CREDO Petroleum Corporation Reports Fiscal 1997 Earnings and Operating Results

Business Wire, Jan 12, 1998

DENVER--(BUSINESS WIRE)--Jan. 12, 1998--CREDO Petroleum Corporation (NASDAQ: CRED) today reported that for the fiscal year ended October 31, 1997, net income increased 69% to $439,000 compared to $260,000 last year.

On a per share basis, net income was $.14 in 1997 compared to $.08 last year.

Revenue increased 18% to a record $2,690,000 compared to $2,287,000 last year. Cash flows from operating activities (before working capital changes) increased 32% to a record $1,288,000 from $975,000 last year.

"Successful drilling and other operations in 1997 largely offset the impact of production cessation from CREDO's largest producing well which occurred about mid-year," said James T. Huffman, President. The 13,800 foot Tracy Federal well unexpectedly stopped producing after a substance consisting of iron minerals covered the perforations and plugged the producing zone. "Although, we anticipate future work to attempt to reactivate the well, its reserves have been reclassified to the "probable" category and are not included in the company's year-end reserves," Huffman said. A discussion of the well and its present status is contained in the Form 10-K for fiscal 1997.

PRODUCTION VOLUMES NEAR RECORD LEVELS

Total production for 1997 was 779,000 Mcf (thousand cubic feet) gas-equivalent units, compared to a record high 802,000 Mcf gas-equivalent units last year. Crude oil sales volume fell 7% to 39,000 barrels. The decline in production resulted from loss of production from the Tracy Federal well and sale of a non-core waterflood property.

OIL AND GAS RESERVES CLIMB TO A RECORD

Total proved reserves increased to a record 8.1 Bcf (billion cubic feet) gas equivalent units at year-end 1997 with an undiscounted value of $14,212,000 and a 10% discounted value of $8,518,000. Average product prices used for year-end reserve estimates were $2.69 for gas and $19.97 for oil. Year-end reserves do not include reserves from the Tracy Federal well which have been reclassified to the "probable" category. At fiscal year-end, natural gas represented 73% and oil represented 27% of CREDO's reserve base.

WELLHEAD PRICES RISE SHARPLY

Total gas price realizations, which reflect the effects of hedging transactions, increased 39% to $2.21 per Mcf in 1997 compared to $1.59 per Mcf last year. Hedging transactions resulted in a $.04 per Mcf loss in 1996. Net wellhead gas prices for 1997 increased 36% to $2.21 per Mcf compared to $1.63 per Mcf last year. Oil price realizations increased 3% to $20.31 per barrel in 1997 compared to $19.77 per barrel last year.

CAPITAL EXPENDITURES INCREASE

The company invested $1,236,000 during 1997 in drilling, a waterflood installation, and purchasing producing property interests. The company participated in drilling three wells in Oklahoma and Wyoming with an average 41% interest. Two of the wells were successfully completed with initial production rates ranging up to 1.5 million cubic feet of gas per day, and the third well is cased and awaiting completion. The company owns a 20% interest in a waterflood installed during the year in southern Oklahoma. Water has been injected since about mid-year and the oil production is increasing. Peak response is not expected for 18 to 24 months. During 1997, the company also acquired interests in 30 producing wells located in Wyoming and Oklahoma.

FINANCIAL POSITION REMAINS STRONG

At third quarter-end, total assets were $10,546,000 including cash and temporary cash investments of $3,333,000. Shareholders' equity (book value) was $8,185,000, or $2.69 per share, and the company had no debt.

CREDO Petroleum Corporation is a publicly traded independent oil and gas company headquartered in Denver, Colorado. The company explores for, develops and produces oil and natural gas and engages in secondary oil recovery projects in the Mid-Continent and Rocky Mountain regions. The company's stock is traded on the NASDAQ System under the symbol "CRED" and is quoted daily in the "NASDAQ Small-Cap Issues" section of The Wall Street Journal. -0-

                   CREDO PETROLEUM CORPORATION
                      FINANCIAL HIGHLIGHTS


                                Year Ended    Year Ended
Condensed Operating             October 31,   October 31,
  Information                         1997          1996
Revenues:
  Oil and Gas Sales             $1,992,000    $1,703,000
  Operating                        458,000       421,000
  Interest and Other               240,000       163,000
                                 2,690,000     2,287,000
Expenses:
  General and Administrative       633,000       618,000
  Depreciation, Depletion and
    Amortization                   614,000       577,000
  Oil and Gas Production           767,000       691,000
                                 2,014,000     1,886,000

Earnings Before Income Taxes        676,000       401,000

Income Taxes                       (237,000)     (141,000)

Net Earnings                    $   439,000   $   260,000

Earnings Per Share                  $.14          $.08

Weighted Average Common Shares
  Outstanding During the Period   3,050,000     3,104,000



Condensed Balance Sheet Information

                             October 31, 1997  October 31, 1996

Cash and Temporary Cash
 Investments                     $ 3,333,000    $2,873,000
Other Current Assets                 700,000       414,000
Oil and Gas Properties, Net        6,344,000     5,636,000
Other Assets                         169,000       264,000

                                 $10,546,000    $9,187,000

Current Liabilities              $ 1,458,000   $   717,000
Deferred Income Taxes                903,000       681,000
Stockholders' Equity               8,185,000     7,789,000

                                 $10,546,000    $9,187,000