Crimson Exploration Announces Third Quarter 2012 Financial Results Business Wire HOUSTON -- November 07, 2012 Crimson Exploration Inc. (NasdaqGM:CXPO) today announced financial results for the third quarter and first nine months of 2012 and provides operational update. Highlights *Revenue of $30.8million and adjusted EBITDAX of $21.6million for the quarter *Increased total liquids production to 3,255 barrels per day, a 49% volume increase over the prior year quarter *Achieved crude oil and natural gas liquids production ratio of 50.4% for the quarter Management Commentary Allan D. Keel, President and Chief Executive Officer, commented, “Our focus on targeting oil and liquid-rich assets in the Woodbine formation in Madison and Grimes Counties, Texas and the Eagle Ford Shale formation in South Texas yielded exceptional operating results during the third quarter of 2012. During the quarter, the Company increased crude oil and natural gas liquids production 49% over the prior year quarter and achieved a crude oil and natural gas liquids production ratio above 50 percent for the first time in Company history. Our strategy for 2013 will be to continue to concentrate on the development of these areas where we have a multi-year inventory of high quality targets.” Summary Financial Results The Company reported a net loss of $3.8million, or ($0.09)per basic share, for the third quarter of 2012 compared to net income of $0.5million, or $0.01 per basic share, for the third quarter of 2011. Special non-cash items impacting the third quarter of 2012 were an unrealized pre-tax charge of $4.6 million related to the mark-to-market valuation requirement on our commodity price hedges and a $0.9million leasehold impairment charge. In the third quarter of 2011, we recognized a $2.3 million lease operating expense credit for accrual estimates, an unrealized pre-tax gain of $4.2million related to the mark-to-market valuation requirement on commodity price hedges and a $4.8 million leasehold impairment charge. Exclusive of these special cash and non-cash items, the net loss for the third quarter of 2012 would have been $0.3million, compared to a net loss of $0.6million in 2011. Adjusted EBITDAX, as defined below, was $21.6million in the third quarter of 2012 compared to Adjusted EBITDAX for the prior year quarter of $22.4 million. Revenues for the third quarter of 2012 were $30.8million compared to revenues of $28.9million in the third quarter of 2011. Revenue for the quarter increased as a result of our shift to oil and liquids-rich weighted projects over the last twelve months. Partially offsetting the benefits of this increased oil revenue were a decline in natural gas production and lower realized natural gas and natural gas liquids prices. Production for the third quarter of 2012 was approximately 3.6Bcfe, or 38,759Mcfe per day, compared to production of 4.2Bcfe, or 45,160Mcfe per day, in the third quarter of 2011, and at the mid-point of management’s guidance of 37,000 – 40,000 Mcfe per day. Though we experienced a decrease in equivalent quarterly production, crude oil and natural gas liquids production was 50.4% of total production for the third quarter of 2012, up from 29% in the third quarter of 2011. This marks the first quarter in which Crimson’s crude oil and natural gas liquids production has exceeded a ratio greater than 50 percent. Since 2011, Crimson has achieved its goal of a balanced production profile by targeting its extensive liquids-rich inventory of projects in the East Texas Woodbine formation and South Texas Eagle Ford Shale. The weighted average field sales price in the third quarter of 2012 (before the effects of realized gains/losses on our commodity price hedges) was $8.13per Mcfe compared to an average field sales price of $6.50for the third quarter of 2011. The weighted average realized sales price in the third quarter of 2012 (including the effects of realized gains/losses on our commodity price hedges) was $8.63per Mcfe compared to a weighted average realized sales price of $6.96per Mcfe for the third quarter of 2011. During the third quarter, realized prices increased period over period due to a more balanced product mix. Direct lease operating expenses for the third quarter of 2012 were $3.3million, or $0.93per Mcfe, compared to $0.9million, or $0.22per Mcfe, in the third quarter of 2011. Lease operating expenses in the third quarter of 2011 reflected a change in accrual estimates which lowered lease operating expenses by $2.3 million. Exclusive of this adjustment, quarter over quarter lease operating expenses would be comparable. Production and ad valorem tax expenses for the third quarter of2012 were $1.8million, or $0.51 per Mcfe, compared to $1.6million, or $0.39 per Mcfe, for