Exhibit 99.1
| For Immediate Release | For Further Information Contact: |
| Monday, November 12, 2007 | Robert E. Phaneuf |
| Vice President - Corporate Development |
RAM ENERGY RESOURCES REPORTS THIRD QUARTER
2007 RESULTS; MERGER WITH ASCENT ANTICIPATED TO
CLOSE BY END OF NOVEMBER 2007
Tulsa, Oklahoma – RAM Energy Resources, Inc. (Nasdaq: RAME) today announced third quarter 2007 earnings and operating results.
Third Quarter 2007 Highlights
| • | RAM reports income of $4.8 million, or $0.12 a share; |
| • | Cash flow from operations, a non-GAAP measure, was $6.0 million in the third quarter and $16.0 million for the nine months of 2007; |
| • | Third quarter production of 336,000 barrel equivalents (BOE) of oil and natural gas was down slightly compared with the second quarter level of 337,000 BOE; |
| • | Non-acquisition capital spending of $5.6 million in the quarter raises the total for the nine months to $15.4 million with total capital expenditures including acquisitions aggregating to $34.1 million. Through the nine months of 2006, non-acquisition capital spending totaled $16.3 million; |
| • | Devon Energy recently proposed two additional wells in our jointly held Barnett Shale leases. RAM’s share of the total estimated cost for each of the Etta Burress 2-H and the Etta Burress 4-H is expected to be approximately $1.0 million; |
| • | Liquidity remained substantial at $48.5 million on September 30, composed of $27.0 million of cash and $31.0 million available under our revolving credit facility, of which $9.5 million is reserved for retirement of our 11.5% Senior Notes due February 2008; |
| • | We continue to expect the close of the merger with Ascent Energy Inc. to occur by the end of November 2007. |
‘‘We have positioned the company to grow through a balanced strategy of acquisition, exploitation and exploration; the proposed merger with Ascent represents an opportunity to capitalize on that strategy and meaningfully enhance the near-to-intermediate term growth projects available to us,’’ said Larry Lee, Chairman and CEO. “The solid cash flow evidenced in the third quarter generated by RAM’s substantial mix of oil and natural gas liquids (NGL) production and the rise in the price of oil provides a strong base for the merger with Ascent,” added Mr. Lee.
Income and Cash Flow
For the quarter ended September 30, RAM had net income of $4.8 million, or $0.12 per share, based upon 40.4 million weighted average fully diluted shares outstanding. Compared with the third quarter of 2006, results of the current quarter were positively impacted by an increase in oil and natural gas sales of $1.2 million, or seven percent, the product of a nine percent increase in product prices offset by a two percent decrease in production and an income tax provision benefit. These increases were partially offset by higher operating costs, realized and unrealized derivative losses of $1.1 million and an increase in net interest expense. The income tax benefit of $4.3 million recorded in this year’s third quarter is the result of a tax provision of $300,000 which was more than offset by a reversal of previously accrued taxes and accrued interest totaling $4.6 million, resulting from tax positions taken by RAM in a previous year. Pursuant to FASB Interpretation No. 48 adopted earlier this year, such accruals are to be reversed and recognized in income coincident with the expiration of the statute of limitations, which occurred in the third quarter. By comparison, in the third quarter 2006 RAM reported income of $4.2 million, or $0.13 per share, based upon 33.7 million weighted average fully diluted shares outstanding. In addition, the 2006 quarter’s results included a pre-tax non-cash benefit of $3.9 million for realized and unrealized derivative gains.
Cash flow from operations, a non-GAAP measure, was $6.0 million for the third quarter of 2007 compared to cash flow of $6.6 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 provided by operating activities of $5.2 million for the third quarter of 2007 and $9.9 million for the same quarter in 2006.
