RAM Energy Resources, Inc. (Nasdaq: RAME) today announced fourth
quarter and year ended December 31, 2006 earnings and operating
results. 2006 Highlights Oil and gas sales for the year rose three
percent to $68.0 million; Operating income for the year increased
to $23.3 million, or 67 percent, compared to $13.9 million in 2005;
Net income for the year was $5.0 million, or $0.20 per share,
compared to $543,000 in 2005; Cash flow from operations, a non-GAAP
measure, was $18.1 million compared to $23.0 million in 2005;
Average daily production for the year was 3,533 BOE compared with
3,848 BOE in the 2005 year. Fourth Quarter 2006 Highlights RAM
reports income of $1.1 million or $0.03 a share; Cash flow from
operations, a non-GAAP measure, was $3.2 million versus $5.4
million in fourth quarter 2005; Fourth quarter production of
301,000 barrel equivalents (BOE) of oil and natural gas was
negatively impacted by weather and gas plant related curtailments.
Although winter weather related curtailments also negatively
affected production in the first quarter of 2007, daily production
is estimated to have averaged approximately 3,500 BOE or a total
for the quarter of approximately 315,000 BOE; Capital spending of
$6.6 million in the quarter raises the total for the year to $28.1
million, compared to $13.5 million spent during 2005. Current
Quarter Highlights Activity aimed at developing the company�s
Barnett Shale acreage continues; RAM recently proposed its third
well to date in 2007 to EOG Resources, while Devon Energy�s first
well of this year on jointly held acreage has been drilled and is
awaiting completion; In the company�s Wolfcamp shale exploration
play, two vertical wells drilled in the fourth quarter of 2006 are
currently undergoing fracture stimulation and initial testing; In
conjunction with its regularly scheduled semi-annual
redetermination, RAM�s borrowing base was reaffirmed at $140
million by the company�s commercial lenders based on the company�s
proved reserves at year-end 2006; The company completed its
offering of 7.5 million common shares in February, adding
significantly to liquidity, which is estimated to be $68 million at
March 31, 2007. �2006 was a year of substantial change for the
company as it transitioned from a private to a publicly traded
entity. A significant portion of our efforts focused upon the work
program preparing to accelerate the development of our Barnett
Shale acreage and the initiation of the Wolfcamp shale exploration
play. The groundwork laid in 2006, in combination with EBITDA and
cash flow in the fourth quarter, along with the liquidity from our
successful equity offering in early 2007, positions us well to fund
our 2007 capital budget and take advantage of growth opportunities
during the year,� said Larry Lee, Chairman and CEO. �We continue to
position the company to grow through a balanced strategy of
acquisition, exploitation and exploration,� added Mr. Lee. 2006
Results For the 2006 year RAM reported net income of $5.0 million,
or $0.20 a share, on 25.6 million weighted average fully diluted
shares outstanding. For the 2005 year, RAM recorded income of
$543,000. Total production for the year was 1.3 million BOE, down 8
percent from the prior year. However after giving pro forma effect
to a reversionary interest burdening our properties in our
Boonsville shallow gas area that vested in September 2005, which
reduced our interest in the related properties, our production in
2006 would have decreased by four percent compared to that of 2005.