the third quarter of2011, a slight increase primarily due to higher revenues in 2012. Depreciation, depletion and amortization (“DD&A”) expense for the third quarter of 2012 was $14.3million, or $4.00per Mcfe, compared to $13.4million, or $3.24 per Mcfe, for the third quarter of 2011. DD&A expense increased period over period due to the higher rate associated with drilling higher cost, and higher-margin crude oil wells, offset in part by lower natural gas production. General and administrative expense in the third quarter of 2012 was $4.7 million, or $1.32per Mcfe, compared to $4.5million, or $1.08per Mcfe, in the third quarter of 2011. General and administrative expenses, exclusive of non-cash stock option expense recognized in each quarter, was $4.1million for the third quarter of 2012 and $4.0 million for third quarter of 2011. Capital expenditures for the third quarter of 2012 were $14.1million, consisting of drilling and completion operations in the Woodbine formation and the successful sidetrack of the Catherine Henderson A-6 well in Liberty County, Texas. Year to date, Crimson has invested approximately $74.4 million in its capital program which is currently forecasted to total approximately $80.0 million for the 2012 year. Borrowing Base & Liquidity On October 30, 2012, Crimson’s borrowing base under its $400 million senior secured revolving credit agreement (the “Senior Credit Agreement”) was reaffirmed by its bank group at $100 million. The next borrowing base redetermination under the Senior Credit Agreement is scheduled for May 1, 2013. As of September30, 2012, Crimson had $71.1million outstanding, with availability of $28.9million, under the Senior Credit Agreement. Hedging Activity In early October, Crimson added the following crude oil and natural gas derivative contracts to its existing hedge position as part of its continued effort to mitigate risks associated with commodity price fluctuations: Crude Oil Volume/Month Price/Unit Brent Jan 2013-Dec 2013 Swap 9,000 Bbls $109.13 Jan 2014-Dec 2014 Swap 7,500 Bbls $102.10 Natural Gas Volume/Month Price/Unit Henry Hub Jan 2013-Dec 2014 Collar 42,500 Mmbtu $3.75-$4.60 Jan 2013-Dec 2014 Collar 42,500 Mmbtu $3.50-$5.00 Selected Financial and Operating Data The following table reflects certain comparative financial and operating data for the three and nine month periods ended September30,2012 and 2011: Three Months Ended Nine Months Ended September 30, September 30, 2012 2011 % 2012 2011 % Total Volumes Sold: Crude oil 228,895 98,523 132 584,713 282,774 107 (barrels) Natural gas liquids 70,607 102,595 -31 215,663 324,670 -34 (barrels) Natural gas 1,768,778 2,948,021 -40 5,933,989 9,234,785 -36 (Mcf) Natural gas equivalents 3,565,790 4,154,729 -14 10,736,245 12,879,449 -17 (Mcfe) Daily Sales Volumes: Crude oil 2,488 1,071 132 2,134 1,036 106 (barrels) Natural gas liquids 767 1,115 -31 787 1,189 -34 (barrels) Natural gas 19,226 32,044 -40 21,657 33,827 -36 (Mcf) Natural gas equivalents 38,759 45,160 -14 39,183 47,177 -17 (Mcfe) Average sales prices (before hedging): Oil $ 95.82 $ 96.21 0 $ 102.45 $ 100.59 2 NGLs 31.05 52.74 -41 36.56 48.28 -24 Gas 2.75 4.11 -33 2.44 4.04 -40 Mcfe 8.13 6.50 25 7.66 6.32 21 Average sales price (after hedging): Oil $ 97.27 $ 89.99 8 $ 103.75 $ 90.95 14 NGLs 31.05 51.66 -40 36.56 47.65 -23 Gas 3.57 5.00 -29 3.27 4.87 -33 Mcfe 8.63 6.96 24 8.19 6.69 22 Selected Costs ($ per Mcfe): Lease operating $ 0.93 $ 0.22 323 $ 1.08 $ 0.75 44 expenses Production and ad valorem $ 0.51 $ 0.39 31 $ 0.07 $ 0.42 -83 taxes Depreciation and depletion $ 4.00 $ 3.24 24 $ 4.04 $ 3.21 26 expense General and administrative $ 1.14 $ 0.95 20 $ 1.14 $ 0.87 31 expense (cash) Interest $ 1.81 $ 1.46 24 $ 1.76 $ 1.48 19 expense Adjusted $ 21,579,942 $ 22,435,395 -4 $ 63,505,201 $ 59,922,258 6 EBITDAX ^(1) Capital expenditures Property acquisition – $ - $ 241 $ - $ 940,586 proved Leasehold 1,267,001 5,217,469 5,258,214 7,691,567 acquisitions Exploratory 43,967 (395,354 ) 9,793,303 5,625,125 Development 12,760,004 12,769,690 59,288,195 47,253,309 Other 5,693 - 25,410 5,416 $ 14,076,665 $ 17,592,046 $ 74,365,122 $ 61,516,003 Weighted Average Shares Outstanding Basic 44,208,471 45,121,172 44,106,956 45,084,200 Diluted 44,208,471 45,166,566 44,106,956 45,084,200 (1) Adjusted EBITDAX is a non-GAAP financial measure. See below for a reconciliation to net income (loss). CRIMSON EXPLORATION INC. CONDENSED CONSOLIDATED BALANCE SHEETS September 30, December 31, 2012 2011 (unaudited) ASSETS Accounts receivable $ 14,642,466 $ 16,059,667 Current mark to market value of 1,992,532 4,538,897 derivatives Other current assets 603,891 473,616 Deferred tax asset (current and 18,624,542 17,297,621 non-current) Net property and equipment 426,048,022 396,781,299 Other