Production
Total production for the third quarter 2007 decreased nearly two percent to 336,000 BOE from the year-ago quarter level of 342,000 BOE. Production of NGLs rose 20 percent to 48,000 barrels and production of natural gas rose eight percent to 641 MMcf, principally a result of increased production from Barnett Shale wells. However, oil production decreased 11 percent to 181,000 barrels as a result of weather related drilling delays and down time of producing wells in the Electra/Burkburnett and Bridgeport fields. Average daily combined production for the third quarter 2007 was 3,650 BOE compared to 3,716 BOE in last year’s third quarter.
Commodity Prices and Revenues
The company’s overall average price per BOE of product produced in the third quarter 2007 rose nine percent to $58.03 compared to last year’s average price for the quarter of $53.43 per BOE. The realized price for oil increased 16 percent to an average of $72.78 per barrel in the third quarter of 2007, compared with last year’s third quarter average realized price of $62.79 per barrel. Similarly, the company’s realized price for natural gas rose nearly four percent to average $6.34 per thousand cubic feet (Mcf) compared to an average of $6.13 per Mcf in the third quarter of 2006.
The increase in natural gas and NGL production combined with the increase in the average realized price of oil and natural gas more than offset the effect of the decrease in oil production resulting from the effect of adverse weather on targeted drilling plans. Oil and gas sales increased nearly seven percent to $19.5 million for the third quarter of 2007 compared to $18.3 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. With the negative impact to oil and gas sales of $1.1 million attributable to the net of derivative contract
settlements, premiums and unrealized mark-to-market losses, total revenues for the third quarter of 2007 were $18.4 million, compared to $22.2 million in the same period of 2006, which were positively impacted by $3.9 million of realized and unrealized mark-to-market gains.
Costs and Expenses
Production costs totaled $5.7 million, or $16.84 per BOE, in the third quarter of 2007, 34 percent higher than the $12.60 per BOE in the previous year’s quarter. The increase was primarily due to the addition of producing properties acquired in the second quarter of 2007, increased maintenance and treating costs due to additional producing wells and increased costs associated with non-operated wells. Production taxes were $1.1 million, or $3.30 per BOE, in this year’s third quarter, 34 percent above the $2.47 per BOE in the third quarter of 2006, principally as a result of the higher average price of oil and natural gas. General and administrative expenses of $2.4 million, or $7.22 per BOE, rose seven percent on a BOE basis as a result of lower total BOE of production. Net interest expense for the third quarter rose by $620,000 to $4.4 million compared to the prior year’s quarter due to pre-payment premiums totaling $800,000 relating to our term loan facility reduction during the quarter.
Nine Months Results
For the nine months ended September 30, 2007 RAM reported net income of $5.1 million, or $0.13 a share, on 39.4 million weighted average fully diluted shares outstanding. Included in the nine month 2007 period is a derivative mark-to-market loss of $2.1 million. For the nine months ended September 30, 2006, RAM recorded net income of $4.0 million, or $0.13 per share, on 30.7 million weighted average fully diluted shares outstanding. Included in the nine months 2006 results is a pre-tax derivative mark-to-market unrealized gain of $5.9 million. Cash flow from operations, a non-GAAP measure, was $16.0 million for the first nine months of 2007 compared to $15.8 million for the same period in 2006. See the attached table for reconciliation of these non-GAAP financial measures to the corresponding GAAP amounts of
cash provided by operating activities of $12.7 million for the nine months ended September 30, 2007 and $25.3 million for the nine months ended September 30, 2006.
Operations Update
Oil and gas related capital expenditures totaled $5.6 million in the third quarter; $2.3 million was allocated to lower risk development activities; $2.3 million for exploratory activities; and $1.0 million for the acquisition of undeveloped properties, bringing total capital spending for the nine months to $34.1 million. Total capital expenditures of $34.1 million for the first nine months of 2007 are composed of $7.4 million allocated to drilling new development wells; $6.6 million for exploratory costs; $1.4 million allocated to the acquisition of unproved properties and $18.7 million for a proved property acquisition which closed in the second quarter.
