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OMB APPROVAL |
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OMB Number:
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3235-0058 |
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Expires:
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April 30,
2009 |
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Estimated average burden
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2.50 |
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SEC
FILE NUMBER |
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CUSIP NUMBER |
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 12b-25
NOTIFICATION OF LATE FILING
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| (Check One): |
| þ Form 10-K |
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o Form 20-F |
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o Form 11-K |
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| o Form 10-Q |
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o Form 10-D |
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| o Form N-SAR |
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o Form N-CSR |
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| For Period Ended: |
October 31, 2006 |
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| o Transition Report on Form 10-K |
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o Transition Report on Form 10-Q |
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| o Transition Report on Form 20-F |
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o Transition Report on Form N-SAR |
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| o Transition Report on Form 11-K |
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| For the Transition Period Ended |
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Read
Instruction (on back page) Before Preparing Form. Please Print or
Type.
Nothing in this form shall be construed to imply that the Commission has
verified any information contained herein.
If the notification relates to a portion of the filing checked above,
identify the Item(s) to which the notification relates:
PART I — REGISTRANT INFORMATION
CREDO Petroleum Corporation
Full Name of Registrant
Former Name if Applicable
1801 Broadway, suite 900
Address of Principal Executive
Office (Street and Number)
Denver, Colorado 80202
City, State and Zip Code
PART II — RULES 12b-25(b) AND (c)
If the subject report could not be filed without unreasonable effort or
expense and the registrant seeks relief pursuant to Rule 12b-25(b), the
following should be completed. (Check box if appropriate)
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(a) |
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The reasons described in reasonable detail in Part III of this form
could not be eliminated without unreasonable effort or expense; |
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(b) |
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The subject annual report, semi-annual report, transition report on
Form 10-K, Form 20-F, 11-K, Form N-SAR or Form N-CSR, or
portion thereof, will be filed on or before the fifteenth calendar day following the prescribed
due date; or the subject quarterly report or transition report on Form
10-Q or subject distribution report on Form 10-D, or portion thereof, will be filed on or before the fifth
calendar day following the prescribed due date; and |
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(c) |
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The accountant’s statement or other exhibit required by Rule 12b-25(c)
has been attached if applicable. |
PART III — NARRATIVE
State below in reasonable detail the reasons why
Forms 10-K, 20-F, 11-K, 10-Q, 10-D, N-SAR, N-CSR or the transition report
or portion thereof, could not be filed within the prescribed time period.
This is the company’s first year to transition
to Accelerated filer status which reduced the available time to file
Form 10-K from 90 days to 75 days. Additionally, this is the
company’s first year to undergo a Sec. 404 audit.
The company anticipated and planned for these
changes, but did not anticipate the severe snow storms that affected
Denver in late December and early January. These storms forced the
closure of the company’s offices, and the offices of the
company’s Public Accounting firm for several days. Accordingly,
the company requests this extension to ensure that a complete and
accurate Form 10-K is filed.
PART IV — OTHER INFORMATION
(1) Name and telephone number of person to contact in regard to this
notification
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| David E. Dennis |
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303 |
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297-2200 |
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(Area Code) |
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(Telephone Number) |
(2) Have all other periodic reports required
under Section 13 or 15(d) of the Securities Exchange Act of 1934 or
Section 30 of the Investment Company Act of 1940 during preceding
12 months or for such shorter period that the registrant was required
to file such report(s) been filed? If answer is no, identify report(s).
þ Yes o No
(3) Is it anticipated that any significant change in results of operations
from the corresponding period for the last fiscal year will be reflected by the
earnings statements to be included in the subject report or portion thereof?
þ Yes o No
If so, attach an explanation of the anticipated change, both narratively
and quantitatively, and, if appropriate, state the reasons why a reasonable
estimate of the results cannot be made.
The company has issued a press release disclosing earnings and all
other significant results for the year ended October 31, 2006, which
are not expected to be different than the 10-K filling. Copy of Press
Release is attached.
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CREDO Petroleum Corporation
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| (Name of Registrant as Specified in Charter) |
has caused this notification to be signed on its behalf by the undersigned
hereunto duly authorized.
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| Date |
January 16, 2007 |
By |
/s/ David E. Dennis |
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NEWS RELEASE
FOR IMMEDIATE RELEASE
CREDO PETROLEUM REPORTS 17% INCREASE
IN FISCAL 2006 EARNINGS TO $0.62 PER SHARE
Fiscal 2006 Earnings Rise to All Time High on 18% Increase in Production
DENVER, COLORADO, January 11, 2007—CREDO Petroleum Corporation (NASDAQ: CRED) today reported
record financial results for the year ended October 31, 2006. Per share data has been adjusted to
reflect the 3-for-2 stock split that occurred on October 12, 2005.
Record production propelled fiscal 2006 net income to an all time high. For the year, net income
rose 17% to $5,880,000 compared to net income of $5,022,000 last year. On a per diluted share
basis, net income was $.62 compared to $.54 last year. Revenue rose 24% to a record $16,491,000
compared to $13,289,000 last year. Cash flow from operating activities jumped 47% to $12,973,000.
