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PostRock Reports Second Quarter Results

Stocks in this article: PSTR

OKLAHOMA CITY, Aug. 8, 2012 (GLOBE NEWSWIRE) -- PostRock Energy Corporation (Nasdaq:PSTR) today announced its second quarter 2012 results. Oil and gas revenues fell 50% from the prior-year period to $10.7 million. The decline paralleled a 51% drop in the Company's realized gas price which averaged $2.06 per Mcf in the period. This price does not reflect the benefits of hedging which are included in Other Income. As substantially all gas development was suspended in September 2011 due to falling prices, gas production fell 11.1% from the prior-year period to an average of 45.2 MMcf a day. Oil production, which remains modest but is benefiting from current development efforts, increased 22.5% to an average of 265 Bbls a day. Gathering revenue fell by almost 70% to $474,000. More than two-thirds of the decline resulted from the royalty settlement. A further $125,000 can be tracked to the Company's production decline and $175,000 related to a 26% reduction in third party volumes. Pipeline revenue rose 14.1% to $2.8 million as growing associated gas volumes from Osage County, OK increased throughput.

Realized hedging gains, including gains on settling June, July and August 2012 gas swaps, totaled $18.6 million for the quarter. Unfortunately, as the settlement was structured as a re-pricing, a portion of these gains were subsequently lost. Due to the declining unit price of Constellation Energy Partners ("CEP") in the quarter, the Company recorded a mark-to-market loss of $6.6 million. In June 2012, a $5.7 million escrow related to a 2011 property sale was released. Of this amount, $1.3 million was retained by the Company and $4.4 million was paid to the Royal Bank of Canada. At June 30, 2012, a $564,000 escrow balance remained and is scheduled for release in December 2012. Only $164,000 of this will remain with PostRock.

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