RAM participated in the drilling of 17 gross (17.0 net) development wells and one gross (0.24 net) exploratory well in the third quarter of 2007. All of the development wells drilled in this year’s third quarter are capable of commercial production, while the exploratory well is waiting on orders for completion. In addition, we are continuing to participate in gas exploration in the Arkoma Basin. During the quarter the Weyerhauser 9-22 well was completed and is currently producing at a daily rate of 1,260 Mcf gross (104 Mcf net). RAM participated in the drilling of 45 gross (45 net) development wells and 12 gross (1.9 net) exploratory wells in the first nine months of the year.
RAM to Webcast Third Quarter 2007 Conference Call
The company’s teleconference call to review third quarter results will be broadcast live on a listen-only basis over the internet on Tuesday, November 13, at 8 a.m. Central Standard 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(866)543-6411 (domestic) or 1(617)213-8900 (international) and providing the participant passcode 87527237 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 November 20, 2007 by dialing 1(888)286-8010 (domestic) or 1(617)801-6888 (international) and using passcode 97553296.
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)
| September 30, | | December 31, |
| 2007 | | 2006 |
ASSETS | (unaudited) | | |
CURRENT ASSETS: | | | |
Cash and cash equivalents | $ 26,986 | | $ 6,721 |
Accounts receivable: | | | |
Oil and natural gas sales | 7,448 | | 6,194 |
Joint interest operations, net of allowance of $185 ($187 at December 31, 2006) | 387 | | 750 |
Income taxes | 37 | | 121 |
Other, net of allowance of $25 ($33 at December 31, 2006) | 325 | | 236 |
Derivative assets | - | | 677 |
Prepaid expenses | 498 | | 1,013 |
Other current assets | 269 | | - |
Total current assets | 35,950 | | 15,712 |
| | | |
PROPERTIES AND EQUIPMENT, AT COST: | | | |
Oil and natural gas properties and equipment, using full cost accounting | 219,811 | | 185,284 |
Other property and equipment | 6,670 | | 6,098 |
| 226,481 | | 191,382 |
Less accumulated amortization and depreciation | (60,090) | | (48,577) |
Total properties and equipment | 166,391 | | 142,805 |
OTHER ASSETS: | | | |
Deferred loan costs, net of accumulated amortization of $5,466 ($4,840 at December 31, 2006) | 2,624 | | 2,593 |
Other | 1,207 | | 615 |
Total assets | $206,172 | | $161,725 |
| | | |
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | | | |
CURRENT LIABILITIES: | | | |
Accounts payable: | | | |
Trade | $7,900 | | $7,810 |
Oil and natural gas proceeds due others | 4,766 | | 3,886 |
Related party | 40 | | 14 |
Other | 348 | | 31 |
Accrued liabilities: | | | |
Compensation | 682 | | 1,611 |
Interest | 1,846 | | 3,849 |
Income taxes | 402 | | 223 |
Derivative liabilities | 1,098 | | - |
Long-term debt due within one year | 28,565 | | 756 |
Total current liabilities | 45,647 | | 18,180 |
| | | |
OIL & NATURAL GAS PROCEEDS DUE OTHERS | 2,612 | | 2,481 |
DERIVATIVE LIABILITIES | 685 | | - |
LONG-TERM DEBT | 119,171 | | 131,481 |
DEFERRED AND OTHER NON-CURRENT INCOME TAXES | 23,162 | | 26,677 |
ASSET RETIREMENT OBLIGATION | 11,295 | | 10,801 |
COMMITMENTS AND CONTINGENCIES | - | | - |
| | | |
STOCKHOLDERS' EQUITY (DEFICIT): | | | |
Common stock, $0.0001 par value, 100,000,000 shares authorized; 42,077,067 and 34,276,805 shares issued; 41,239,792 shares and 33,439,530 shares outstanding at September 30, 2007 and December 31, 2006, respectively | 4 | | 3 |
Additional paid-in capital | 30,375 | | 2,308 |
Treasury stock - 837,275 shares at cost | (3,768) | | (3,768) |
Accumulated deficit | (23,011) | | (26,438) |
Stockholders' equity (deficit) | 3,600 | | (27,895) |
Total liabilities and stockholders' equity (deficit) | $206,172 | | $161,725 |
| | | |
-Table Follows-
RAM Energy Resources, Inc.
