Exhibit 99.1
For Immediate Release For Further Information Contact: Roy A. Fletcher, Investor Relations Crusader Energy Group Inc. (405) 241-1847 |
CRUSADER ENERGY GROUP THIRD QUARTER 2008 FINANCIAL UPDATE
OKLAHOMA CITY, OKLAHOMA, November 10, 2008: Crusader Energy Group Inc. (AMEX:KRU) today reports financial results for the third quarter of 2008. For operational results for the third quarter of 2008, Crusader issued a press release on November 6, 2008. Crusader’s results include the activity of the Westside Transaction for the three months ended September 30, 2008. Crusader’s results for the nine months ended September 30, 2008 include the operations of Knight Energy Group, LLC for the complete period and ninety-six days of activity (June 27, 2008 through September 30, 2008) of the acquired parties (see Westside Transaction below). Certain pro-forma information has been presented as if the acquisitions had occurred on January 1, 2007. Reconciliations of the non-GAAP measures of EBITDA, adjusted EBITDA, pro-forma EBITDA, pro-forma adjusted EBITDA and adjusted earnings per share are presented in Exhibits C and D. Analysts and investors regularly use these or similar metrics when comparing to other oil and gas companies.
FINANCIAL HIGHLIGHTS
• | Net income of $16.4 million for the third quarter of 2008 as compared to net income of $3.6 million for the third quarter of 2007 |
• | Net income (loss) per share of $.08 and $(0.77) for the three and nine months ended September 30, 2008, respectively |
• | Adjusted earnings per share of $.02 and $.11 for the three and nine months ended September 30, 2008, respectively |
• | Adjusted EBITDA increased 164% in the third quarter of 2008 to $25.5 million as compared to $9.6 million in the third quarter of 2007 |
• | Pro-Forma adjusted EBITDA increased 182% in the third quarter of 2008 to $25.5 million as compared to $9.0 million in the third quarter of 2007 |
• | Adjusted EBITDA increased 143% in the nine months ended September 30, 2008 to $57.0 million as compared to $23.5 million in the nine months ended September 30, 2007 |
• | Pro-Forma adjusted EBITDA increased 152% in the nine months ended September 30, 2008 to $68.0 million as compared to $27.0 million in the nine months ended September 30, 2007 |
• | The Company has significant oil and gas hedges in place to mitigate a portion of the effect of a prolonged downturn of oil and gas prices: |
Natural Gas Production
Collars | Swaps | Puts | ||||||||||||||||||||||||||||||
Year | Month | MCF | Floor | Ceiling | MCF | MCF | Floor | |||||||||||||||||||||||||
2008 | Oct - Dec | 937,000 | $ | 8.10 | $ | 10.58 | 30,000 | $ | 7.45 | 45,450 | $ | 8.00 | ||||||||||||||||||||
2009 | Jan - Mar | 678,500 | $ | 8.13 | $ | 10.12 | — | $ | — | 259,131 | $ | 8.00 | ||||||||||||||||||||
2009 | Apr - Jun | 441,000 | $ | 8.00 | $ | 9.56 | — | $ | — | 259,131 | $ | 8.00 | ||||||||||||||||||||
2009 | Jul - Dec | 882,000 | $ | 8.00 | $ | 9.56 | — | $ | — | 518,262 | $ | 8.00 | ||||||||||||||||||||
2010 | Jan - Dec | — | $ | — | $ | — | — | $ | — | 2,144,988 | $ | 8.00 |
Oil Production
Collars | ||||||||||||||||
Year | Month | Bbls | Floor | Ceiling | ||||||||||||
2008 | Oct - Dec | 56,280 | $ | 77.74 | $ | 88.00 | ||||||||||
2009 | Jan - Dec | 163,200 | $ | 79.56 | $ | 117.72 | ||||||||||
2010 | Jan - Dec | 115,200 | $ | 100.00 | $ | 161.75 |
PRODUCTION RESULTS
Three Months Ended September 30, | ||||||||||||||||||||||||||||||||
Reported | Pro Forma | |||||||||||||||||||||||||||||||
2008 | 2007 | change | % change | 2008 | 2007 | change | % change | |||||||||||||||||||||||||
Gas (Mcf) | 2,208,667 | 809,653 | 1,399,014 | 173 | % | 2,208,667 | 1,272,140 | 936,527 | 74 | % | ||||||||||||||||||||||
Oil (Bbls) | 120,766 | 79,489 | 41,277 | 52 | % | 120,766 | 98,717 | 22,049 | 22 | % | ||||||||||||||||||||||