The average price for oil and for natural gas liquids rose 19
percent and 11 percent respectively but their impact was partially
offset by a 9 percent decline in the price of natural gas. The
beneficial effect of hydrocarbon prices more than offset the
decline in production volumes allowing oil and gas sales to rise
nearly three percent for the year to $68.0 million, compared to
$66.2 million in 2005. Cash flow from operations, a non-GAAP
measure, was $18.1 million for the 2006 year compared to $23.0
million for the same period in 2005. See the attached table for
reconciliation of these non-GAAP financial measures to the
corresponding GAAP amounts of cash provided by operating activities
of $30.5 million for the 2006 year and $18.4 million for the period
ended December 31, 2005. Fourth Quarter 2006 Income and Cash Flow
For the quarter ended December 31, 2006 RAM had net income of $1.1
million, or $0.03 per share, based upon 33.6 million weighted
average fully diluted shares outstanding. Results of the current
quarter were driven by reduced production, a rise in production
expenses and share based compensation, somewhat offset by slightly
lower interest expense. By comparison, in the fourth quarter 2005
RAM Energy, Inc. reported $4.1 million net income, which included a
$5.0 million gain on derivatives. All comparative information in
this release relates to the same 2005 period financial and
operating results of RAM Energy, Inc., the exploration and
production entity acquired by the company in May 2006. Cash flow
from operations, a non-GAAP measure, was $3.2 million for the
fourth quarter of 2006 compared to cash flow of $5.4 million in the
same quarter of 2005. See the attached table for reconciliation of
these non-GAAP financial measures to the corresponding GAAP amounts
of cash provided by operating activities of $5.2 million for the
fourth quarter of 2006 and $7.8 million for the same quarter in
2005. Production, Commodity Prices and Revenues Total production
for the fourth quarter 2006 was 301,000 BOE, a decline of 74,000
BOE compared to the year-ago quarter of 375,000 BOE. Production in
the 2006 quarter was negatively impacted by weather and gas plant
related curtailments. By contrast, fourth quarter 2005 production
of 375,000 was impacted beneficially by substantial accruals of
production attributable to non-operated properties from prior
quarters during the year. The company�s realized price for oil
increased 15 percent to an average of $63.89 per barrel in the
fourth quarter of 2006, compared with last year�s fourth quarter
average realized price of $55.37 per barrel. The company�s realized
price for natural gas decreased nearly 21 percent to average $5.42
per thousand cubic feet (Mcf) compared to an average of $6.82 per
Mcf in the fourth quarter of 2005. The benefit from the increase in
the average price of oil was almost entirely offset by the decline
in the average realized price of natural gas and natural gas
liquids, allowing much of the impact of the decline in production
to be reflected in oil and gas sales. Oil and gas sales dropped 17
percent to $15.0 million for the fourth quarter of 2006 compared to
$18.1 million in the same quarter of 2005. The company does not
formally designate its derivative contracts as hedges, nor are its
derivative contracts associated with its production; therefore
realized prices are not associated with derivative gains or losses.
With the addition to oil and gas sales of $655,000 attributable to
the net of derivative contract settlements, premiums, unrealized
mark-to-market gains on derivatives and other revenues and
operating income, total revenues for the fourth quarter of 2006
fell to $15.6 million, compared to $22.9 million of total revenues,
in the same period of 2005. Costs and Expenses Production costs, in
the fourth quarter of 2006, totaled $5.0 million, or $16.76 per
BOE, 35 percent higher than the $12.38 per BOE in the previous
year�s quarter. The increase in the per BOE rate was primarily due
to lower production volumes, increased utility costs and higher
maintenance costs due to additional producing wells. Production
taxes were $800,000, or $2.66 per BOE, in this year�s fourth
quarter, compared to $860,000, or $2.29 per BOE, in the fourth
quarter of 2005. General and administrative expenses of $2.9
million, or $9.80 per BOE, increased 58 percent on a BOE basis,
excluding share based compensation expense. Operations Update Oil
and gas related capital expenditures totaled $6.6 million in the
fourth quarter: $4.1 million was allocated to lower risk
development activities and $2.5 million for exploratory activities,
bringing total capital spending for the year to $28.1 million. RAM
participated in the drilling of 18 gross (18.0 net) development
wells and three gross (2.1 net) exploratory wells in the fourth
quarter in contrast to a total of 17 gross (15.5 net) wells drilled
in the same period of 2005. In the Electra/Burkburnett area of
North Texas, responsible for approximately 55 percent of total net
production in the fourth quarter 2006, the company continues its
high level of development drilling and recompletion activity. A
total of 18 net wells were drilled, of which 13 were completed as
producing wells, and five were in various stages of completion at
the end of the year. By contrast, 15 wells were drilled and
completed in the fourth quarter of 2005. The company owns a 100
percent working interest in and operates Electra/Burkburnett. The
company has an interest in nine producing wells in its Barnett
Shale play in Jack and Wise Counties, Texas and a seismic
acquisition program which has identified a growing inventory of
potential drilling locations. Over the last two years, RAM has
acquired and interpreted thirty-five square miles of 3-D seismic
which supports the current inventory of 18 drilling locations, with
additional locations expected to be identified from existing
seismic. Accordingly, early in 2007, RAM has proposed the drilling
of two wells to EOG Resources and other joint interest owners in
the property with the result that EOG and other interest owners
have consented to drill the first two wells proposed. In mid-March
of this year, RAM proposed a third well to the parties, which have
30 days from the date of proposal to consent to drill the well or
opt out. In order to continue to build on its inventory of
potential drilling locations for future development, RAM plans to
acquire an additional 60 square miles of 3-D seismic during 2007.
