RAM Energy Resources, Inc. (Nasdaq: RAME) today announced first
quarter 2007 earnings and operating results. First Quarter 2007
Highlights Well proposal and drilling activity aimed at developing
the company�s Barnett Shale acreage continues to grow; two wells
were drilled and are completing, three additional wells approved by
interest owners and RAM�s inventory of seismically identified
locations stands at 33; RAM participated in the drilling of 18
gross (14.7 net) wells, 11 of which were completed as producing
wells and five were in various stages of completion at March 31;
First quarter production totaled 313,000 barrel equivalents (BOE)
for a daily production average of 3,478 (BOE), up slightly from the
3,446 BOE daily average in the fourth quarter of 2006; The company
completed a public offering of 7,500,000 shares of its common stock
in February; net proceeds of the offering available to RAM were
approximately $27.4 million; RAM�s borrowing base was reaffirmed at
$140 million by the company�s commercial lenders based on year-end
2006 reserves; liquidity remained a substantial $66 million on
March 31, 2007. Other Highlights: As a result of the year-to-date
pace of apparent development activity, in April the portion of the
budget allocated to development of the Barnett Shale was increased
by 150 percent, or $6.0 million, to a total of $10.0 million
raising the total capital budget for 2007 to $36.3 million; On May
10, the company signed an agreement to purchase 120 wells located
principally in Southeast New Mexico and West Texas, for a price of
$18.5 million. Closing is scheduled for May 15, 2007. �Having
completed our first year as a public oil and gas company, we are
pleased with the operational re-positioning achieved. In the
near-term we are focused on maintaining our production while
working to rapidly develop the growth potential of our Barnett
Shale acreage and evaluate exploration projects,� 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. Income and Cash Flow For the quarter
ended March 31, 2007 RAM reported a net loss $580,000, or $0.02 per
share, based upon 37.9 million basic weighted average shares
outstanding. Results for the current quarter were negatively
impacted by pre-tax unrealized mark-to-market derivative losses of
$1.05 million. Results of the first quarter 2007 compared to the
year-ago quarter were the product of marginally lower total
production combined with lower realized prices for oil and gas
along with higher operating and interest expenses. By comparison,
in the first quarter 2006, RAM Energy, Inc. reported net income of
$2.8 million, which included a pre-tax unrealized mark-to-market
derivative gain of $3.0 million. All comparative information in
this release relates to the same 2006 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 $4.1 million for the first
quarter of 2007 compared to cash flow of $5.3 million in the same
quarter of 2006. See the attached table for reconciliation of these
non-GAAP financial measures to the corresponding GAAP amounts of
cash used by operating activities of $37,000 for the first quarter
of 2007. Production Total production for the first quarter 2007
slipped marginally to 313,000 BOE, a decline of 5,000 BOE compared
to the year-ago quarter of 318,000 BOE. Approximately one-half of
the dip is due to the negative impact of winter weather which
resulted in some production being temporarily shut-in during the
quarter with the remainder attributable to the natural declines in
our existing inventory of predominately mature producing fields
relative to volume additions from drilling PUD locations and
additional exploitation activities. Oil and natural gas volumes
were each three percent below year-ago volume levels, however, the
volume of natural gas liquids rose 13 percent. Commodity Prices and
Revenues The company�s realized price for oil declined nearly eight
percent to an average of $56.37 per barrel in the first quarter of
2007, compared with last year�s first quarter average realized
price of $61.05 per barrel. Similarly, the company�s realized price
for natural gas fell 11 percent to average $6.21 per thousand cubic
feet (Mcf) compared to an average of $6.97 per Mcf in the first
quarter of 2006. The price of natural gas liquids dropped a modest
three percent, averaging $37.94 per barrel for this year�s first
quarter. The decline in oil and gas production combined with lower
average realized prices caused oil and gas revenues to decrease 10
percent to $15.1 million in the first quarter of 2007 compared to
$16.8 million in the same quarter of 2006. 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.