non-current assets 1,390,309 1,174,774 TOTAL ASSETS $ 463,301,762 $ 436,325,874 LIABILITIES AND STOCKHOLDERS' EQUITY Current mark to market value of $ — $ 290,703 derivatives Other current liabilities 44,966,908 66,795,433 Long-term debt, net of current 240,948,063 190,041,933 portion Other non-current liabilities 10,528,815 9,692,107 Total stockholders’ equity 166,857,976 169,505,698 TOTAL LIABILITIES & STOCKHOLDERS’ $ 463,301,762 $ 436,325,874 EQUITY CRIMSON EXPLORATION INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended Nine Months Ended September 30, September 30, 2012 2011 2012 2011 OPERATING REVENUES Crude oil $ 22,265,178 $ 8,866,235 $ 60,663,558 $ 25,718,944 sales Natural gas 6,312,901 14,747,982 19,433,566 45,011,246 sales Natural gas 2,192,377 5,299,854 7,883,922 15,470,606 liquids sales Total operating 30,770,456 28,914,071 87,981,046 86,200,796 revenues OPERATING EXPENSES Lease operating 3,318,057 912,698 11,558,488 9,600,620 expenses Production and ad valorem 1,806,631 1,615,539 726,375 5,454,014 taxes Exploration expenses (186,550 ) 573,697 163,041 954,906 (gain) Depreciation, depletion and 14,273,884 13,445,305 43,411,828 41,311,873 amortization Impairment and abandonment of 850,980 4,810,708 2,333,521 14,220,733 oil & gas properties General and 4,722,057 4,473,022 14,019,234 12,700,744 administrative Gain on sale - - (8,900 ) - of assets Total operating 24,785,059 25,830,969 72,203,587 84,242,890 expenses INCOME (LOSS) FROM 5,985,397 3,083,102 15,777,459 1,957,906 OPERATIONS OTHER INCOME (EXPENSE) Interest expense, net (6,454,526 ) (6,045,543 ) (18,912,514 ) (19,028,127 ) of amount capitalized Other income (expense) and (106,801 ) (252,611 ) (453,088 ) (1,407,490 ) financing cost Unrealized (loss) gain on (4,564,414 ) 4,222,523 (2,052,314 ) 2,059,233 derivative instruments Total other income (11,125,741 ) (2,075,631 ) (21,417,916 ) (18,376,384 ) (expense) INCOME (LOSS) BEFORE INCOME (5,140,344 ) 1,007,471 (5,640,457 ) (16,418,478 ) TAXES Income tax (expense) 1,294,220 (480,871 ) 1,306,067 5,572,553 benefit NET INCOME $ (3,846,124 ) $ 526,600 $ (4,334,390 ) $ (10,845,925 ) (LOSS) Non-GAAP Financial Measures EBITDAX represents net income (loss) before interest expense, taxes, and depreciation, amortization and exploration expenses. Adjusted EBITDAX represents EBITDAX as further adjusted to reflect the items set forth in the table below, all of which will be required in determining our compliance with financial covenants under the credit agreements representing our senior credit facility and our second lien credit facility. We have included EBITDAX and Adjusted EBITDAX in this release to provide investors with a supplemental measure of our operating performance and information about the calculation of some of the financial covenants that are contained in our credit agreements. We believe EBITDAX is an important supplemental measure of operating performance because it eliminates items that have less bearing on our operating performance and so highlights trends in our core business that may not otherwise be apparent when relying solely on GAAP financial measures. We also believe that securities analysts, investors and other interested parties frequently use EBITDAX in the evaluation of companies, many of which present EBITDAX when reporting their results. Adjusted EBITDAX is a material component of the covenants that are imposed on us by our credit agreements. We are subject to financial covenant ratios that are calculated by reference to Adjusted EBITDAX. Non-compliance with the financial covenants contained in these credit agreements could result in a default, an acceleration in the repayment of amounts outstanding, and a termination of lending commitments. Our management and external users of our financial statements, such as investors, commercial banks, research analysts and others, also use EBITDAX and Adjusted EBITDAX to assess: *the financial performance of our assets without regard to financing methods, capital structure or historical cost basis; *the ability of our assets to generate cash sufficient to pay interest costs and support our indebtedness; *our operating performance and return on capital as compared to those of other companies in our industry, without regard to financing or capital structure; and *the feasibility of acquisitions and capital expenditure projects and the overall rates of return on alternative investment opportunities. EBITDAX and Adjusted EBITDAX are not presentations made in accordance with generally accepted accounting principles, or GAAP. As discussed above, we believe that the presentation of EBITDAX and Adjusted EBITDAX in this release is appropriate. However, when evaluating our results, you should not consider EBITDAX and Adjusted