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): June 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 12. "CREDO Reports Record Six-Month Earnings, Higher Natural
Gas Prices and Increased Production Propel Earnings"
_____________________________________________________________________
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: June 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 SIX-MONTH EARNINGS
Higher Natural Gas Prices and Increased Production
Propel Earnings
DENVER, COLORADO, June 14, 2004 - CREDO Petroleum Corporation
(NASDAQ: CRED) today reported record financial results for the
six months ended April 30, 2004. Net income surged 64% to a
record $1,951,000 on revenue of $5,123,000 compared to $1,187,000
on revenue of $3,475,000 last year. On a per diluted share
basis, net income was $.32 compared to $.20 last year. Cash flow
from operating activities (before changes in operating assets and
liabilities) jumped 51% to $3,363,000.
James T. Huffman, President, said, "For the first half of 2004,
we established significant new records in many operational and
financial categories, highlighted by a 22% annualized return on
equity without using leverage. Strong operating fundamentals
continue to buttress our results with increased production and
reserves, low finding costs, and outstanding net income per unit
of production."
For the second quarter ended April 30, 2004, net income increased
57% to a record $786,000, or $.13 per diluted share, compared to
$502,000, or $.08 per diluted share last year.
Huffman further stated, "Despite these record results, delays in
getting our new wells on line suppressed second quarter
production volumes and earnings. Those wells (discussed in a
separate press release made today) came on line after second
quarter-end. Increased industry activity has caused a backlog in
many field services resulting in both delays and rising costs."
PRODUCTION VOLUMES SET ANOTHER NEW RECORD
Six-month production surged 35% to 988 MMcfge (million cubic feet
of gas-equivalent) compared to 734 MMcfge last year. Natural gas
production rose 36% to 861 MMcfg and oil production rose 23% to
21,000 barrels. Natural gas accounts for 87% of the company's
total production.
Second quarter production rose 28% to 470 MMcfge compared to
366 MMcfge last year. Natural gas production rose 27% to
403 MMcfg and oil production rose 38% to 11,000 barrels.
PRODUCT PRICES SHOW CONTINUED STRENGTH
Net wellhead natural gas prices for the first half rose one
percent to $4.76 per Mcf compared to $4.73 last year. Hedging
transactions reduced wellhead prices $.07 per Mcf in the
six-month period compared to last year's hedging loss of $.69 per
Mcf. As a result, total natural gas price realizations rose
16% to $4.69 per Mcf compared to $4.04 last year. Wellhead oil
prices rose 12% to $31.58 per barrel compared to $28.27 last
year.
For the second quarter, net wellhead natural gas prices fell
15% to $4.64 per Mcf compared to $5.49 last year. Hedging
transactions reduced wellhead prices $.34 per Mcf this year and
$1.72 per Mcf last year. As a result, total natural gas price
realizations rose 14% to $4.30 per Mcf compared to $3.77 last
year. Wellhead oil prices rose 7% to $32.77 per barrel compared
to $30.55 last year.
At second quarter-end, the company had open hedge positions
totaling 600 MMcfg covering the months of May through October
2004 at an average NYMEX price of $4.81 per Mcf. Also at second
quarter-end, the May hedge was closed and a deferred loss of
$112,000 was realized. The remaining hedges are ratably
allocated to June through October 2004, and are expected to cover
less than 65% of the company's estimated total production for
those five months. 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.
CAPITAL SPENDING PRODUCES GOOD RESULTS
Capital spending for the six months totaled $1,945,000 as
successful operations continued on the company's two core
projects--natural gas drilling along the Anadarko Shelf of
Oklahoma and application of the company's patented Calliope gas
recovery technology. A separate press release has been made
today updating those results.
STRONG FINANCIAL CONDITION PROVIDES
SOLID FOUNDATION FOR GROWTH
At April 30, 2004, working capital was $7,118,000. Total assets
were $26,602,000 including cash and short-term investments of
$7,384,000. Stockholders' equity was $19,138,000. 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
$1,951,000, DD&A of $791,000, and deferred income taxes of
$621,000. For 2003, such cash flow consists of net income of
$1,187,000, DD&A of $605,000, deferred income taxes of $506,000,
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
Six Months Six Months Quarter Quarter
Ended Ended Ended Ended
Condensed Operating April 30, April 30, April 30, April 30,
Information (Unaudited) 2004 2003 2004 2003
Revenue:
Oil and Gas Sales $ 4,706,000 $ 3,034,000 $ 2,101,000 $ 1,445,000
Operating 292,000 251,000 155,000 125,000
Investment Income
and Other 125,000 190,000 17,000 114,000
5,123,000 3,475,000 2,273,000 1,684,000
Expenses:
Oil and Gas Production 932,000 692,000 472,000 365,000
Depreciation, Depletion
and Amortization 791,000 605,000 362,000 282,000
General and
Administrative 667,000 606,000 336,000 328,000
Interest 23,000 23,000 11,000 12,000
2,413,000 1,926,000 1,181,000 987,000
Income Before Income Taxes
and Accounting Change 2,710,000 1,549,000 1,092,000 697,000
Income Taxes (759,000) (434,000) (306,000) (195,000)
Income Before
Accounting Change 1,951,000 1,115,000 786,000 502,000
Cumulative Effect of
Change in Accounting
Principle - 72,000 - -
Net Income $ 1,951,000 $ 1,187,000 $ 786,000 $ 502,000
Basic Income Per Share
Before Accounting Change $ .32 $ .19 $ .13 $ .08
Cumulative Effect of Change
in Accounting Principle - .01 - -
Basic Net Income Per Share $ .32 $ .20 $ .13 $ .08
Diluted Income Per Share
Before Accounting Change $ .32 $ .19 $ .13 $ .08
Cumulative Effect of Change
in Accounting Principle - .01 - -
Diluted Net Income Per Share $ .32 $ .20 $ .13 $ .08
Condensed Balance Sheet
Information April 30, 2004 October 31, 2003
Cash and Short-Term Investments $ 7,384,000 $ 6,663,000
Other Current Assets 2,594,000 1,900,000
Oil and Gas Properties, Net 15,177,000 14,061,000
Exclusive License Agreement, Net 443,000 478,000
Other Assets 1,004,000 470,000
$ 26,602,000 $ 23,572,000
Current Liabilities $ 2,860,000 $ 1,986,000
Deferred Income Taxes 3,979,000 3,358,000
Exclusive License Agreement
Obligation 355,000 355,000
Asset Retirement Obligation 270,000 238,000
Stockholders' Equity 19,138,000 17,635,000
$ 26,602,000 $ 23,572,000