In the first quarter 2007, contract settlements and premium costs
of derivatives were a nominal $30,000 and unrealized mark-to-market
losses were $1.05 million, resulting in realized and unrealized
losses impacting the quarter of $1.08 million. As a result, total
revenues and other operating income for the first quarter were
$14.3 million. In the similar quarter of last year, realized and
unrealized gains of $1.4 million combined with oil and gas income
of $16.8 million to increase total revenues and other operating
income to $18.5 million. Costs and Expenses Production expenses
were $14.47 per BOE in the first quarter of 2007, or a total of
$4.5 million, seven percent higher on a BOE basis than the $13.54
per BOE, or a total of $4.3 million, in the previous year�s
quarter. The increase was primarily due to increased workover
costs. Production taxes were $2.63 per BOE in this year�s first
quarter, or a total of $824,000, three percent above the $2.55 per
BOE, or a total of $810,000 during the 2006 quarter, principally as
a result of selling a larger quantity of gas in a higher taxing
state than in the comparable quarter of 2006. General and
administrative expenses of $2.3 million, or $7.50 per BOE, rose 22
percent on a BOE basis as a result of higher salary expense and an
increased number of employees. Net interest expense for the first
quarter rose by $129,000, or four percent, to $3.6 million compared
to the prior year�s quarter due to higher interest rates and higher
outstanding indebtedness. First Quarter Operational Update In an
effort to accelerate the development of the company�s Barnett Shale
acreage within the prolific Fort Worth Basin, RAM proposed three
wells during the first quarter to EOG Resources, Inc., which
jointly owns an interest in a significant portion of the company�s
North Texas Barnett Shale acreage. EOG elected to participate in
and operate each of the three wells proposed by RAM. The total
estimated cost to drill and complete each well is approximately
$3.0 million. RAM owns a 24 percent working interest in each of the
wells and will bear a like percentage of the costs. Earlier this
year, EOG elected to participate in the Ashe C 1H well located in
Wise County, Texas. The Ashe C 1H well was spud in April and is
currently completing. Also in April, RAM proposed its fourth
Barnett Shale well to EOG. The Brown #2H well is to be drilled to a
true vertical depth of approximately 7,100 feet with a lateral
length of approximately 2,300 feet to test the Lower Barnett Shale
formation. Located in Wise County, Texas, the total estimated cost
to drill and complete the well is $2.7 million. As in the case of
the three earlier wells proposed by RAM this year, EOG has recently
elected to participate as operator of the Brown #2H well. RAM will
own a 24 percent working interest in the well and will bear a like
percentage of the costs. RAM has an interest in 27,700 gross (6,800
net) acres in Jack and Wise Counties, Texas with all the acreage
held by production. Currently RAM has nine gross producing wells in
the Barnett Shale, with the tenth well, the Devon-operated T. L.
Dickenson 1-H, completing. In addition to the T.L. Dickenson 1-H
well and the recently spud Ashe C 1H well, RAM�s project inventory
for potential near-to-intermediate term growth in its Barnett Shale
play includes five PUD locations, 19 probable seismic locations and
nine possible seismic locations, for a total of 35 locations
identified to date. Many of these locations stem from the company�s
acquisition and ongoing review of 35 square miles of 3-D seismic
data over the last year. RAM expects additional locations to
emanate from further geophysical work on the acquired seismic data.
Also, a portion of RAM�s 2007 capital budget is allocated to
acquire an additional 60 square miles of 3-D seismic covering other
acreage in its Barnett Shale holdings. Capital Expenditures Oil and
gas related capital expenditures totaled $4.5 million in the first
quarter 2007; $3.0 million was allocated to lower risk development
activities and $1.5 million for exploratory activities. Total
non-acquisition capital commitments for the first three months of
the year are on pace with RAM�s recently increased non-acquisition
capital budget of $36.3 million for the 2007 year. RAM participated
in the drilling of 14 gross (14 net) development wells and 4 gross
(0.7 net) exploratory wells in the first three months of the year
in contrast to a total of 23 gross (21.7 net) wells drilled in the
same period of 2006. In the company�s Electra/Burkburnett area 14
net wells were drilled in the first quarter, with 72 wells targeted
to be drilled in the field during 2007. RAM�s previous $30.3
million non-acquisition capital expenditure budget for 2007
allocated $4.0 million to drilling and developmental activity on
its Barnett Shale acreage. However, with EOG�s election to drill
and operate three of the four wells proposed by RAM as of April of
this year and with Devon Energy Corporation�s continuous drilling
commitment, it became increasingly apparent that the activity level
has reached the four to seven wells which comprised the original
2007 capital spending allocation for the Barnett Shale. As a
result, in April the portion of the budget previously allocated to
the Barnett Shale was increased by 150 percent, or $6.0 million, to
a total of $10.0 million to accommodate additional wells
anticipated to be proposed by the company to EOG from RAM�s
inventory of seismically identified locations. Accordingly, the
total company 2007 capital budget was increased by about 20 percent
to $36.3 million. RAM Signs Agreement to Acquire Producing
Properties On May 10, 2007 RAM signed a purchase and sale agreement
covering 120 wells in Southeast New Mexico and West Texas. The
purchase price is $18.5 million and is subject to customary closing
adjustments. Closing is scheduled for May 15, 2007. RAM is
acquiring a 100 percent working interest in all of the wells and
will become the operator. Daily net production from these wells
totaled 232 BOPD and 290 MCFD during the month of January 2007, and
net cash flow for the twelve months ending December 2006 totaled
$4.1 million. �These properties represent long life predictable
reserves that are geographically concentrated, with the majority of
the value located in Southeast New Mexico. This is an area in which
RAM successfully operated between 1989 and 2004 and one that we are
excited to be re-entering,� said Larry E. Lee, Chairman and CEO.