Mcfe | 2,933,263 | 1,286,587 | 1,646,676 | 128 | % | 2,933,263 | 1,864,442 | 1,068,821 | 57 | % | ||||||||||||||||||||||
Mcfe/day | 31,883 | 13,985 | 17,899 | 128 | % | 31,883 | 20,266 | 11,618 | 57 | % |
Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||
Reported | Pro Forma | |||||||||||||||||||||||||||||||
2008 | 2007 | change | % change | 2008 | 2007 | change | % change | |||||||||||||||||||||||||
Gas (Mcf) | 4,373,077 | 2,213,065 | 2,160,012 | 98 | % | 5,832,085 | 3,431,416 | 2,400,669 | 70 | % | ||||||||||||||||||||||
Oil (Bbls) | 318,693 | 191,554 | 127,139 | 66 | % | 343,237 | 229,200 | 114,037 | 50 | % | ||||||||||||||||||||||
Mcfe | 6,285,235 | 3,362,389 | 2,922,846 | 87 | % | 7,891,507 | 4,806,616 | 3,084,891 | 64 | % | ||||||||||||||||||||||
Mcfe/day | 22,939 | 12,316 | 10,706 | 87 | % | 28,801 | 17,607 | 11,300 | 64 | % |
MANAGEMENT COMMENTS
Commenting on the financial results achieved to date, David D. Le Norman, Crusader’s President and CEO, said, “We have worked hard to integrate the entities associated with the Westside Transaction from both an accounting and operational perspective. We have accomplished these tasks while keeping our focus on the efficient development of Crusader’s reserves.” Le Norman further stated, “Crusader was able to secure $250 million in a previously announced second lien facility with JP Morgan in order to consolidate and retire all previous debt obligations of the merged entities, and to fund capital expenditure initiatives to date without tapping our $140 million, senior debt facility. These funding sources coupled with our anticipated development programs and initiatives should be sufficient to fund Crusader for the foreseeable future while remaining flexible to add or subtract from the programs based upon the macro-economic environment.”
WESTSIDE TRANSACTION
On December 31, 2007, Westside Energy Corporation (“Westside”), a public company traded on the American Stock Exchange, entered into a definitive agreement to combine with several affiliated privately held entities including Knight Energy Group, LLC (“Knight”), Knight Energy Group II, LLC (“Knight II”), RCH Upland Acquisition, LLC (“RCH”), Hawk Energy Fund I, LLC (“Hawk”) and other entities acquired (consisting of Knight Energy Management, LLC, Crusader Energy Group, LLC and Crusader Management Corporation) (with Knight II, Hawk, RCH and the other entities acquired collectively referred to as the “Crusader Entities”). On June 26, 2008, the business combination contemplated by the contribution agreement (the “Westside Transaction”) was completed and Westside changed its name to Crusader Energy Group Inc. (“Crusader” or the “Company”). For accounting purposes, the Westside Transaction was treated as a reverse acquisition with Knight as the acquirer and Westside and the Crusader Entities as the acquired parties. As such, the historical financial statements of Crusader are Knight’s historical financial statements which were included in the proxy statement filed with the Securities and Exchange Commission (“SEC”) on May 28, 2008. The acquisitions have been accounted for using the purchase method and the results of operations for Westside and the Crusader Entities are included subsequent to June 26, 2008.
ABOUT CRUSADER ENERGY
Oklahoma City-based Crusader Energy Group Inc. is an oil and gas company with assets focused in various producing domestic basins. The company has a primary focus on the development of unconventional resource plays which includes the application of horizontal drilling and cutting edge completion technology aimed at developing shale and tight sand reservoirs. The Crusader assets are located in various domestic basins, the majority of which are in the Anadarko Basin and Central Uplift, Ft. Worth Basin Barnett Shale, Delaware Basin, Val Verde Basin, and the Bakken Shale of the Williston Basin.