EBITDAX in isolation of, or as a substitute for, measures of our financial performance as determined in accordance with GAAP, such as net income (loss). EBITDAX and Adjusted EBITDAX have material limitations as performance measures because they exclude items that are necessary elements of our costs and operations. Because other companies may calculate EBITDAX and Adjusted EBITDAX differently than we do, EBITDAX may not be, and Adjusted EBITDAX as presented in this release is not, comparable to similarly-titled measures reported by other companies. The following table reconciles net income to EBITDAX and Adjusted EBITDAX for the periods presented: Three Months Ended Nine Months Ended September 30, September 30, 2012 2011 2012 2011 Net income $ (3,846,124 ) $ 526,600 $ (4,334,390 ) $ (10,845,925 ) (loss) Interest 6,454,526 6,045,543 18,912,514 19,028,127 expense Income tax (benefit) (1,294,220 ) 480,871 (1,306,067 ) (5,572,553 ) expense Depreciation, Depletion and 14,273,884 13,445,305 43,411,828 41,311,873 amortization Exploration (186,550 ) 573,697 163,041 954,906 expense EBITDAX 15,401,516 21,072,016 56,846,926 44,876,428 Unrealized loss (gain) 4,564,414 (4,222,523 ) 2,052,314 (2,059,233 ) on derivative instruments Non-cash equity-based 656,231 522,583 1,828,252 1,476,840 compensation charges Impairment and abandonment 850,980 4,810,708 2,333,521 14,220,733 of oil and gas properties Other income (expense) and 106,801 252,611 453,088 1,407,490 financing costs Gain on sale - - (8,900 ) - of assets Adjusted $ 21,579,942 $ 22,435,395 $ 63,505,201 $ 59,922,258 EBITDAX Updated Guidance for Fourth Quarter 2012 The Company is providing the following updated guidance for the fourth calendar quarter of 2012. Fourth quarter 2012 production 34,000 – 37,000 mcfe per day Lease operating expenses ($M) $4,200 – $4,500 Production and ad valorem taxes 8% of actual prices Cash G&A ($M) $4,000 – $4,500 DD&A rate $4.00 – $4.25 per mcfe Teleconference Call Crimson management will hold a conference call to discuss the information described in this press release on November8, 2012 at 8:30 a.m. CST. Those interested in participating in the earnings conference call may do so by calling the following phone number: 888-359-3627, (International 719-325-2484) and entering the following participation code 7747182. Areplay of the call will be available from November 8, 2012 at 11:30am CST through November 15, 2012 at 11:30am CST by dialing toll free 888-203-1112, (International 719-457-0820) and asking for replay ID code7747182. Crimson Exploration is a Houston, TX-based independent energy company engaged in the exploitation, exploration, development and acquisition of crude oil and natural gas, primarily in the onshore Gulf Coast regions of the United States. The Company owns and operates conventional properties in Texas, Louisiana, Colorado and Mississippi, including approximately 18,500 net acres in Madison and Grimes Counties in Southeast Texas, approximately 8,200 net acres in the Eagle Ford Shale in South Texas, approximately 11,000 net acres in the DJ Basin of Colorado, and approximately 5,700 net acres in the Haynesville Shale and Mid-Bossier gas plays and James Lime gas/liquids play in East Texas. Additional information on Crimson Exploration Inc. is available on the Company's website at http://crimsonexploration.com. This press release includes “forward-looking statements” as defined by the Securities and Exchange Commission (“SEC”) and applicable securities laws. 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, cash flow operating results, leverage, drilling rigs operating, drilling locations, funding, derivative transactions, pricing, operating costs and capital spending, tax rates, and descriptions of our development plans 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, the proximity to and capacity of transportation facilities, the timing of planned capital expenditures, uncertainties in estimating reserves and forecasting production results, operating and drilling risks, regulatory changes and the potential lack of capital resources. All forward-looking statements are based on our forecasts for our existing operations and do not include the potential impact of any future acquisitions. 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, 2011, and subsequent filings for a further discussion of these risks. Existing and prospective investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise. Contact: Crimson Exploration Inc. E. Joseph Grady, 713-236-7400 Senior Vice President and Chief Financial Officer or Josh Wannarka, 713-236-7400 Manager of Investor Relations and FP&A
Crimson Exploration Announces Third Quarter 2012 Financial Results
Press spacebar to pause and continue. Press esc to stop.