During the fourth quarter 2006 the company initiated an exploration
play in Southwest Texas, targeting the Wolfcamp shale. RAM has
acquired leases and options covering 15,000 acres in which it
currently holds a 100 percent working interest. The company drilled
two vertical wells in the prospect during the fourth quarter;
currently both wells are being fracture stimulated and tested. RAM
to Webcast Third Quarter 2006 Conference Call The company�s
teleconference call to review fourth quarter and year-end 2006
results will be broadcast live on a listen-only basis over the
internet on Tuesday, April 3, at 3:00 p.m. Central Time. Interested
parties may access the webcast by visiting the RAM Energy
Resources, Inc. website at www.ramenergy.com. From the home page,
select the Investor Relations tab and then click on the microphone
icon. The teleconference may be accessed by dialing 1(888) 396-2356
(domestic) or 1(617)847-8709 (international) and providing the call
passcode �66484342� to the operator. The webcast and the
accompanying slide presentation will be available for replay on the
company�s website. An audio replay will be available until April
10, 2006 by dialing 1(888) 286-8010 (domestic) or 1(617) 801-6888
(international) and using passcode �19577040�. Forward-Looking
Statements This release includes certain statements that may be
deemed to be �forward-looking statements� within the meaning of the
Private Securities Litigation Reform Act of 1995. All statements in
this release, other than statements of historical facts that
address estimates of capital spending, prices of oil and gas and
company realizations, the impact of oil and gas derivatives,
drilling activities, borrowing availability, estimated production
and events or developments that the company expects or believes are
forward-looking statements. Although the company believes the
expectations expressed in such forward-looking statements are based
on reasonable assumptions, such statements are not guarantees of
future performance and actual results or developments may differ
materially from those in the forward-looking statements. Factors
that could cause actual results to differ materially from those in
forward-looking statements include oil and gas prices, exploitation
and exploration successes, actions taken and to be taken by the
government as a result of political and economic conditions,
continued availability of capital and financing, and general
economic, market or business conditions as well as other risk
factors described from time to time in the company�s filings with
the SEC. The company assumes no obligation to update publicly such
forward-looking statements, whether as a result of new information,
future events or otherwise. RAM Energy Resources, Inc. is an
independent energy company engaged in the acquisition,
exploitation, exploration, and development of oil and gas
properties and the marketing of crude oil and natural gas. Company
headquarters are in Tulsa, Oklahoma, and its common shares are
traded on the Nasdaq under the symbol RAME. For additional
information, visit the company website at www.ramenergy.com. RAM
Energy Resources, Inc. Consolidated balance sheets (in thousands,
except share and per share amounts) � As of December 31, 2006�
2005� � ASSETS CURRENT ASSETS: Cash and cash equivalents $ 6,721� $
70� Accounts receivable: Oil and natural gas sales 6,194� 7,422�
Joint interest operations, net of allowance of $187 ($31 at
December 31, 2005) 750� 566� Related party -� 142� Income taxes
121� -� Other, net of allowance of $33 ($13 at December 31, 2005)
