CRED iShares Trust

Late Operator Billings Result in Adjustments to Year End and First Quarter Results

First Quarter Earnings Per Share Unchanged at $.10

Year End Earnings Decrease $.01 to $.34 Per Share

Credo Petroleum Corporation (Nasdaq:CRED), an oil and gas exploration and production company with significant assets in the North Dakota Bakken and Three Forks, Kansas, Nebraska, the Texas Panhandle and Oklahoma, today reported restated financial results for its fiscal year ended October 31, 2011 and its first fiscal quarter of 2012.

Oakley Hall, Chairman of the Audit Committee stated, "The restatement was caused by late Bakken operator bills that included well costs which were incurred earlier than we expected, and were not accrued. This is a growing-pain that, for Credo, is unique to the Bakken and Three Forks project. We have now modified our procedures to identify and accrue well costs which are incurred long before they are actually billed by the operators.

"As is shown in the Financial Highlights section of this release, the restatement primarily affects working capital and oil and gas property costs. There was no effect on first quarter earnings per share, and fiscal 2011 earnings per share decreased 3%, or $.01 per share, to $.34. There were no changes in our operating data such as production and reserves. Including the unbilled cost, we have a $3,948,000 working capital deficit at January 31, 2012. We anticipated working capital deficits for 2012 and previously announced that Credo will borrow money to finance its record drilling budget. When borrowing is required, our use of just-in-time financing will result in a working capital deficit due to the time lag between when costs are estimated and accrued and when operator invoices are received and paid. This is not unusual in our business as many companies choose not to pay interest on borrowed funds in order to dress up their working capital.

"We have concluded an exhaustive review. We are confident that the full extent of the incurred costs have been identified and accrued, and that this is a manageable situation going forward. Therefore, yesterday we filed restated financial statements in Form 10-K/A for the year ended October 31, 2011 and Form 10-Q/A for the first fiscal quarter ended January 31, 2012. The remainder of this press release contains comparative year end and first quarter information as restated. Our numbers continue to show substantial growth in fiscal 2011 followed by even greater growth in the first quarter of fiscal 2012. We expect this growth trend to continue."

Increased Oil Production Drove a Significant Improvement in Financial Results

  For both 2011 and First Quarter 2012

The following table shows the changes in certain financial and operational categories for the fiscal year ended October 31, 2011 compared to last year and for the quarter ended January 31, 2012 compared to the same quarter last year.

For the fiscal year ended October 31, 2011, operating income increased to $4,867,000 compared to $2,665,000 last year on revenue of $16,767,000 compared to $11,566,000 last year. Increased production volumes accounted for 73% of the revenue increase while price changes accounted for 27%. EBITDA (a non-GAAP measure; see reconciliation below) for the year ended October 31, 2011 increased to $9,925,000 compared to $6,490,000 last year. Net income was $3,453,000, or $.34 per diluted share, compared to $2,203,000, or $.22 per diluted share, last year. Adjusted net income (a non-GAAP measure; see reconciliation below) increased to $3,447,000, or $.34 per share, compared to $2,260,000, or $.22 per share last year.

For the first quarter ended January 31, 2012, operating income increased to $1,938,000 compared to $904,000 last year on revenue of $5,821,000 compared to $3,250,000 last year. Increased production volumes accounted for 94% of the revenue increase while price changes accounted for 6% of the increase. EBITDA for the first quarter of 2012 increased to $3,792,000 compared to $1,960,000 last year. Net income was $962,000, or $.10 per diluted share, compared to $169,000, or $.02 per diluted share, last year. Adjusted net income increased to $1,289,000, or $.13 per share, compared to $726,000, or $.07 per share last year.

DRILLING SUCCESS DRIVES SURGE IN OIL PRODUCTION

The Company's oil-focused drilling success yielded a 53% increase in fiscal 2011 oil production and a 99% increase in first quarter 2012 oil production compared to last year. Natural gas drilling was suspended in 2009 because of low natural gas prices. As a result, mostly normal declines reduced gas production in both periods. The following table shows that the Company's comparative 2011 year end and first quarter 2012 production mix shifted solidly in favor of oil.

Total production volumes increased 12% for the year ended October 31, 2011 to 301,000 BOE (barrels of oil equivalent based on six Mcf of gas to one barrel of oil), and increased 36% in the first quarter to 91,000 BOE compared to last year. The following table shows comparative production volume percentages by region and highlights the robust shift occurring in the Company's production mix to crude oil in North Dakota, Kansas and Nebraska and away from natural gas in Oklahoma.

Michael D. Davis, Chief Executive Officer (interim), stated, "Although we are required to report production volumes on their six to one energy equivalent basis, the current price equivalent is more than fifty to one. That makes oil worth about eight times more than natural gas, which is magnifying our revenue growth and bottom line results compared to our production growth. For example, in the first quarter of 2012, oil represented 86% of the value of production compared to 61% of production volumes."

The following table shows comparative revenue percentages by region.

WELLHEAD PRICES MIXED

For the year ended October 31, 2011, wellhead oil prices increased 20% to $85.16 compared to $70.88 last year. Natural gas prices were unchanged at $4.54 last year due to the high Btu content of Bakken and Three Forks gas. For the year, the Company had realized hedging losses of $191,000 compared to gains of $115,000 last year. Fiscal 2011 oil hedges had the effect of reducing the Company's oil price realizations by $1.16 per barrel to $84.00. Last year, natural gas hedges increased first quarter price realizations by $.11 per Mcf to $4.65.

