OilVoice - Crimson Exploration Announces Second Quarter 2008 Financial Results

Crimson Exploration Announces Second Quarter 2008 Financial Results

Sunday, August 17, 2008

Crimson Exploration Inc. today announced financial results for the second quarter 2008.

Highlights

- Record quarterly revenue of $53.0 million
- Record quarterly production of 4.8 Bcfe
- Daily production for the second quarter of 2008 averaged 53,127 Mcfed, up 52% over the 2007 quarter
- Acquisition in May 2008 of approximately 22 Bcfe of South Texas properties for approximately $56.8 million

Summary Financial Results - Second Quarter 2008

The Company reported a loss before income taxes for the second quarter of 2008 of $39.6 million, compared to income before income taxes of $6.9 million for the second quarter of 2007. Negatively impacting the second quarter results for 2008 was a $58.8 million non-cash charge recorded to reflect the unrealized mark-to-market exposure on our commodity price and interest rate hedge instruments as required by SFAS 133 "Accounting for Derivative Instruments and Hedging Activities". Recorded in the second quarter 2007 was a $1.0 million non-cash benefit related to the mark-to-market requirement. Exclusive of the effects of the mark-to-market charges in 2007 and 2008, income before taxes for the second quarter of 2008 would have been $19.2 million, compared to income before taxes of $5.9 million in 2007. Net loss for the second quarter of 2008 was $25.6 million compared to net income of $4.3 million for the second quarter of 2007.

Net cash flow from operations for the second quarter of 2008, which consists of net cash provided by operating activities, plus the period change in certain working capital and other cash flow items, was $62.5 million, a $54.8 million increase over the $7.7 million reported for the 2007 quarter. The increase in cash flow was attributable to the South Texas and Gulf Coast producing assets acquired in May 2007 ("STGC Acquisition") and the properties acquired from Smith Production in May 2008, offset in part by increased interest expense and general and administrative costs related to the increase in debt and infrastructure growth after the acquisitions.

Revenues for the second quarter of 2008 were $53.0 million, a 99% increase compared to revenue of $26.7 million in the prior year quarter. The increase in revenues was attributable primarily to new production from the STGC and Smith Production acquisitions, and to a lesser extent, higher oil and gas price realizations.

Production for the second quarter of 2008 was 4.8 Bcfe of natural gas equivalents, or 53,127 Mcfe per day, compared with production of 3.2 Bcfe, or 34,855 Mcfe per day, in the 2007 quarter. The dramatic increase in production for the quarter was attributable to the STGC and Smith Production acquisitions and to production increases resulting from our 2007 and 2008 drilling programs.

Average prices realized in the second quarter of 2008 (including the effects of realized gains/losses on our commodity price hedges) were $95.52 per barrel, $10.23 per Mcf, $55.73 per barrel and $10.94 per Mcfe for oil, natural gas, natural gas liquids and natural gas equivalents, respectively. For the second quarter of 2007, average prices realized were $62.66 per barrel, $7.95 per Mcf and $8.39 per Mcfe for oil, natural gas, and natural gas equivalents, respectively.