236� 175� Derivative assets 677� -� Prepaid expenses 1,013� 756�
Other current assets -� 484� Total current assets 15,712� 9,615�
PROPERTIES AND EQUIPMENT, AT COST: Oil and natural gas properties
and equipment, using full cost accounting 185,284� 160,704� Other
property and equipment 6,098� 7,276� 191,382� 167,980� Less
accumulated amortization and depreciation (48,577) (36,848) Total
properties and equipment 142,805� 131,132� OTHER ASSETS: Deferred
loan costs, net of accumulated amortization of $4,840 ($4,095 at
December 31, 2005) 2,593� 1,613� Other 615� 916� Total assets $
161,725� $ 143,276� � LIABILITIES AND STOCKHOLDERS' DEFICIT CURRENT
LIABILITIES: Accounts payable: Trade $ 7,810� $ 4,343� Oil and
natural gas proceeds due others 3,886� 3,201� Related party 14� 41�
Other 31� -� Accrued liabilities: Compensation 1,611� 749� Interest
3,849� 1,745� Income taxes 223� 146� � RAM Energy Resources, Inc.
Consolidated balance sheets (in thousands, except share and per
share amounts) continued � As of December 31, 2006� 2005�
Derivative liabilities -� 3,510� Long-term debt due within one year
756� 560� Total current liabilities 18,180� 14,295� OIL &
NATURAL GAS PROCEEDS DUE OTHERS 2,481� 1,972� LONG-TERM DEBT
131,481� 112,286� DEFERRED AND OTHER NON-CURRENT INCOME TAXES
26,677� 25,300� ASSET RETIREMENT OBLIGATION 10,801� 10,192� �
STOCKHOLDERS' DEFICIT: Common stock, $0.0001 par value, 100,000,000
and 30,000,000 shares authorized, 33,630,000 and 7,700,000 shares
issued, 33,439,530 and 7,700,000 outstanding at December 31, 2006
and 2005, respectively 3� 1� Additional paid-in capital 2,308� 95�
Treasury stock - 837,275 shares at cost (3,768) -� Accumulated
deficit (26,438) (20,865) Stockholders' deficit (27,895) (20,769)
Total liabilities and stockholders' deficit $161,725� $143,276� �
(1) See RAM Energy Resources Form 10-K for the period ended
December 31, 2006. The accompanying notes contained therein are an
integral part of these consolidated financial statements � RAM
Energy Resources, Inc. Consolidated statements of operations Years
ended December 31, 2006 and 2005 (in thousands, except share and
per share amounts) � 2006� 2005� REVENUES AND OTHER OPERATING
INCOME Oil and natural gas sales $68,015� $66,243� Gain on sale of
subsidiary -� -� Other 640� 851� Realized and unrealized gains
(losses) from derivatives 1,589� (11,695) Total revenues and other
operating income 70,244� 55,399� OPERATING EXPENSES: Oil and
natural gas production taxes 3,329� 3,320� Oil and natural gas
production expenses 18,266� 16,099� Depreciation and amortization
13,252� 12,972� Accretion expense 535� 510� Share-based
compensation 2,308� -� General and administrative, overhead and
other expenses, net of operator's overhead fees 9,300� 8,610� Total
operating expenses 46,990� 41,511� Operating income 23,254� 13,888�
OTHER INCOME (EXPENSE): Interest expense (17,050) (12,614) Interest
income 309� 75� INCOME BEFORE INCOME TAXES 6,513� 1,349� INCOME TAX
PROVISION 1,465� 806� Net Income $5,048� $543� BASIC EARNINGS PER
SHARE $0.21� $0.07� BASIC WEIGHTED AVERAGE SHARES OUTSTANDING
24,347,607� 7,700,000� DILUTED EARNINGS PER SHARE $0.20� $0.07�
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING 25,658,711� 7,700,000�
� (1) See RAM Energy Resources Form 10-K for the period ended
December 31, 2006. The accompanying notes contained therein are an
integral part of these consolidated financial statements � RAM
Energy Resources, Inc. Consolidated statements of cash flows Years
ended December 31, 2006 and 2005 (in thousands) � 2006� 2005�
