quarter-end, hedges for the months of
February and March 2004 were closed and an $88,000 loss was
incurred. The company currently has open hedge positions totaling
700 MMcfg covering the months of April through October 2004 at an
average NYMEX price of $4.82 per Mcf. This hedge represents
approximately 65% of the company's estimated gas production for
those months.
During the quarter ended January 31, 2004 the company
entered into a bank hedging line of credit facility with a
maximum threshold amount of $2,000,000. At January 31, 2004,
approximately 25% of the company's open natural gas hedge
positions were covered by this agreement.
The following table sets forth the components of
Comprehensive Income for each of the periods presented:
Three Months Ended
January 31,
2004 2003
----------- -----------
Net Income $ 1,165,000 $ 685,000
Other comprehensive income (loss),
net of tax:
Change in fair value of futures
contracts used for natural gas hedging (363,000) (150,000)
----------- -----------
Comprehensive income $ 802,000 $ 535,000
=========== ===========
Oil and gas sales volume and price comparisons for the
indicated periods are set forth below. Price realizations
include the sales price and hedging gains and losses.
Three Months Three Months Percent Percent
Ended January 31, 2004 Ended January 31, 2003 Volume Price
---------------------- ----------------------
Product Volume Price Volume Price Change Change
------- ------- ------- ------- ------- ------ ------
Gas (Mcf) 458,000 $ 5.03(1) 313,000 $ 4.31(2) + 46% + 17%
Oil (bbls) 10,000 $29.95 9,000 $26.25 + 11% + 14%
____________________________
(1) Includes $0.18 Mcf hedging gain.
(2) Includes $0.36 Mcf hedging gain.
The company's business focuses on two core projects--natural
gas drilling along the shelf of the Northern Anadarko Basin of
Oklahoma and application of its patented Calliope Gas Recovery
System. The company believes that, in combination, these two
projects provide an excellent (and possibly unique) balance for
achieving its goal of adding long-lived gas reserves and
production at reasonable costs and risks.
Anadarko Shelf Drilling Program. At the beginning of fiscal
2004, the company had 11 wells on its drilling schedule.
However, the tight supply of drilling rigs has caused most of the
wells to be delayed longer than anticipated. During the first
quarter, the company drilled two wells in Oklahoma with working
interests ranging up to 50%. Both wells appear to be productive
and are awaiting pipeline connection and completion for
production. A third well will be drilled in April and the
remaining wells will be drilled consecutively beginning in May.
The Bobby-John #1-10 was completed on the company's 17,000
gross acre Sand Creek Prospect located in Ellis County, Oklahoma.
Electric log data indicates that the 7,850-foot well encountered
the same Morrow sand that is producing in the company's Deanna
#1-15 located approximately one-half mile to the south. The
Deanna has been an excellent well for the area, and the company
expects the Bobby-John to have similar production
characteristics. The company is the operator and owns an
approximate 50% working interest.
Approximately 15 miles to the north, the Owens #1-21 well
has been drilled on the company's 2,560 gross acre Buffalo Creek
prospect in Harper County, Oklahoma. Drilling data and electric
logs indicate that this 6,900-foot well will be productive and it
is currently awaiting completion for pipeline connection. The
Owens is currently classified as a "tight hole" meaning the other
information on the well is not being released for proprietary
business reasons. The company owns a 31% working interest.
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.
During the first quarter, the company installed its Calliope
Gas Recovery System on two 8,200-foot wells located in Oklahoma.
Both wells represent a very rigorous test for Calliope in terms
of the challenge of reviving dead wells that have reservoir
damage, including damage from the "parting shot" of a previous
operator. Calliope has been installed on both wells and the
company is currently performing reservoir treatment procedures
designed to mitigate the reservoir damage. Calliope facilitates
such treatments in low pressure reservoirs because it can lift
the fluids used in such treatments back out of the wellbore and
thereby keep from loading-up the well. If successful, these
installations should expand the envelope for Calliope
applications. The company owns an approximate 80% working
interest in the wells and is the operator. The company is in
various stages of preparing to install Calliope on three
additional wells in Oklahoma.
STOCK DIVIDEND
On March 19, 2003, the company declared a 20% stock dividend
to shareholders of record on April 2, 2003. On April 23, 2003,
the company issued 656,000 shares of common stock in conjunction
with this dividend. Accordingly, the fair value (based on the
quoted market price as adjusted) of the additional shares issued
of $6,277,000 was charged to retained earnings and credited to
common stock and capital in excess of par value. Cash payments
were made to shareholders in lieu of fractional shares. The basic
and diluted weighted average number of shares outstanding and net
income per share information for all prior reporting periods have
been restated to reflect the effects of the stock dividend.