RAM to Webcast First Quarter 2007 Conference Call The company�s
teleconference call to review first quarter results will be
broadcast live on a listen-only basis over the internet on Tuesday,
May 15, at 3:00 p.m. Central Daylight 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 (800)299-7635 (domestic)
or (617)786-2901 (international) and providing the call identifier
�45150191� 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 May 22, 2006 by dialing
(888)286-8010 (domestic) or (617)801-6888 (international) and using
pass code �74934604�. 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, NYMEX prices of oil and gas and
company realizations, the impact of oil and gas derivatives,
drilling activities, borrowing availability, 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. Condensed consolidated balance sheets (in
thousands, except share and per share amounts) � March 31, 2007
December 31, 2006 ASSETS (unaudited) CURRENT ASSETS: Cash and cash
equivalents $ 29,287� $ 6,721� Accounts receivable: Oil and natural
gas sales 6,137� 6,194� Joint interest operations, net of allowance
of $189 ($187 at December 31, 2006) 338� 750� Income taxes 121�
121� Other, net of allowance of $43 ($33 at December 31, 2006) 109�
236� Derivative assets -� 677� Prepaid expenses 749� 1,013� Other
current assets 141� -� Total current assets 36,882� 15,712� �
PROPERTIES AND EQUIPMENT, AT COST: Oil and natural gas properties
and equipment, using full cost accounting 189,705� 185,284� Other
property and equipment 6,137� 6,098� 195,842� 191,382� Less
accumulated amortization and depreciation (52,042) (48,577) Total
properties and equipment 143,800� 142,805� OTHER ASSETS: Deferred
loan costs, net of accumulated amortization of $5,036 ($4,840 at
December 31, 2006) 2,397� 2,593� Other 618� 615� Total assets $
183,697� $ 161,725� � LIABILITIES AND STOCKHOLDERS' DEFICIT CURRENT
LIABILITIES: Accounts payable: Trade $ 4,644� $ 7,810� Oil and
natural gas proceeds due others 2,665� 3,886� Related party 16� 14�
Other 39� 31� Accrued liabilities: Compensation 1,842� 1,611�
Interest 4,267� 3,849� Income taxes 334� 223� Derivative
liabilities 83� -� Long-term debt due within one year 28,823� 756�
Total current liabilities 42,713� 18,180� � OIL & NATURAL GAS
PROCEEDS DUE OTHERS 2,510� 2,481� DERIVATIVE LIABILITIES 335� -�
LONG-TERM DEBT 103,122� 131,481� DEFERRED AND OTHER NON-CURRENT
INCOME TAXES 26,337� 26,677� ASSET RETIREMENT OBLIGATIONS 10,916�
10,801� COMMITMENTS AND CONTINGENCIES -� -� � STOCKHOLDERS'
DEFICIT: Common stock, $0.0001 par value, 100,000,000 shares
authorized, 41,990,805 and 34,276,805 shares issued; 41,153,530 and
33,439,530 shares outstanding at March 31, 2007 and December 31,
2006, respectively 4� 3� Additional paid-in capital 29,846� 2,308�
Treasury stock - 837,275 shares at cost (3,768) (3,768) Accumulated
deficit (28,318) (26,438) Stockholders' deficit (2,236) (27,895)
Total liabilities and stockholders' deficit $ 183,697� $ 161,725�
RAM Energy Resources, Inc. Condensed consolidated statements of
operations (in thousands, except share and per share amounts)
(unaudited) � Three Months Ended March 31, 2007� 2006� REVENUES AND
OTHER OPERATING INCOME: Oil and natural gas sales $ 15,144� $
16,810� Realized and unrealized gains (losses) on derivatives
(1,084) 1,408� Other 203� 244� Total revenues and other operating
income 14,263� 18,462� � OPERATING EXPENSES: Oil and natural gas
production taxes 824� 810� Oil and natural gas production expenses
4,527� 4,306� Depreciation and amortization 3,425� 3,213� Accretion
expense 146� 133� Share-based compensation 173� -� General and
administrative, overhead and other expenses, net of operator's
overhead fees 2,346� 1,959� Total operating expenses 11,441�
10,421� Operating income 2,822� 8,041� � OTHER INCOME (EXPENSE):
Interest expense (3,838) (3,529) Interest income 207� 27� INCOME
(LOSS) BEFORE INCOME TAXES (809) 4,539� � INCOME TAX PROVISION
(BENEFIT) (229) 1,725� � NET INCOME (LOSS) $ (580) $ 2,814� � BASIC
EARNINGS (LOSS) PER SHARE $ (0.02) $ 1,238.01� BASIC WEIGHTED
AVERAGE SHARES OUTSTANDING 37,856,197� 2,273.00� � DILUTED EARNINGS
(LOSS) PER SHARE $ (0.02) $ 1,195.41� � DILUTED WEIGHTED AVERAGE
SHARES OUTSTANDING 37,856,197� 2,354� RAM Energy Resources, Inc.