Condensed consolidated statements of operations
(in thousands, except share and per share amounts)
(unaudited)
| Three months ended | | Nine months ended |
| September 30, | | September 30, |
| 2007 | 2006 | | 2007 | 2006 |
OPERATING REVENUES AND OTHER OPERATING INCOME: | | | | | (restated) |
Oil and natural gas sales | $ 19,488 | $ 18,267 | | $ 52,515 | $ 53,050 |
Realized and unrealized gains (losses) on derivatives | (1,146) | 3,878 | | (2,437) | 1,108 |
Gain on sale of assets | 11 | - | | 11 | - |
Other | 82 | 42 | | 384 | 466 |
Total operating revenues and other operating income | 18,435 | 22,187 | | 50,473 | 54,624 |
| | | | | |
OPERATING EXPENSES: | | | | | |
Oil and natural gas production taxes | 1,110 | 843 | | 2,960 | 2,527 |
Oil and natural gas production expenses | 5,658 | 4,309 | | 14,868 | 13,222 |
Amortization and depreciation | 3,913 | 3,495 | | 11,467 | 10,019 |
Accretion expense | 146 | 133 | | 436 | 398 |
Share-based compensation | 308 | - | | 702 | 2,218 |
General and administrative, overhead and other expenses | 2,424 | 2,304 | | 7,348 | 6,351 |
Total operating expenses | 13,559 | 11,084 | | 37,781 | 34,735 |
Operating income | 4,876 | 11,103 | | 12,692 | 19,889 |
| | | | | |
OTHER INCOME (EXPENSE): | | | | | |
Interest expense | (4,754) | (3,906) | | (12,582) | (13,213) |
Interest income | 357 | 129 | | 877 | 238 |
INCOME BEFORE INCOME TAXES | 479 | 7,326 | | 987 | 6,914 |
| | | | | |
INCOME TAX PROVISION (BENEFIT) | (4,291) | 3,081 | | (4,105) | 2,924 |
| | | | | |
NET INCOME | $ 4,770 | $ 4,245 | | $ 5,092 | $ 3,990 |
| | | | | |
EARNINGS PER SHARE: | | | | | |
Basic | $ 0.12 | $ 0.13 | | $ 0.13 | $ 0.13 |
Diluted | $ 0.12 | $ 0.13 | | $ 0.13 | $ 0.13 |
| | | | | |
WEIGHTED AVERAGE SHARES OUTSTANDING: | | | | | |
Basic | 40,292,725 | 33,459,589 | | 39,276,241 | 30,139,242 |
Diluted | 40,437,280 | 33,692,544 | | 39,399,262 | 30,743,596 |
| | | | | |
-Table Follows-
RAM Energy Resources, Inc.