Oklahoma City-based Crusader Energy Group Inc. is an oil and gas company with assets focused in various producing domestic basins. The company has a primary focus on the development of unconventional resource plays which includes the application of horizontal drilling and cutting edge completion technology aimed at developing shale and tight sand reservoirs. The Crusader assets are located in various domestic basins, the majority of which are in the Anadarko Basin and Central Uplift, Ft. Worth Basin Barnett Shale, Delaware Basin, Val Verde Basin, and the Bakken Shale of the Williston Basin.
For other information regarding Crusader, please visit the Company’s Internet Web site athttp://www.crusaderenergy.com. In addition to SEC filings and press releases, the Company posts materials of general interest to investors including any current investor meeting information or Crusader conference or analyst presentations.
CONFERENCE CALL INFORMATION
The Company will host a conference call today at 10:00 a.m. (CST) to review the Company’s third quarter 2008 financial and operating results. The call can be accessed by calling 866-543-6403 (U.S. domestic) or 617-213-8896 (international). The pass code for the call is “Crusader Energy.” A live audio Web cast of the call will be available on the Company’s Web site atwww.crusaderenergy.com.
The Company will host a conference call today at 10:00 a.m. (CST) to review the Company’s third quarter 2008 financial and operating results. The call can be accessed by calling 866-543-6403 (U.S. domestic) or 617-213-8896 (international). The pass code for the call is “Crusader Energy.” A live audio Web cast of the call will be available on the Company’s Web site atwww.crusaderenergy.com.
A replay of the call will be made available one hour following the conclusion of the call. To access the domestic audio replay, call 888-286-8010. The international replay number is 617-801-6888. The audio replay will be available through November 24, 2008. The passcode for the replay is 15627545. The replay will also be available on the Company’s Web site indefinitely.
FORWARD-LOOKING STATEMENT DISCLOSURE
This press release contains “forward-looking statements” within the meaning of the Federal securities laws and regulations. Forward-looking statements are estimates and predictions by management about the future outcome of events and conditions that could affect Crusader’s business, financial condition and results of operations. We use words such as, “will,” “should,” “could,” “plans,” “expects,” “likely,” “anticipates,” “intends,” “believes,” “estimates,” “may,” and other words of similar expression to indicate forward-looking statements.
This press release contains “forward-looking statements” within the meaning of the Federal securities laws and regulations. Forward-looking statements are estimates and predictions by management about the future outcome of events and conditions that could affect Crusader’s business, financial condition and results of operations. We use words such as, “will,” “should,” “could,” “plans,” “expects,” “likely,” “anticipates,” “intends,” “believes,” “estimates,” “may,” and other words of similar expression to indicate forward-looking statements.
There is no assurance that the estimates and predictions contained in our forward-looking statements will occur or be achieved as predicted. Any number of factors could cause actual results to differ materially from those referred to in a forward-looking statement, including drilling risks, operating hazards and other uncertainties inherent in the exploration for, and development and production of, oil and natural gas; volatility in oil and natural gas prices, including the adverse impact of lower prices on the amount of our cash flow available to meet capital expenditures, our ability to borrow and raise capital and on the values attributed to our proven reserves; drilling and operating risks in the unconventional shales and other reservoirs in which we operate, including uncertainties in interpreting engineering, reservoir and reserve data; the availability of technical personnel and drilling equipment; the timing and installation of processing and treatment facilities, third-party pipelines and other transportation facilities and equipment; changes in interest rates; and increasing production costs and other expenses.
Further information on risks and uncertainties affecting our business is described in our reports filed with the SEC which are incorporated by this reference as though fully set forth herein. We undertake no obligation to publicly update or revise any forward-looking statement.
EXHIBIT A
CRUSADER ENERGY GROUP INC.
