PostRock Reports Third Quarter Results
OKLAHOMA CITY, Nov. 10, 2010 (GLOBE NEWSWIRE) -- PostRock Energy Corporation (Nasdaq:PSTR) today announced its results for the third quarter of 2010. Revenues increased $1.4 million, or 5.7%, to $25.3 million during the quarter. The increase was primarily due to higher realized gas prices offset by lower production volume and a decline in pipeline revenue. Production volumes fell to 53.9 Mcfe a day, a 10% decline from the prior year period primarily due to a lack of drilling in late 2008 and 2009. With increasing capital expenditures starting in the second quarter of 2010, production has stabilized at approximately 54 Mcfe a day. Average prices for the period, excluding realized hedging gains, increased to $4.33 per Mcfe. Realized hedging gains in the quarter decreased to $6.8 million from $19.6 million a year earlier. Pipeline revenue decreased $1.8 million, or 31.8%, to $3.8 million primarily due to the loss of a significant interstate pipeline customer in late 2009.
Production costs, including lease operating expenses ("LOE"), severance and ad valorem taxes, decreased $3.1 million, or 35.4%, to $5.6 million. The decline was primarily due to $2.7 million lower ad valorem taxes and $0.6 million lower LOE offset by $0.2 million higher severance taxes. The reduction in ad valorem taxes reflects reduced tax assessments. LOE decreased primarily as a result of improved labor utilization. Total production costs were $1.14 per Mcfe for the three months ended September 30, 2010, a sharp drop from the $1.59 per Mcfe reported in the prior year. Pipeline operating expense decreased $1.5 million, or 18.8%, to $6.7 million during the three months ended September 30, 2010. Contributing to the decrease in operating expense were lower ad valorem taxes. General and administrative expenses fell 58.9% in the quarter to $4.7 million. The decline reflected the absence of the reaudit and the cost of recombining our predecessor entities along with the related fees to financial advisors.
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