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. 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 month
periods ended January 31, 2004 and 2003, the company recognized
$3,000 and $2,000, respectively, of accretion expense on the
liability.
STOCK-BASED COMPENSATION
In December 2002, the Financial Accounting Standards Board
issued SFAS No. 148, "Accounting for Stock-Based Compensation
- Transition and Disclosure, an amendment of SFAS No. 123."
Among other provisions, the statement amends the disclosure
requirements of SFAS No. 123, "Accounting for Stock-Based
Compensation." Under current accounting rules the company
elected to account for its stock-based employee compensation
under the intrinsic value method established by Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees."
If compensation expense had been determined in accordance
with the provisions of SFAS No. 123, the company's net income and
per share amounts would have been reported as follows:
Three Months Ended January 31,
2004 2003
------------- -------------
Net Income as reported $ 1,165,000 $ 685,000
Pro forma stock compensation expense,
net of tax (71,000) (12,000)
----------- -----------
Pro forma net income $ 1,094,000 $ 673,000
=========== ===========
Basic net income per share:
As reported $ 0.29 $ 0.17
======= =======
Pro forma $ 0.27 $ 0.17
======= =======
Diluted net income per share:
As reported $ 0.28 $ 0.17
======= =======
Pro forma $ 0.27 $ 0.17
======= =======
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
Three Months Ended January 31, 2004 Compared to Three Months
Ended January 31, 2003
For the three months ended January 31, 2004, net income rose
70% to $1,165,000 compared to $685,000 last year. Higher net
income resulted primarily from a 41% increase in production
volumes and a 15% increase in product prices.
Total revenues rose 60% to $2,850,000 compared to $1,791,000
last year. Oil and gas sales rose 64% to $2,605,000 compared to
$1,589,000 last year. Net wellhead natural gas prices rose 17%
to $5.03 per Mcf compared to $4.31 last year. Net wellhead
prices for oil rose 14% to $29.95 per barrel compared to $26.25
last year. Natural gas production rose 46% to 458,000 Mcf
compared to 313,000 Mcf last year and oil production rose 10% to
10,000 bbls compared to 9,000 bbls last year. The effect of
these higher volumes and prices was to increase oil and gas sales
by $1,016,000. Operating income increased 9% due to an increase
in drilling and production overhead income from new operated
wells. Investment income and other rose to $108,000 compared to
$76,000 last year due to improved performance from the company's
investments.
Total costs and expenses increased 31% to $1,232,000 in the
first three months of fiscal 2004 compared to $939,000 last year.
Oil and gas production expenses rose 41%, or $133,000, due
primarily to increased production taxes resulting from increased
production volumes and prices. Depreciation, depletion and
amortization increased 34% primarily due to increased production
and an increase in the amortizable full cost pool base. General
and administrative expenses increased 19% due to increases in
salaries and wages, consulting fees relating to increased
regulatory requirements as well as inflationary pressures.
Interest expense primarily relates to the accrual of interest on
the exclusive license agreement obligation. Income taxes were
provided at 28% in both 2004 and 2003.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Accounting for Oil and Gas Property Costs. As more fully
discussed in Note 1 to the consolidated financial statements
included with the company's Form 10-KSB for the fiscal year ended
October 31, 2003, the company (i) follows the full cost method of
accounting for the costs of its oil and gas properties, (ii)
amortizes such costs using the units of production method, and
(iii) applies a quarterly full cost ceiling test. Adverse
changes in conditions (primarily gas price declines) could result
in permanent write-downs in the carrying value of oil and gas
properties as well as non-cash charges to operations, but would
not affect cash flows.
Estimates of Proved Oil and Gas Reserves. An independent
petroleum engineer annually estimates approximately 60% of the
company's proved reserves. The company estimates the remainder.
Reserve engineering is a subjective process that is dependent
upon the quality of available data and the interpretation
thereof. In addition, subsequent physical and economic factors
such as the results of drilling, testing, production and product
prices may justify revision of such estimates. Therefore, actual
quantities, production timing, and the value of reserves may
differ substantially from estimates. A reduction in proved
reserves would result in an increase in depreciation, depletion
and amortization ("DD&A") expense. A large reduction in proved
reserve quantities or values could result in a permanent
write-down in the carrying value of oil and gas properties as discussed
in Accounting for Oil and Gas Property Costs above.