CONSOLIDATED STATEMENT OF OPERATIONS
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
OPERATING REVENUES | ||||||||||||||||
Gas sales | $ | 19,461,726 | $ | 5,236,783 | $ | 40,291,425 | $ | 14,789,573 | ||||||||
Oil sales | 13,682,006 | 5,508,222 | 35,337,557 | 12,127,594 | ||||||||||||
Other | 368,873 | 271,747 | 1,097,661 | 614,319 | ||||||||||||
Total operating revenue | 33,512,605 | 11,016,752 | 76,726,643 | 27,531,486 | ||||||||||||
OPERATING COSTS AND EXPENSES | ||||||||||||||||
Lease operating | 3,176,995 | 1,102,303 | 6,227,443 | 2,347,783 | ||||||||||||
Production taxes | 2,531,769 | 763,536 | 5,303,388 | 1,766,532 | ||||||||||||
General and administrative | 3,227,305 | 952,426 | 113,599,183 | 2,715,870 | ||||||||||||
Depreciation, depletion and amortization | 10,885,522 | 4,523,575 | 22,392,645 | 11,809,640 | ||||||||||||
Accretion of asset retirement obligations | 20,637 | 21,471 | 48,181 | 32,823 | ||||||||||||
Total operating costs and expenses | 19,842,228 | 7,363,311 | 147,570,840 | 18,672,648 | ||||||||||||
Income (loss) from operations | 13,670,377 | 3,653,441 | (70,844,197 | ) | 8,858,838 | |||||||||||
OTHER (EXPENSE) INCOME | ||||||||||||||||
Interest expense | (8,283,932 | ) | (862,468 | ) | (11,384,422 | ) | (1,797,650 | ) | ||||||||
Interest income and other | 480,469 | 24,862 | 603,926 | 68,182 | ||||||||||||
Risk management | 19,008,980 | 832,160 | (1,197,988 | ) | 115,030 | |||||||||||
Total other (expenses) income | 11,205,517 | (5,446 | ) | (11,978,484 | ) | (1,614,438 | ) | |||||||||
Income (loss) before income taxes | 24,875,894 | 3,647,995 | (82,822,681 | ) | 7,244,400 | |||||||||||
Income tax expense | 8,456,038 | — | 20,282,862 | — | ||||||||||||
NET INCOME (LOSS) | $ | 16,419,856 | $ | 3,647,995 | $ | (103,105,543 | ) | $ | 7,244,400 | |||||||
EARNINGS (LOSS) PER SHARE | ||||||||||||||||
Basic and Diluted | $ | 0.08 | $ | (0.77 | ) | |||||||||||
WEIGHTED AVERAGE SHARES OUTSTANDING | ||||||||||||||||
Basic | 198,194,958 | 134,469,036 | ||||||||||||||
Diluted | 209,973,306 | 134,469,036 | ||||||||||||||
PRO FORMA INFORMATION | ||||||||||||||||
Historical income (loss) from operations before income taxes | $ | 3,647,995 | $ | 7,244,400 | ||||||||||||
Pro forma provision (benefit) for income taxes | 1,419,070 | 2,818,072 | ||||||||||||||
Pro forma net income (loss) | $ | 2,228,925 | $ | 4,426,328 | ||||||||||||
PRO FORMA EARNINGS PER SHARE | ||||||||||||||||
Basic and Diluted | $ | 0.02 | $ | 0.04 | ||||||||||||
WEIGHTED AVERAGE SHARES OUTSTANDING | ||||||||||||||||
Basic and Diluted | 100,100,000 | 100,100,000 | ||||||||||||||
EXHIBIT B
CRUSADER ENERGY GROUP INC.
