Crimson Exploration announces fourth quarter and full year 2011 financial results
Wednesday, Mar 14, 2012
Crimson Exploration Inc. (NasdaqGM:CXPO) today announced financial results for the fourth quarter and full year 2011.
- Full year revenue of $114.4 million, 18% year over year increase
- Full year EBITDAX of $77.2 million, 36% year over year increase
- Increased quarterly oil and natural gas liquids production to 34% of total production, 40% of total production reached in January 2012
- Increased proved reserves by 20% year over year, to 200.4 Bcfe, with a reserve replacement rate of 304% of 2011 production
Allan D. Keel, President and Chief Executive Officer, commented, “In 2011, Crimson began its transformation from a predominately natural gas producer to a Company focused on oil and liquids weighted opportunities. After finally securing our highest quality Haynesville/Mid-Bossier acreage in East Texas in the first half of the year, we shifted our focus toward the Eagle Ford shale in South Texas in an effort to balance our production profile. By employing the same horizontal drilling and fracing techniques used in the Haynesville Shale and Mid-Bossier gas shale plays, we then successfully proceeded with the development of our leasehold position in Karnes County, averaging a 24-hr gross initial production rate of 1,060 Boepd on seven completed wells on our Littlepage McBride lease. In 2012, Crimson anticipates achieving a 50/50 liquids production profile by the end of the second quarter by targeting the planned horizontal redevelopment of the Woodbine formation in Madison and Grimes counties, Texas and the continued development of the Eagle Ford shale.”
Summary Fourth Quarter Financial Results
The Company reported a net loss for the fourth quarter 2011 of $5.0 million, or $0.11 per basic share, compared to a net loss of $20.9 million, or $0.50 per basic share, for the fourth quarter of 2010. Recorded in the fourth quarters of 2011 and 2010, respectively, were non-cash leasehold impairment charges of $0.7 million and $21.1 million. Fourth quarter non-cash charges of $1.6 million and $6.8 million were also recorded in 2011 and 2010, respectively, related to the mark-to-market valuation on our commodity price and interest rate derivatives. Exclusive of these special items, net loss for the fourth quarter of 2011 would have been $3.5 million, compared to a loss of $2.4 million in 2010. Adjusted EBITDAX, as defined below, was $17.3 million in the fourth quarter of 2011, a 3% increase over Adjusted EBITDAX of $16.7 million for the prior year quarter.
Revenues for the fourth quarter 2011 were $27.7 million compared to revenues of $27.9 million in the prior year quarter. Quarter over quarter revenues were flat, though lower natural gas revenues from lower production and prices were offset by higher oil and liquids revenues resulting from a 40% increase in quarterly oil production as Crimson pursued its strategy of achieving a more balanced production profile.
Production for the fourth quarter of 2011 was approximately 3.7 Bcfe of natural gas equivalents, or 40,048 Mcfe per day, compared with production of approximately 4.0 Bcfe, or 43,010 Mcfe per day, in the 2010 quarter. As of January 30, 2012, Crimson achieved 40% oil and liquids production, compared to 28% for the fourth quarter 2010, a key milestone in our strategy to achieve a production mix of 50% oil and liquids by the middle of 2012.
The weighted average field sales price in the fourth quarter of 2011 (before the effects of realized gains/losses on our commodity price hedges) was $6.72 per Mcfe compared to an average sales price of $5.59 for the fourth quarter of 2010, an increase resulting from higher oil and NGL prices and the increase in oil and liquids production. The weighted average realized sales price in the fourth quarter of 2011 (including the effects of realized gains/losses on our commodity price hedges) was $7.45 per Mcfe compared to a weighted average realized sales price of $7.02 per Mcfe for the fourth quarter of 2010.
Lease operating expenses for the fourth quarter of 2011 were $3.7 million compared to $3.6 million in the prior year quarter. On a per Mcfe produced basis, lease operating expenses were $1.00 for the fourth quarter 2011, compared to $0.91 Mcfe for the fourth quarter 2010.
Production and ad valorem taxes for the fourth quarter 2011 were $1.3 million compared to $1.5 million in the prior year quarter due to slightly lower revenues. On a per Mcfe produced basis, production and ad valorem taxes were $0.35 for the fourth quarter compared to $0.37 Mcfe for the fourth quarter 2010.
DD&A expense for the fourth quarter of 2011 was $15.6 million, or $4.24 per Mcfe, compared to $12.0 million, or $3.05 per Mcfe, in the prior year quarter. The higher DD&A rate for the 2011 quarter resulted primarily from negative natural gas reserve revisions related to the low natural gas price environment.
General and administrative expense in the fourth quarter of 2011 was $5.9 million, or $1.60 per Mcfe, compared to $6.6 million, or $1.66 per Mcfe, in the prior year quarter due to lower personnel costs and lower legal and other professional fees. Cash general and administrative expenses for the fourth quarter of 2011, exclusive of non-cash stock option expense recognized, were $5.4 million ($1.48 per Mcfe) and $6.1 million ($1.55 per Mcfe) for the fourth quarters of 2011 and 2010, respectively.
Year End Reserves and 2012 Capital Budget
As previously disclosed, proved reserves at December 31, 2011, as estimated by Netherland, Sewell, and Associates, Inc., our independent petroleum engineering firm, were 200.4 Bcfe, a 20% increase from the prior year’s proved reserves of 166.5 Bcfe, with an SEC PV-10 value of approximately $266.5 million. Reserve additions, including revisions, totaled approximately 50.4 Bcfe which led to a reserve replacement rate of 304% and finding and development costs of $1.99 per Mcfe in 2011. Crimson plans to continue an active drilling program in 2012 by spending approximately $74 million primarily targeting the Woodbine formation and the Eagle Ford shale.
Source: Business Wire
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