Condensed consolidated statements of cash flows
(in thousands)
(unaudited)
| Nine months ended
September 30, |
| 2007 | | 2006 |
OPERATING ACTIVITIES: | | | |
Net income | $ 5,092 | | $ 3,990 |
Adjustments to reconcile net income to net cash
provided by operating activities: | | | |
Amortization and depreciation: | | | |
Oil and natural gas properties and equipment | 11,000 | | 9,524 |
Amortization of deferred loan costs and senior notes discount | 657 | | 776 |
Charge off of unamortized deferred loan costs | - | | 1,055 |
Other property and equipment | 467 | | 495 |
Accretion expense | 436 | | 398 |
Unrealized (gain) loss on derivatives | 2,076 | | (5,874) |
Deferred income taxes | (4,385) | | 3,337 |
Share-based compensation | 702 | | 2,218 |
Gain on disposal of other property and equipment | (11) | | (99) |
Changes in operating assets and liabilities: | | | |
Accounts receivable | (896) | | 1,303 |
Prepaid expenses, deposits, and other assets | 246 | | 816 |
Accounts payable | 1,313 | | 2,550 |
Income taxes payable | 179 | | - |
Accrued liabilities and other | (4,142) | | 4,805 |
Total adjustments | 7,642 | | 21,304 |
Net cash provided by operating activities | 12,734 | | 25,294 |
| | | |
INVESTING ACTIVITIES: | | | |
Payments for oil and natural gas properties and equipment | (34,076) | | (21,529) |
Proceeds from sales of oil and natural gas properties and equipment | 81 | | 3,565 |
Payments for other property and equipment | (650) | | (726) |
Proceeds from sales of other property and equipment | - | | 366 |
Net cash used in investing activities | (34,645) | | (18,324) |
| | | |
FINANCING ACTIVITIES: | | | |
Payments on long-term debt | (741) | | (87,738) |
Payments of loan fees | (657) | | (2,978) |
Proceeds from borrowings on long-term debt | 16,208 | | 106,557 |
Stock redemption | - | | (9,792) |
Repurchase of stock | - | | (3,768) |
Common stock offering, net of direct costs | 27,366 | | - |
Deferred income taxes on share-based compensation | - | | (843) |
Payments of merger costs | - | | (4,187) |
Cash acquired in merger | - | | 3,801 |
Dividends paid | - | | (500) |
Net cash provided by financing activities | 42,176 | | 552 |
Net increase in cash and cash equivalents | 20,265 | | 7,522 |
| | | |
Cash and cash equivalents at beginning of period | 6,721 | | 70 |
Cash and cash equivalents at end of period | $ 26,986 | | $ 7,592 |
| | | |
-Table Follows-
RAM Energy Resources, Inc.
Condensed consolidated statements of cash flows, continued
(in thousands)
(unaudited)
| Nine months ended
September 30, |
| 2007 | | 2006 |
| | | |
SUPPLEMENTAL CASH FLOW INFORMATION: | | | |
Cash paid for interest | $ 14,723 | | $ 7,214 |
Cash paid for income taxes | $ 18 | | $ 124 |
| | | |
DISCLOSURE OF NONCASH FINANCING ACTIVITIES: | | | |
Accrued interest added to principal balance of revolving credit facility | $ - | | $ 2,848 |
Amount added to asset retirement obligations for new wells | $ 405 | | $ 350 |
| | | |
-Table Follows-
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. 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.
| 2007 |
| | Three months ended | | Nine months ended |
| | September 30 | | September 30 |
| | | | |
Net cash provided by operating activities per condensed Consolidated statements of cash flow | | $5,238 | | $12,734 |
Less: working capital changes | | (733) | | (3,300) |
| | | | |
Cash flow from operations (a non-GAAP measure) | | $5,971 | | $16,034 |
| | | | |
| | | | |
Cash flow from operations (a non-GAAP measure) | | $5,971 | | $16,034 |
Less: realized gains (losses) on derivatives | | (226) | | (361) |
| | | | |
Cash flow from operations (a non-GAAP measure) excluding realized gains (losses) on derivatives | | $6,197 | | $16,395 |
| |
| |
| 2006 |
| | Three months ended | | Nine months ended |
| | September 30 | | September 30 |
Net cash provided by operating activities per condensed Consolidated statements of cash flow | | $9,928 | | $25,294 |
| | | | |
Less: working capital changes | | 3,377 | | 9,474 |
| | | | |
Cash flow from operations (a non-GAAP measure) | | $6,551 | | $15,820 |
| | | | |
Cash flow from operations (a non-GAAP measure) | | $6,551 | | $15,820 |
Less: realized gains (losses) on derivatives | | (1,152) | | (4,766) |
| | | | |
Cash flow from operations (a non-GAAP measure) excluding realized gains (losses) on derivatives | | $7,703 | | $20,586 |
