Credo Petroleum Corp. (CRED, Financial) filed Annual Report for the period ended 2011-10-31.
Credo Petroleum Corp. has a market cap of $102.92 million; its shares were traded at around $10.25 with a P/E ratio of 23.3 and P/S ratio of 6.14.
In 2011, oil and gas revenues increased 45% to $16,767,000 compared to $11,566,000 in 2010. Total production, at the six Mcf of gas to one barrel of oil energy equivalent ratio, increased 12% to 301,000 barrels of oil equivalent (BOE). The increased production resulted in a revenue increase of $3,819,000. As the oil and gas price/volume table on page 26 shows, oil prices increased to $85.16 per barrel and natural gas sales prices remained unchanged. The net effect of the price change was to increase total oil and gas sales by $1,382,000. Realized derivative losses were $191,000 in 2011 compared to a gain of $115,000 in 2010. Unrealized derivative gains were $8,000 in 2011 compared to unrealized losses of $73,000 in 2010. Investment and other income decreased due to the impact of market place volatility on the Companys investments.
In 2011, total costs and expenses increased 33% to $11,854,000 compared to $8,901,000 in 2010. Oil and gas production expenses increased 25% primarily due to production taxes on increased revenue together with the increased number of operating wells. DD&A increased primarily due to an increase in the amortizable base including future development costs related to proved undeveloped oil reserves in the Bakken. (Refer to the Certain Significant Effects of the Companys Strategic Transition to Oil from Natural Gas section of MD&A for further information regarding DD&A changes.) General and administrative expenses increased due primarily to legal and professional fees and the settlement of a lawsuit. The effective income tax rate was 26% and 22% for the 2011 and 2010 periods, respectively. The variation from the statutory rate in 2011 is primarily due to the effect of percentage depletion.
In 2010, oil and gas revenues increased 15% to $11,566,000 compared to $10,067,000 in 2009. The increase was due to a 38% increase in oil prices and a 37% increase in natural gas prices. As the oil and gas price/volume table on page 26 shows, oil prices increased to $70.88 per barrel and natural gas sales prices increased to $4.54 per Mcf. The net effect of these price changes was to increase total oil and gas sales by $3,710,000. Realized derivative gains were $115,000 in 2010 compared to $3,720,000 in 2009. Unrealized derivative losses were $73,000 in 2010 compared to unrealized losses of $1,641,000 in 2009. During the same period, the Companys total production decreased 16% to 270,000 BOE, resulting in a decrease in oil and gas sales of $2,211,000. The decline in 2010 oil production resulted because of delays caused by shortages of fracture stimulation equipment for horizontal wells in the North Dakota Bakken and the Texas Panhandle. The situation was exacerbated by the expected flush production decline on the Huslig Field discovery which peaked last year at about 365 barrels of oil per day, net to Credo. In addition, the Company did not drill any gas wells during 2010 due to low natural gas prices. Investment and other income increased primarily due to the impact of market place improvements on the Companys investments.
The Company performs a ceiling test each quarter. The full cost ceiling test is a limitation on capitalized costs prescribed by SEC Regulation S-X Rule 4-10. The ceiling test is not a fair value based measurement. Rather, it is a standardized mathematical calculation. The ceiling test provides that capitalized costs less related accumulated depletion and deferred income taxes for each cost center may not exceed the sum of (1) the present value of future net revenue from estimated production of proved oil and gas reserves using current prices (discussed below), excluding the future cash outflows associated with settling asset retirement obligations that have been accrued on the balance sheet, at a discount factor of 10%; plus (2) the cost of properties not being amortized, if any; plus (3) the lower of cost or estimated fair value of unproved properties included in the costs being amortized, if any; less (4) income tax effects related to differences in the book and tax basis of oil and gas properties. The current prices utilized are based on the average of the first-day-of-the-month prices during the preceding twelve-month period pursuant to the SECs Modernization of Oil and Gas Reporting rule. For fiscal year 2011, the average of the
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Credo Petroleum Corp. has a market cap of $102.92 million; its shares were traded at around $10.25 with a P/E ratio of 23.3 and P/S ratio of 6.14.
