Credo Petroleum Reports Increased Reserves for Fiscal 2009
January 05 2010 - 7:00AM
Business Wire
Credo Petroleum Corporation (NASDAQ: CRED) today reported
that total proved reserves rose to 20.2 billion cubic feet
equivalent (“Bcfe”) at its October 31, 2009 fiscal year-end
compared to 19.8 Bcfe last year. Reserves are denominated in
the six to one natural gas energy-equivalent ratio.
For 2009, Credo replaced 121% of its production. Oil
reserves increased 23% while natural gas reserves fell about
4%. Oil currently accounts for 26% of the company’s
total proved reserves.
James T. Huffman, Chief Executive Officer, said, “Historically,
Credo’s reserves have been almost exclusively natural gas. Several
years ago, we disclosed plans to achieve better balance between oil
and natural gas based on the belief that increasing worldwide
demand would pressure oil supplies and prices. That scenario is
reflected in today’s oil prices where one barrel of oil trades at
roughly a 15 multiple over an Mcf of natural gas. By
comparison, the six to one energy equivalent ratio is required to
be used for reserve estimates.
“If Credo’s oil reserves were denominated at the current price
equivalent ratio of 15 to one, oil would account for almost 50% of
the company’s reserves, and total proved reserves would have grown
by over 7% at fiscal year end. A price equivalent calculation of
reserve quantities more accurately reflects the reality of our
business and the impact on our financial results as the reserves
are produced.”
At October 31, 2009, the undiscounted value of reserves was
$71,863,000, up 34% over last year. The discounted value (at 10%)
was $40,434,000. Average fiscal year-end wellhead prices used to
calculate reserves were $4.49 per Mcf and $69.24 per
barrel for 2009 compared to $3.50 per Mcf and $62.25 per
barrel last year.
At fiscal year-end, proved developed reserves represented 61% of
total reserves and proved undeveloped reserves represented 39%. The
percentage of reserves in the proved undeveloped category increased
this year because the company was able to book a limited amount of
reserves on its previously announced Bakken well on the Fort
Berthold Indian Reservation. That well has reached total depth and
is currently awaiting completion. In addition, SEC rules permitted
the company to book a minor amount of Bakken reserves where its
acreage is directly offset by producing Bakken wells.
“We have had good success achieving our goal of increasing the
percentage of oil in Credo’s reserve base,” Huffman said. “We will
continue to focus on oil because we believe that increasing
worldwide demand, political unrest and other factors will apply
upward pressure to oil prices. To that end, we are very pleased
with the results from our central Kansas oil exploration program,
and we are excited about ramping-up drilling on our Bakken acreage
in the Williston Basin of North Dakota where recent wells located
near our acreage continue to show great promise.”
For more information about the company, visit
http://www.credopetroleum.com.
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
Global Market” section of The Wall Street Journal.
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. Investors are encouraged to read the “Forward-Looking
Statements” and “Risk Factors” sections included in the company’s
Annual Report on Form 10-K for more information. Although the
company may from time to time voluntarily update its prior forward
looking statements, it disclaims any commitment to do so except as
required by securities laws.
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