Condensed consolidated statements of cash flows (in thousands)
(unaudited) � Three Months Ended March 31, 2007� 2006� OPERATING
ACTIVITIES: Net income (loss) $ (580) $ 2,814� Adjustments to
reconcile net income (loss) to net cash provided by operating
activities - Depreciation and amortization 3,425� 3,213�
Amortization of deferred loan costs and Senior Notes discount 206�
353� Accretion expense 146� 133� Loss on sale of other property and
equipment -� 27� Unrealized (gain) loss on derivatives 1,054�
(2,979) Deferred income taxes (340) 1,725� Share-based compensation
173� -� Changes in operating assets and liabilities, net of
acquisitions Accounts receivable 596� 724� Prepaid expenses and
other assets 123� (8) Accounts payable (4,377) 222� Accrued
liabilities (463) 1,705� Total adjustments 543� 5,115� Net cash
(used in) provided by operating activities (37) 7,929� � INVESTING
ACTIVITIES: Payments for oil and natural gas properties and
equipment (4,468) (5,155) Proceeds from sales of oil and natural
gas properties 47� 33� Payments for other property and equipment
(39) (425) Net cash used in investing activities (4,460) (5,547) �
FINANCING ACTIVITIES: Payments on long-term debt (338) (4,097)
Proceeds from borrowings on long-term debt 35� 3,357� Payments for
deferred loan costs -� (100) Common stock offering, net of direct
costs 27,366� -� Dividends paid -� (500) Net cash provided by (used
in) financing activities 27,063� (1,340) � INCREASE IN CASH AND
CASH EQUIVALENTS 22,566� 1,042� CASH AND CASH EQUIVALENTS,
beginning of period 6,721� 70� CASH AND CASH EQUIVALENTS, end of
period $ 29,287� $ 1,112� � SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for income taxes $ -� $ 25� Cash paid for interest $
4,487� $ 1,667� � DISCLOSURES OF NONCASH INVESTING AND FINANCING
ACTIVITIES: Accrued interest added to principal balance of credit
facility $ -� $ 2,026� RAM Energy Resources, Inc. Production and
Price Summary � Three months ended March 31, Percent Increase
(Decrease) 2006� 2007� � � Production volumes: Oil (MBbls) 187�
181� (3.1%) NGL (MBbls) 31� 35� 12.9% Natural gas (MMcf) 600� 582�
(3.1%) Total (Mboe) 318� 313� (1.6%) � Average sale prices
received: Oil (per Bbl) $ 61.05� $ 56.37� (7.7%) NGL (per Bbl) $
39.02� $ 37.94� (2.8%) Natural gas (per Mcf) $ 6.97� $ 6.21�
(10.9%) Total per Boe $ 52.85� $ 48.41� (8.4%) RAM Energy
Resources, Inc. Reconciliation of cash flow from operations (a
non-GAAP measure) to GAAP net cash provided by operating activities
(in thousands) � 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. � � Quarter Ended Three months Ended
Three Months Ended March 31, 2007 March 31, 2006 � Cash flow from
operations (a non-GAAP measure) $ 4,084� $ 5,286� Plus: working
capital changes (4,121) 2,643� Less: deferred income taxes on
share-based compensation classified as financing activities -� -�
Net cash (used in) provided by operating activities per Condensed
consolidated statements of cash flow $ (37) $ 7,929� � Cash flow
from operations (a non-GAAP measure) $ 4,084� $ 5,286� Less:
realized gains (losses) on derivatives (30) (1,571) Less:
unrealized gains (losses) on derivatives per condensed consolidated
statements of cash flow (1,054) 2,979� Cash flow from operations (a
non-GAAP measure) excluding realized and unrealized gains (losses)
on derivatives $ 5,168� $ 3,878�
Ram Energy Resources, Inc. (MM) (NASDAQ:RAME)
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