Highlight of Business Operations:
The following table sets forth, as of October 31 of the indicated year, information regarding the Companys proved reserves which is based on the assumptions set forth in Note (12) to the Consolidated Financial Statements where additional reserve information is provided. The average price used to calculate estimated future net revenues was $86.32, $68.30, and $69.24 per barrel of oil and $4.54, $4.49, and $4.49 per Mcf of gas as of October 31, 2011, 2010, and 2009, respectively. Amounts do not include estimates of future Federal and state income taxes.In 2011, oil and gas revenues increased 45% to $16,767,000 compared to $11,566,000 in 2010. Total production, at the six Mcf of gas to one barrel of oil energy equivalent ratio, increased 12% to 301,000 barrels of oil equivalent (BOE). The increased production resulted in a revenue increase of $3,819,000. As the oil and gas price/volume table on page 26 shows, oil prices increased to $85.16 per barrel and natural gas sales prices remained unchanged. The net effect of the price change was to increase total oil and gas sales by $1,382,000. Realized derivative losses were $191,000 in 2011 compared to a gain of $115,000 in 2010. Unrealized derivative gains were $8,000 in 2011 compared to unrealized losses of $73,000 in 2010. Investment and other income decreased due to the impact of market place volatility on the Companys investments.
In 2011, total costs and expenses increased 33% to $11,854,000 compared to $8,901,000 in 2010. Oil and gas production expenses increased 25% primarily due to production taxes on increased revenue together with the increased number of operating wells. DD&A increased primarily due to an increase in the amortizable base including future development costs related to proved undeveloped oil reserves in the Bakken. (Refer to the Certain Significant Effects of the Companys Strategic Transition to Oil from Natural Gas section of MD&A for further information regarding DD&A changes.) General and administrative expenses increased due primarily to legal and professional fees and the settlement of a lawsuit. The effective income tax rate was 26% and 22% for the 2011 and 2010 periods, respectively. The variation from the statutory rate in 2011 is primarily due to the effect of percentage depletion.
In 2010, oil and gas revenues increased 15% to $11,566,000 compared to $10,067,000 in 2009. The increase was due to a 38% increase in oil prices and a 37% increase in natural gas prices. As the oil and gas price/volume table on page 26 shows, oil prices increased to $70.88 per barrel and natural gas sales prices increased to $4.54 per Mcf. The net effect of these price changes was to increase total oil and gas sales by $3,710,000. Realized derivative gains were $115,000 in 2010 compared to $3,720,000 in 2009. Unrealized derivative losses were $73,000 in 2010 compared to unrealized losses of $1,641,000 in 2009. During the same period, the Companys total production decreased 16% to 270,000 BOE, resulting in a decrease in oil and gas sales of $2,211,000. The decline in 2010 oil production resulted because of delays caused by shortages of fracture stimulation equipment for horizontal wells in the North Dakota Bakken and the Texas Panhandle. The situation was exacerbated by the expected flush production decline on the Huslig Field discovery which peaked last year at about 365 barrels of oil per day, net to Credo. In addition, the Company did not drill any gas wells during 2010 due to low natural gas prices. Investment and other income increased primarily due to the impact of market place improvements on the Companys investments.
The Company performs a ceiling test each quarter. The full cost ceiling test is a limitation on capitalized costs prescribed by SEC Regulation S-X Rule 4-10. The ceiling test is not a fair value based measurement. Rather, it is a standardized mathematical calculation. The ceiling test provides that capitalized costs less related accumulated depletion and deferred income taxes for each cost center may not exceed the sum of (1) the present value of future net revenue from estimated production of proved oil and gas reserves using current prices (discussed below), excluding the future cash outflows associated with settling asset retirement obligations that have been accrued on the balance sheet, at a discount factor of 10%; plus (2) the cost of properties not being amortized, if any; plus (3) the lower of cost or estimated fair value of unproved properties included in the costs being amortized, if any; less (4) income tax effects related to differences in the book and tax basis of oil and gas properties. The current prices utilized are based on the average of the first-day-of-the-month prices during the preceding twelve-month period pursuant to the SECs Modernization of Oil and Gas Reporting rule. For fiscal year 2011, the average of the
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