OPERATING ACTIVITIES: Net Income $5,048� $543� Adjustments to
reconcile net income to net cash provided by operating activities -
Depreciation and amortization 13,252� 12,972� Amortization of
deferred loan costs and Senior Notes discount 988� 839� Write off
loan fees due to debt refinancing 1,055� -� Accretion expense 535�
510� Gain on sale of subsidiary -� -� Provisions for doubtful
accounts -� -� Unrealized (gain) loss on derivatives (6,239) 6,302�
Derivative premiums net of amortization -� 634� Deferred income
taxes 1,311� 1,199� Share-based compensation 2,308� -� Gain on
disposal of other property and equipment (142) -� Changes in
operating assets and liabilities, net of acquisitions Accounts
receivable 1,012� (2,608) Prepaid expenses and other assets 229�
(143) Accounts payable 4,173� (165) Accrued liabilities 6,025�
(1,331) Income taxes payable 105� (393) Gas balancing liability -�
-� Total adjustments 24,612� 17,816� Net cash provided by operating
activities 29,660� 18,359� INVESTING ACTIVITIES: Payments for oil
and natural gas properties and equipment (28,145) (13,528) Proceeds
from sales of oil and natural gas properties 3,565� 2,471� Payments
for other property and equipment (812) (1,497) Proceeds from sales
of other property and equipment 461� -� Payments of merger cost
(4,187) -� Cash acquired in merger 3,801� -� RWG acquisition, net
of cash acquired -� -� Proceeds from the sale of subsidiary -� -�
Proceeds from short-term investments -� -� Net cash used in
investing activities (25,317) (12,554) � (1) See RAM Energy
Resources Form 10-K for the period ended December 31, 2006. The
accompanying notes contained therein are an integral part of these
consolidated financial statements � RAM Energy Resources, Inc.
Consolidated statements of cash flows Years ended December 31, 2006
and 2005 (in thousands) � 2006� 2005� FINANCING ACTIVITIES:
Payments on long-term debt (88,094) (15,615) Proceeds from
borrowings on long-term debt 107,443� 10,670� Payments for deferred
loan costs (2,981) (565) Stock redemption (9,792) -� Stock
repurchased (3,768) -� Dividends paid (500) (1,400) Net cash
provided by (used in) financing activities 2,308� (6,910) INCREASE
(DECEASE) IN CASH AND CASH EQUIVALENTS 6,651� (1,105) CASH AND CASH
EQUIVALENTS, beginning of year 70� 1,175� CASH AND CASH
EQUIVALENTS, end of year $6,721� $70� SUPPLEMENTAL CASH FLOW
INFORMATION: Cash paid for income taxes $124� $20� Cash paid for
interest $10,080� $3,297� � DISCLOSURE OF NONCASH INVESTING AND
FINANCING ACTIVITIES: Accrued interest added to principal balance
of credit facility $2,848� $8,093� � (1) See RAM Energy Resources
Form 10-K for the period ended December 31, 2006. The accompanying
notes contained therein are an integral part of these consolidated
financial statements � RAM Energy Resources, Inc. Production and
Price Summary � Year ended Percent December 31, Increase 2005�
2006� (Decrease) � Production volumes: (1) Oil (MBbls) 787� 752�
(4.5%) NGL (MBbls) 170� 143� (16.1%) Natural gas (MMcf) 2,861�
2,365� (11.8%) Total Mboe 1,405� 1,290� (8.2%) � Average sale
prices: (2) Oil (per Bbl) $ 53.75� $ 63.82� 18.7% NGL (per Bbl) $
36.33� $ 40.33� 11.0% Natural gas (per Mcf) $ 6.61� $ 6.02� (9.0%)
Per Boe $ 47.16� $ 52.54� 11.4% � (1) A reversionary interest
burdening our properties in our Boonsville shallow gas area vested
September 2005, which reduced our interest in the related
properties. The effect of the reversionary interest reduced total
daily production by four percent in 2006 compared to 2005. � (2)
