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DENVER, Feb. 22, 2011 (GLOBE NEWSWIRE) -- CREDO Petroleum Corporation (Nasdaq:CRED) today released the text of the
Report to Shareholders that is included in the company's Annual Report for fiscal 2010. The Annual Report will soon be mailed to shareholders and will also be available on-line through Credo's website (
Report to Shareholders contains important information about the company, including certain estimates. This information may be deemed to include "forward‑looking statements" as described in the last paragraph of this press release. Accordingly, readers are encouraged to carefully review the "forward-looking statements" section of this press release.
Report from Marlis E. Smith, Jr., President & CEODear Shareholders:
The theme of last year's annual report was "Building Momentum in Oil Plays". This year's theme, "Growth Through Oil-Focused Drilling", defines Credo today—as we embark on the most aggressive drilling schedule in company history in order to exploit oil's significant price advantage over natural gas. We have built good momentum in several outstanding oil plays, and Credo is now well‑positioned to achieve substantial organic growth by significantly ramping-up our oil drilling operations.
Credo had a good year despite encountering some strong headwinds in 2010, such as a 27% drop in realized natural gas prices and production delays due to shortages of fracture stimulation equipment for horizontal wells. Highlights included a 15% revenue increase, with oil accounting for 59% of our total production revenue. Net income increased 277% to $2,203,000, compared to adjusted net income of $584,000 in 2009. We ended the year in very strong financial condition with significant operating cash flow and a rock-solid balance sheet, including ample cash and no debt. That enables us to enter 2011 with a significantly expanded drilling program and to seize opportunities that will propel future growth.
Business Strategy. Credo's business has undergone very significant changes over the last few years to implement your Board's decision to move away from natural gas and focus on building oil production and reserves. Our Board identified the opportunity and made that decision in 2008, well ahead of industry competition. That strategy proved both timely and correct, as oil is currently worth three times more than natural gas on an energy equivalent basis. In order to deliver outstanding results to our shareholders, we must own high quality assets that deliver profitability. We can exploit the significant value gap between oil and natural gas to dramatically benefit our bottom line by adding high-margin oil reserves in diversified plays through organic growth, and by making opportunistic acquisitions.
Utilizing new technology is a key part of our business strategy to find and produce oil. We are employing advanced 3-D seismic technology to help locate previously hidden but very economically attractive shallow oil deposits in Kansas and Nebraska. We are also utilizing the latest advances in precision horizontal drilling and multi-stage, high pressure fracture stimulation technology to develop oil reserves in deeper plays, both conventional and non-conventional, such as the North Dakota Bakken and the Texas Panhandle Tonkawa.