Fourth quarter production increased 23% over last year. However, a 28% decline in natural gas
prices together with substantial costs related to first year implementation of Sarbanes-Oxley
regulations offset the production increase and caused fourth quarter 2006 net income to decline 10%
compared to last year. For the quarter, net income was $1,507,000 compared to $1,677,000 last
year. On a per diluted share basis, net income was $.16 compared to $.18 last year. Fourth
quarter revenue fell 2% to $4,236,000 compared to $4,303,000 last year. Cash flow from operating
activities rose 4% to $3,624,000.
James T. Huffman, President, said, “For the sixth consecutive year, we have established new records
in virtually every operational and financial category, highlighted by a 22% return on equity in
2006 without using leverage. This year marks the sixth consecutive year of record production and
the thirteenth consecutive year for record reserve quantities.” Huffman further stated, “CREDO’s
performance in 2006 extends a long record of exceptional achievement. This year, Forbes magazine
again ranked CREDO as one of its 200 Best Small Companies and Fortune Small Business magazine again
ranked the company as one of America’s 100 fastest growing small companies.”
PRODUCTION VOLUMES SET SIXTH CONSECUTIVE ANNUAL RECORD
Successful drilling in 2006 boosted production 18% to a new record. Fiscal 2006 production was
2.42 Bcfe (billion cubic feet of gas equivalent) compared to 2.05 Bcfe last year. Natural gas
production rose 19% to a record 2.18 Bcf compared to 1.83 Bcf last year. Oil production rose 11%
to 41,000 barrels compared to 37,000 barrels last year. Natural gas accounted for 90% of the
company’s total 2006 production.
Fourth quarter production rose 23%, also a new record. Production was 706 MMcfe (million cubic
feet of gas equivalent) compared to 575 MMcfe last year. Natural gas production rose 25% to 648
MMcf and oil production increased to 9,600 barrels compared to 9,300 barrels last year.
CAPITAL SPENDING INCREASED TO A NEW RECORD
RESERVES SET THIRTEENTH CONSECUTIVE ANNUAL RECORD
Capital spending for fiscal 2006 increased 70% to a record $11,076,000. This level of capital
spending enabled the company to increase its production to take advantage of excellent product
prices, while simultaneously setting the stage for significant production and reserve growth
through new projects. Capital spending included $2,598,000 on new projects in Texas and Kansas
which are in their initial stages.
For fiscal 2006, the company added 3.13 Bcfe of new reserves, replacing 129% of its 2006
production. Reserves rose 4% to 18.54 Bcfe, the thirteenth consecutive annual record.
Approximately 87% of the company’s total proved reserves are classified as proved developed. The
company includes proved undeveloped reserves for a limited number of its offset drilling locations.
Natural gas accounted for 86% of reserve volume.
The undiscounted value of reserves was $84,861,000 at year end, and the discounted value (at 10%)
was $52,328,000. Average fiscal year end wellhead prices used to calculate reserves were $6.32 per
Mcf (thousand cubic feet of gas) and $53.69 per barrel.
PRODUCT PRICES STABLE COMPARED TO LAST YEAR
Net wellhead natural gas prices for fiscal 2006 fell 5% to $6.23 per Mcf compared to $6.55 last
year. Hedging transactions reduced wellhead prices $.12 per Mcf compared to $.39 per Mcf last
year. As a result, total natural gas price realizations fell slightly to $6.11 per Mcf compared to
$6.16 last year. Wellhead oil prices rose 20% to $61.14 per barrel compared to $50.90 last year.
There were no oil hedging transactions.
For the fourth quarter, net wellhead natural gas prices fell 35% to $5.29 per Mcf compared to $8.14
last year. There were no hedging transactions in the fourth quarter of 2006, but such transactions
reduced wellhead prices by $.84 per Mcf last year. As a result, total natural gas price
realizations fell 28% to $5.29 per Mcf compared to $7.30 last year. Wellhead oil prices fell 4% to
$59.27 per barrel compared to $61.48 last year.
The following table sets forth the company’s current open hedge positions.
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Average Price |
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Mbtu Per Month |
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NYMEX Basis |
February 2007 |
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150,000 |
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$ |
9.35 |
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March 2007 |
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140,000 |
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$ |
9.30 |
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April 2007 |
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140,000 |
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$ |
8.17 |
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May 2007 |
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130,000 |
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$ |
7.75 |
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June 2007 |
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130,000 |
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$ |
7.78 |
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July 2007 |
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120,000 |
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$ |
7.81 |
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Volumes currently hedged range from 50% to 75% of estimated gas production volumes for the months
shown. Hedge positions for the months of November 2006 through January 2007 were closed subsequent
to fiscal 2006 year end resulting in a realized gain of $438,000. Hedges include contracts indexed
to the NYMEX and to Panhandle Eastern Pipeline Company for Texas, Oklahoma mainline. For
comparative purposes, hedges indexed to Panhandle Eastern Pipeline Company are expressed on a NYMEX
basis. For hedges indexed to Panhandle Eastern Pipeline Company, the individual month price
(basis) differentials between the NYMEX and Panhandle Eastern Pipeline Company range from minus
$1.46 in the winter months to minus $0.90 in the spring months.