Average realized prices before effects of derivative contracts. �
(3) See RAM Energy Resources Form 10-K for the period ended
December 31, 2006. The accompanying notes contained therein are an
integral part of these consolidated financial statements � RAM
Energy Resources, Inc. Selected Quarterly Financial Data ($ In
thousands except per share data) � Quarter Ended December 31, 2006�
2005� � Net revenue - $15,620� $22,889� Net operating expenses
12,255� 11,883� Operating income (loss) 3,365� 11,006� Interest
expense (3,837) (3,845) Interest income 71� 34� Income before
income taxes (401) 7,195� Income tax provision (benefit) (1,459)
3,028� Net income (loss) $1,058� $4,167� � Basic net income (loss)
applicable to common stockholders per common share $0.03� $0.54� �
Diluted net income (loss) applicable to common stockholders per
common share $0.03� $0.54� � RAM Energy Resources, Inc.
Reconciliation of cash flow from operations (a non-GAAP measure) to
GAAP net cash provided by operating activities � Non-GAAP Financial
Measure Cash flow, a non-GAAP measure, represents cash provided by
operating activities before the impact of discontinued operations,
changes in working capital items related to operating activities,
and further adjusted for unrealized gains or losses on derivative
transactions. This non-GAAP measure is presented because management
believes it is a useful adjunct to cash provided by operating
activities under accounting principles generally accepted in the
United States (GAAP). This non-GAAP cash flow measure is widely
accepted as a financial indicator of an oil and gas company's
ability to generate cash which is used to internally fund
exploration and development activities and to service debt. This
non-GAAP measure is not a measure of financial performance under
GAAP and should not be considered as an alternative to cash
provided (used) by operating, investing, or financing activities as
an indicator of cash flows, or as a measure of liquidity. � 2006�
Three months ended Year Ended December 31 December 31 � Cash flow
from operations (a non-GAAP measure) $3,167� $18,144� Plus: working
capital changes 2,042� 11,516� Less: deferred income taxes on
share-based compensation classified as financing activities (34)
(877) Net cash provided by operating activities per condensed
consolidated statements of cash flow $5,243� $30,537� � Cash flow
from operations (a non-GAAP measure) $3,167� $18,144� Less:
realized (losses) on derivatives 116� (4,650) Less: unrealized
gains (losses) on derivatives per condensed consolidated statements
of cash flow 365� 6,239� Cash flow from operations (a non-GAAP
measure) excluding realized and unrealized gains (losses) on
derivatives $2,686� $16,555� � 2005� Three months ended Year Ended
December 31 December 31 � Cash flow from operations (a non-GAAP
measure) $5,355� $22,999� Plus: working capital changes 2,388�
(4,640) Less: deferred income taxes on share-based compensation
classified as financing activities -� -� Net cash provided by
operating activities per condensed consolidated statements of cash
flow $7,743� $18,359� � Cash flow from operations (a non-GAAP
measure) $5,355� $22,999� Less: realized (losses) on derivatives
(3,293) (5,393) Less: unrealized gains (losses) on derivatives per
condensed consolidated statements of cash flow 8,211� (6,302) Cash
flow from operations (a non-GAAP measure) excluding realized and
unrealized gains (losses) on derivatives $437� $34,694�
Ram Energy Resources, Inc. (MM) (NASDAQ:RAME)
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