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS
(Unaudited) September 30, | December 31, | |||||||
2008 | 2008 | |||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash and cash equivalents | $ | 27,637,842 | $ | 7,941,663 | ||||
Accounts receivable: | ||||||||
Accrued oil and gas production revenue | 18,095,835 | 7,581,187 | ||||||
Joint interest billings | 23,545,280 | 14,045,470 | ||||||
Other | 456,132 | 770,584 | ||||||
Prepaid and other assets | 4,816,657 | 126,450 | ||||||
Total current assets | 74,551,746 | 30,465,354 | ||||||
OIL AND GAS PROPERTIES — AT COST, net, based on full cost accounting ($181,309,360 and $ 12,558,796 excluded from amortization at 2008 and 2007, respectively) | 652,790,008 | 243,560,456 | ||||||
Derivative financial instruments | 2,337,651 | — | ||||||
Other assets | 20,298,926 | 5,199,199 | ||||||
$ | 749,978,331 | $ | 279,225,009 | |||||
LIABILITIES AND MEMBERS’/STOCKHOLDERS’ EQUITY | ||||||||
CURRENT LIABILITIES | ||||||||
Accounts payable | $ | 14,692,198 | $ | 11,856,699 | ||||
Accrued liabilities | 22,987,939 | 5,934,262 | ||||||
Derivative financial instruments | 13,989 | 1,775,617 | ||||||
Total current liabilities | 37,694,126 | 19,566,578 | ||||||
LONG-TERM LIABILITIES | ||||||||
Asset retirement obligations | 1,151,419 | 718,316 | ||||||
Derivative financial instruments | — | 403,883 | ||||||
Other | — | 215,778 | ||||||
Deferred tax liabilities, net | 49,223,602 | — | ||||||
Notes payable | 237,770,833 | 67,000,000 | ||||||
Total long-term liabilities | 288,145,854 | 68,337,977 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
MEMBERS’ EQUITY | — | 191,320,454 | ||||||
STOCKHOLDERS’ EQUITY | ||||||||
Common stock, $.01 par value, 500,000,000 authorized; 198,564,958 shares issued and outstanding at September 30, 2008 | 1,985,650 | — | ||||||
Additional paid-in capital | 523,198,521 | — | ||||||
Accumulated deficit | (101,045,820 | ) | — | |||||
Total Stockholders’ Equity | 424,138,351 | — | ||||||
$ | 749,978,331 | $ | 279,225,009 | |||||
EXHIBIT C
CRUSADER ENERGY GROUP INC.
RECONCILIATION OF INCOME (LOSS) BEFORE INCOME TAXES AS REPORTED TO
ADJUSTED EARNINGS EXCLUDING CERTAIN NON-CASH ITEMS, a non-GAAP measure
(Unaudited)
ADJUSTED EARNINGS EXCLUDING CERTAIN NON-CASH ITEMS, a non-GAAP measure
(Unaudited)
Three months ended | Nine months ended | |||||||||||||||
September 30 | September 30 | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Net income (loss), as reported | $ | 16,419,856 | $ | 3,647,995 | $ | (103,105,543 | ) | $ | 7,244,400 | |||||||
Income tax expense, as reported | 8,456,038 | — | 20,282,862 | — | ||||||||||||
Income (loss) before income taxes,as reported | 24,875,894 | 3,647,995 | (82,822,681 | ) | 7,244,400 | |||||||||||
Adjustment for certain non-cash items | ||||||||||||||||
Change in mark-to-market on unrealized derivatives | (18,762,144 | ) | 574,278 | (859,072 | ) | 2,579,122 | ||||||||||
Non-cash stock compensation | 155,925 | — | 106,833,144 | — | ||||||||||||
As adjusted | 6,269,675 | 4,222,273 | 23,151,391 | 9,823,522 | ||||||||||||
Income taxes, adjusted | ||||||||||||||||
Current | — | — | — | — | ||||||||||||
Deferred | 2,367,429 | 1,594,330 | 8,741,965 | 3,709,362 | ||||||||||||
Adjusted earnings excluding certain items, a non-GAAP measure | $ | 3,902,246 | $ | 2,627,943 | $ | 14,409,426 | $ | 6,114,160 | ||||||||
non-GAAP earnings per share | ||||||||||||||||
Basic | $ | 0.02 | $ | 0.03 | $ | 0.11 | $ | 0.06 | ||||||||
Diluted | $ | 0.02 | $ | 0.03 | $ | 0.10 | $ | 0.06 | ||||||||
non — GAAP basic shares outstanding | 198,194,958 | 100,100,000 | 134,469,036 | 100,100,000 | ||||||||||||
non — GAAP diluted shares outstanding | 209,973,306 | 100,100,000 | 137,608,771 | 100,100,000 | ||||||||||||
EXHIBIT D
CRUSADER ENERGY GROUP INC.