First quarter 2012 wellhead oil prices increased 13% to $90.33 compared to $79.75 last year. Natural gas prices fell 14% to $3.73 compared to $4.34 last year. For the quarter ended January 31, 2012, the Company had realized hedging losses of $44,000 compared to gains of $36,000 last year. First quarter oil hedges had the effect of reducing the Company oil price realizations by $.79 per barrel to $89.54. Last year, natural gas hedges increased first quarter price realizations by $.16 per Mcf to $4.50.

At January 31, 2012, the Company held short swap hedge positions on 6,000 barrels of oil per month for the production months of February 2012 through December 2012, at prices ranging from $91.95 to $93.00. The hedge is expected to cover approximately 15% to 25% of estimated production for the hedged period. At first quarter end, unrealized hedging losses were $481,000 compared to $741,000 last year. The unrealized losses are a non-cash charge calculated at a point in time by applying oil prices as of first quarter-end to open hedging contract volumes. Actual realized gains or losses on the hedges are determined based on oil prices at the time each month's hedge contract expires.

RECORD CAPITAL EXPENDITURES

TO BE PARTIALLY FINANCED BY BANK BORROWING

For fiscal 2011, capital expenditures increased 116% to a record $18,744,000 as the Company ramped up drilling on its North Dakota, Kansas, Nebraska and Texas Panhandle projects. For 2012, capital expenditures are expected to almost double to $35,000,000, of which approximately 65% is earmarked for Bakken and Three Forks drilling.

At first quarter end, the Company had a working capital deficit of $3,948,000 due to accrual of well cost liabilities that are not yet payable. As noted above, the Company has previously reported that it will use bank financing to fund a portion of its 2012 drilling budget. When borrowing is required, the Company will use just-in-time financing which will result in a working capital deficit due to the time lag between when costs are accrued and when operator invoices are received and paid.

The Company has established a revolving credit line with its principal bank which provides for a $25,000,000 credit facility. The initial borrowing base is $7 million but will be increased as the Company pledges additional properties as collateral. Borrowing in 2012 is expected to range from $7 million to $12 million. The credit facility is governed by a borrowing base which is determined semi-annually by the lender based on review of the Company's reserves at April 30 and October 31. To date, the Company has drawn $2 million on the line of credit with an effective interest rate of 3.5%.

MANAGEMENT COMMENT

Davis continued, "Our Bakken and Three Forks project is Credo's flagship drilling play and provides enormous growth potential for the Company. It is also our most challenging project primarily because the costs and complexities of horizontal Bakken wells are much greater than most of our other drilling projects. Nevertheless, problems like late operator billings are manageable and are far outweighed by our opportunity to participate in this world class oil play."

Davis continued, "We have been extremely successful transitioning Credo from natural gas to oil in a relatively short time frame. Our comparative first quarter oil production grew 99% and for the quarter, oil represented 61% of our production mix. We will continue to build on that momentum throughout 2012 with the objective of oil comprising 75% of our production mix by year-end.

"We entered 2012 with a balanced, multi-year inventory of scalable and repeatable projects that will propel Credo's organic production and reserve gains in the years ahead. In our Bakken and Three Forks project alone we have approximately 200 drilling locations based on only two Bakken and two Three Forks wells in each spacing unit. That number could double if, as many of the larger Bakken operators predict, well density increases to eight wells per spacing unit."

About Credo Petroleum

Credo Petroleum Corporation is an independent oil and gas exploration and production company based in Denver, Colorado. The Company has significant operations in the Williston Basin of North Dakota, Kansas, Nebraska, the Anadarko Basin of the Texas Panhandle and northwest Oklahoma, and in southern Oklahoma. Credo uses advanced technologies to systematically explore for oil and gas and, through its patented Calliope Gas Recovery System, to recover stranded reserves from depleted gas reservoirs. For more information, please visit our website at www.credopetroleum.com or contact us at 303-297-2200.

Supplemental Non-GAAP Financial Measures

EBITDA

The Company uses this non‑GAAP operating performance measure primarily to compare its performance with other companies in the industry that make a similar disclosure. The Company believes that this performance measure may also be useful to investors for the same purpose. Investors should not consider this measure in isolation or as a substitute for operating income or any other measure for determining the Company's operating performance that is calculated in accordance with GAAP. In addition, because EBITDA is not a GAAP measure, it may not necessarily be comparable to similarly titled measures employed by other companies. A reconciliation of Net Income to EBITDA (as used by the Company) is provided in the table below:

Adjusted Net Income

The following table provides information that the Company believes may be useful to investors that follow the practice of some industry analysts who adjust reported company earnings to match realizations to production settlement months and make other adjustments to exclude certain non-cash items. The following table provides a reconciliation of Net Income to non-GAAP Adjusted Net Income.

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.

CONTACT: Michael D. Davis
         Chief Operating Officer
         and CEO (Interim)
         or
         Alford B. Neely
         Chief Financial Officer
         303-297-2200
         Website: www.credopetroleum.com

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