STRONG FINANCIAL CONDITION CONTINUES TO PROVIDE
A SOLID FOUNDATION FOR GROWTH
At October 31, 2006, working capital was $10,073,000, a 31% increase over last year. Total assets
were $47,759,000 including cash and short-term investments of $10,201,000. Stockholders’ equity
was a record $34,767,000. The company’s only long-term debt is $233,000 related to an exclusive
license obligation.
* * * * *
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Contact:
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James T. Huffman
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President |
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or |
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David E. Dennis |
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Chief Financial Officer |
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303-297-2200 |
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Website:
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www.credopetroleum.com |
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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, as well
as Texas, Kansas and Louisiana. The company’s stock is traded on the NASDAQ System under the
symbol “CRED” and is quoted daily in the “NASDAQ Capital Market” section of The Wall Street
Journal.
For fiscal 2006, cash flow from operating activities (before changes in operating assets and
liabilities) consists of net income of $5,880,000, DD&A of $3,642,000, deferred income taxes of
$2,061,000 and other of $167,000. For 2005, such cash flow consists of net income of $5,022,000,
DD&A of $2,402,000 and deferred income taxes of $1,373,000.
For the fourth quarter of fiscal 2006, cash flow from operating activities (before changes in
operating assets and liabilities) consists of net income of $1,507,000, DD&A of $1,074,000 deferred
income taxes of $652,000, and other of $100,000. For the fourth quarter of 2005, such cash flow
consists of net income of $1,677,000, DD&A of $792,000, deferred income taxes of $123,000 and other
of negative $86,000.
This press release includes certain statements that may be deemed to be “forward-looking
statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. All statements included in this
press release, other than statements of historical facts, address matters that the company
reasonably expects, believes or anticipates will or may occur in the future. Such statements are
subject to various assumptions, risks and uncertainties, many of which are beyond the control of
the company. Investors are cautioned that any such statements are not guarantees of future
performance and that actual results or developments may differ materially from those described in
the forward-looking statements.
(table follows)
CREDO PETROLEUM CORPORATION
FINANCIAL HIGHLIGHTS
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Year Ended |
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Year Ended |
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October 31, |
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October 31, |
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| Condensed Operating Information |
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2006 |
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2005 |
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Revenue: |
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Oil and Gas Sales |
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$ |
15,837,000 |
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$ |
13,143,000 |
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Investment Income and Other |
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654,000 |
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146,000 |
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16,491,000 |
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13,289,000 |
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Expenses: |
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Oil and Gas Production |
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3,407,000 |
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2,759,000 |
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Depreciation, Depletion and Amortization |
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3,642,000 |
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2,402,000 |
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General and Administrative |
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1,291,000 |
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1,117,000 |
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Interest |
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42,000 |
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37,000 |
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8,382,000 |
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6,315,000 |
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Income Before Income Taxes |
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8,109,000 |
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6,974,000 |
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Income Taxes |
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(2,229,000 |
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(1,952,000 |
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Net Income |
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$ |
5,880,000 |
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$ |
5,022,000 |
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Basic Income Per Share |
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$ |
.64 |
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$ |
.55 |
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Diluted Income Per Share |
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$ |
.62 |
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$ |
.54 |
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| Condensed Balance Sheet Information |
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October 31, 2006 |
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October 31, 2005 |
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Cash and Short-Term Investments |
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$ |
10,201,000 |
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$ |
7,430,000 |
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Other Current Assets |
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3,708,000 |
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4,024,000 |
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Oil and Gas Properties, Net |
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32,092,000 |
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24,551,000 |
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Exclusive License Agreement, Net |
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268,000 |
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338,000 |
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Other Assets |
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1,490,000 |
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1,501,000 |
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$ |
47,759,000 |
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$ |
37,844,000 |
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Current Liabilities |
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$ |
3,836,000 |
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$ |
3,757,000 |
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Deferred Income Taxes |
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8,039,000 |
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5,978,000 |
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Exclusive License Agreement Obligation |
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163,000 |
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233,000 |
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Asset Retirement Obligations |
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954,000 |
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929,000 |
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Stockholders’ Equity |
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34,767,000 |
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26,947,000 |
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$ |
47,759,000 |
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$ |
37,844,000 |
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January 16, 2007
Mr. James Huffman, CEO
Mr. David Dennis, CFO
Credo Petroleum Corporation
1801 Broadway, Suite 900
Denver, CO 80209
We cannot complete our audit of Credo Petroleum Corporation’s financial statements and management’s
assessment of internal control for the year ended October 31, 2006 by the required filing date of
January 16, 2007 without incurring unreasonable effort and costs.
HEIN & ASSOCIATES LLP