RECONCILIATION OF EBITDA AND ADJUSTED EBITDA
The following summary presents unaudited pro forma consolidated net income (loss), EBITDA and Adjusted EBITDA for the three and nine months ended September 30, 2008 and 2007, respectively, as if the Westside Transaction had occurred as of January 1, 2007. The pro forma results are for illustrative purposes only and include adjustments in addition to the pre-acquisition historical results, such as increased depreciation, depletion and amortization expense resulting from the allocation of fair value to oil and gas properties acquired. The unaudited pro forma information is not necessarily indicative of the operating results that would have occurred if the acquisitions had been consummated at that date, nor is it necessarily indicative of future operating results.
Three Months Ended September 30, | ||||||||||||||||
Reported | Pro Forma | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Net income (loss) | $ | 16,419,856 | $ | 3,647,995 | $ | 16,419,856 | $ | 2,419,002 | ||||||||
Income tax expense | 8,456,038 | — | 8,456,038 | — | ||||||||||||
Interest expense | 8,283,932 | 862,468 | 8,283,932 | 1,524,190 | ||||||||||||
DD&A | 10,906,159 | 4,545,046 | 10,906,159 | 4,989,644 | ||||||||||||
EBITDA* | 44,065,985 | 9,055,509 | 44,065,985 | 8,932,836 | ||||||||||||
Adjustments: | ||||||||||||||||
Stock compensation expense | 155,925 | — | 155,925 | — | ||||||||||||
Unrealized (gains) losses on derivatives | (18,762,144 | ) | 574,278 | (18,762,144 | ) | 103,845 | ||||||||||
Adjusted EBITDA** | $ | 25,459,766 | $ | 9,629,787 | $ | 25,459,766 | $ | 9,036,681 | ||||||||
Nine Months Ended September 30, | ||||||||||||||||
Reported | Pro Forma | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Net income (loss) | $ | (103,105,543 | ) | $ | 7,244,400 | $ | (98,906,378 | ) | $ | 5,330,636 | ||||||
Income tax expense | 20,282,862 | — | 20,282,862 | — | ||||||||||||
Interest expense | 11,384,422 | 1,797,650 | 13,077,472 | 4,176,417 | ||||||||||||
DD&A | 22,440,826 | 11,842,463 | 27,453,178 | 15,101,147 | ||||||||||||
EBITDA* | (48,997,433 | ) | 20,884,513 | (38,092,866 | ) | 24,608,200 | ||||||||||
Adjustments: | ||||||||||||||||
Stock compensation expense | 106,833,144 | — | 106,833,144 | — | ||||||||||||
Unrealized (gains) losses on derivatives | (859,072 | ) | 2,579,122 | (760,854 | ) | 2,395,506 | ||||||||||
Adjusted EBITDA** | $ | 56,976,639 | $ | 23,463,635 | $ | 67,979,424 | $ | 27,003,706 | ||||||||
* | EBITDA represents net income (loss) before income tax expense and depreciation, depletion and amortization expense. EBITDA is presented as a supplemental financial measurement in the evaluation of our business. We believe that it provides additional information regarding our ability to meet our future debt service, capital expenditures and working capital requirements. This measure is widely used by investors and rating agencies in the valuation, comparison, rating and investment recommendations of companies. EBITDA is a financial measurement that, with certain negotiated adjustments, is reported to our lenders pursuant to our bank credit agreement and is used in the financial covenants in our bank credit agreement. EBITDA is not a measure of financial performance under GAAP. Accordingly, it should not be considered as a substitute for net income, income from operations, or cash flow provided by operating activities prepared in accordance with GAAP. | |
** | Adjusted EBITDA excludes certain items that management believes affect the comparability of operating results. The Company discloses these non-GAAP financial measures due to the following: (a) Management uses adjusted EBITDA to evaluate the Company’s operational trends and performance relative to other natural gas and oil producing companies, (b) Adjusted EBITDA is the financial metric used in determining our compliance with certain financial covenants under our debt agreements, (c) Items excluded generally are one-time items or items whose timing or amount cannot be reasonably estimated. |