Estimates of Asset Retirement Obligations. In accordance with
SFAS No 143, the company makes estimates of future costs and the
timing thereof in connection with recording its future
obligations to plug and abandon wells. Estimated abandonment
dates will be revised in the future based on changes to related
economic lives, which vary with product prices and production
costs. Estimated plugging costs may also be adjusted to reflect
changing industry experience. Increases in operating costs and
decreases in product prices would increase the estimated amount
of the obligation and increase DD&A expense. Cash flows would
not be affected until costs to plug and abandon were actually
incurred.
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 15, 2004
By: /s/ James T. Huffman
-----------------------------
James T. Huffman
President and Chief Executive Officer
(Principal Executive Officer)
By: /s/ James P. Garrett, Jr.
-----------------------------
James P. Garrett, Jr.
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
Exhibit 31.1
CERTIFICATION PURSUANT TO RULE 15D-14
OF THE SECURITIES EXCHANGE ACT OF 1934,
AS AMENDED AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
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
report;
3. Based on my knowledge, the financial statements, and other
financial information included in this 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 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-15(e) and 15d-15(e) for the Registrant and have:
a) Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be
designed under our supervision, 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 report is being prepared;
b) Evaluated the effectiveness of the Registrant's
disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation;
and
c) Disclosed in this report any change in the Registrant's
internal control over financial reporting that occurred
during the Registrant's most recent fiscal quarter (the
Registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is
reasonably likely to materially affect, the Registrant's
internal control over financial reporting; and
5. The Registrant's other certifying officer and I have
disclosed, based on our most recent evaluation of internal
control over financial reporting, to the Registrant's
auditors and the audit committee of Registrant's Board of
Directors:
a) All significant deficiencies and material weaknesses in
the design or operation of internal control over
financial reporting which are reasonably likely to
adversely affect the Registrant's ability to record,
process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves
management or other employees who have a significant role
in the Registrant's internal control over financial
reporting.
Date: March 15, 2004
/s/ James T. Huffman
-----------------------------
James T. Huffman
Chief Executive Officer
Exhibit 31.2
CERTIFICATION PURSUANT TO RULE 15D-14
OF THE SECURITIES EXCHANGE ACT OF 1934,
AS AMENDED AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, James P. Garrett, Jr., 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
report;
3. Based on my knowledge, the financial statements, and other
financial information included in this 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 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-15(e) and 15d-15(e) for the Registrant and have:
a) Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be
designed under our supervision, 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 report is being prepared;
b) Evaluated the effectiveness of the Registrant's
disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation;
and
c) Disclosed in this report any change in the Registrant's
internal control over financial reporting that occurred
during the Registrant's most recent fiscal quarter (the
Registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is
reasonably likely to materially affect, the Registrant's
internal control over financial reporting; and
5. The Registrant's other certifying officer and I have
disclosed, based on our most recent evaluation of internal
control over financial reporting, to the Registrant's
auditors and the audit committee of Registrant's Board of
Directors:
a) All significant deficiencies and material weaknesses in
the design or operation of internal control over
financial reporting which are reasonably likely to
adversely affect the Registrant's ability to record,
process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves
management or other employees who have a significant role
in the Registrant's internal control over financial
reporting.
Date: March 15, 2004
/s/ James P. Garrett, Jr.
-----------------------------
James P. Garrett, Jr.
Vice President and Chief Financial Officer
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of CREDO Petroleum
Corporation (the "Company") on Form 10-QSB for the period ending
January 31, 2004 as filed with the Securities and Exchange on the
date hereof (the "Report"), we, James T. Huffman and James P.
Garrett, Jr., President and Chief Executive Officer, and Vice
President and Chief Financial Officer, respectively, of the
Company, certify, pursuant to 18 U.S.C., SS 1350, as adopted
pursuant to SS 906 of the Sarbanes-Oxley Act of 2002, that to our
knowledge:
1. The Report fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act
of 1934; and
2. The information contained in the Report fairly presents, in
all material respects, the financial condition and results of
operations of the Company.
March 15, 2004
/s/ James T. Huffman
-----------------------------
James T. Huffman
President and Chief Executive Officer
/s/ James P. Garrett, Jr.
----------------------------
James P. Garrett, Jr.
Vice President and Chief Financial Officer