<Page>
Proxy Statement
Pursuant to Section 14(a)
of the Securities Exchange
Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240-14a-11(c) or 240.14a-12.
CREDO PETROLEUM CORPORATION
(Name of Registrant as Specified in Its Charter)
Not Applicable
(Names of Person(s) Filing Proxy Statement)
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CREDO PETROLEUM CORPORATION
_______________________________________________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held March 14, 2002
_______________________________________________________________
You are invited to attend or to be represented by proxy at
the Annual Meeting of Stockholders of CREDO Petroleum
Corporation, a Colorado corporation, to be held at the Wells
Fargo Bank West, N.A., Forum Room, Seventeenth and Broadway,
Denver, Colorado, on March 14, 2002 at 2:30 p.m., MST, for the
purposes set forth below.
1. To elect two Class III directors to serve until the
year 2005 Annual Meeting of Stockholders.
2. To ratify the appointment of independent auditors
for the fiscal year 2002.
3. To approve an amendment to the Company's 1997 Stock
Option Plan that increases the number of shares
approved for issuance under the Plan together with
related matters.
4. To transact such other business as may properly come
before the meeting or any adjournment thereof.
Stockholders of record at the close of business on
February 1, 2002 are entitled to vote at the meeting. You are
cordially invited to attend the meeting in person.
Whether or not you plan to attend the meeting, it is
important that you return your signed proxy. Your vote is
important regardless of the number of shares you own.
BY ORDER OF THE BOARD OF DIRECTORS
William F. Skewes
Secretary and General Counsel
February 1, 2002
Denver, Colorado
_______________________________________________________________
PLEASE FILL IN, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN
IT PROMPTLY SO THAT YOUR VOTE CAN BE RECORDED WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING. NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES.
You May Revoke Your Proxy And Vote In Person
If You Attend The Meeting.
_______________________________________________________________
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CREDO PETROLEUM CORPORATION
1801 Broadway, Suite 900, Denver, Colorado 80202
_______________________
PROXY STATEMENT
_______________________
ANNUAL MEETING OF STOCKHOLDERS, MARCH 14, 2002
Your proxy in the enclosed form is solicited by the Board of
Directors of CREDO Petroleum Corporation for use at the Annual
Meeting of Stockholders to be held on Thursday, March 14, 2002 at
2:30 p.m., MST, at the Wells Fargo Bank West, N.A., Forum Room,
Seventeenth and Broadway, Denver, Colorado, and any adjournment
thereof. This proxy material was mailed to stockholders on or
about February 8, 2002.
Only stockholders of record at the close of business on
February 1, 2002 will be entitled to vote at the meeting. On
that date, there were 3,173,674 shares of common stock
outstanding and entitled to vote, excluding 504,688 shares held
in the Company's treasury.
All shares represented by properly executed, unrevoked
proxies timely received in proper form will be voted in
accordance with the directions specified thereon. Any such proxy
on which no direction is specified will be voted in favor of the
election of the nominees named herein to the Board of Directors,
for ratification of the appointment of Hein + Associates LLP as
independent auditors for the Company for fiscal 2002, and for
increasing the number of shares for issuance under the Company's
1997 Stock Option Plan. In addition, all proxies will be voted
in accordance with the judgement of the proxy holders with
respect to any other matter which may properly come before the
meeting. Any stockholder giving a proxy may revoke that proxy at
any time before it is voted at the meeting by executing a later
dated proxy, by voting by ballot at the meeting, or by filing
with the Election Judge an instrument of revocation.
VOTING SHARES AND PRINCIPAL STOCKHOLDERS
The $.10 par value common stock of the Company is the only
class of capital stock outstanding. Each outstanding share of
common stock is entitled to one vote with respect to each matter
to be voted on by the stockholders, which vote may be given in
person or by proxy duly authorized in writing. Cumulative voting
is not permitted. A majority of the shares of outstanding common
stock will constitute a quorum for transaction of business at the
meeting. The affirmative vote of the majority of the total
number of shares represented and voted at the meeting, assuming a
quorum is present, is necessary for the approval of each of the
matters being voted upon. Shares that withhold votes for a
nominee for director or shares that either abstain from voting on
other proposals presented or which lack authority to vote will
have no effect in the tabulation of votes although they will be
counted toward the presence of a quorum.
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The only persons known to own of record or beneficially more
than 5% of the Company's common stock as of February 1, 2002 are
set forth below.
<Table>
<Caption>
Amount and Nature of Percent
Name and Address Beneficial Ownership of Class
---------------- -------------------- --------
James T. Huffman
6919 S. Steele Street
Littleton, Colorado 80122 461,429(1) 15.5%
R. K. O'Connell
P.O. Box 2003
Casper, Wyoming 82602 169,419(2) 5.3%
_______________________
(1) Includes 149,780 shares owned by members of
Mr. Huffman's family.
(2) Includes 12,817 shares owned by Mr. O'Connell's wife
and by a corporation for which he serves as an officer.
</Table>
DIRECTORS AND OFFICERS
Election of Directors (Item 1 on Proxy Card)
The Articles of Incorporation, as amended, classify members
of the Board of Directors into three classes having staggered
terms of three years each. The Board of Directors consists of
six directors, including five outside directors, who have
particular expertise in areas considered essential to the
Company's business--namely geology, land, petroleum engineering,
legal and accounting.
The directors to be elected to the Board in Class III at the
2002 Annual Meeting of Stockholders will serve until the 2005
Annual Meeting and until their successors are duly elected and
qualified. Class II and Class I directors will continue to serve
until the 2003 and 2004 Annual Meetings of Stockholders,
respectively, and until their successors are duly elected and
qualified.
The Class III nominees named below are presently members of
the Board of Directors. Unless your proxy contains contrary
instructions, it will be voted for the nominees. Should the
nominees become unable to serve, which is not anticipated, the
proxies will vote for such substitute nominee as recommended by
the Board of Directors. Any vacancy occurring in a class
following the election of that class may be filled by the Board
of Directors. A director selected to fill a vacancy in a class
will hold office for a term expiring at the annual meeting at
which the term of that class expires and until a successor is
duly elected and qualified.
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The following table sets forth certain information with
respect to each nominee and each director whose term of office
will continue after the meeting.
Information Concerning Director Nominees
and Continuing Directors
<Table>
<Caption>
Shares of Common
Stock Owned
Name, Age, Position Business Experience Beneficially
with Company and Directorships in Other and Percent
and Term as Director Public or Investment Companies of Class (1)
- -------------------- ------------------------------ ----------------
CLASS III - NOMINEES FOR ELECTION AT THE 2002 ANNUAL MEETING
WHOSE TERMS WILL EXPIRE AT THE 2005 ANNUAL MEETING
William N. Beach Independent oil operator and 65,000 (2.1%)(2)
Age: 77; Director President of Beach Exploration,
since 1980 Inc. since 1975
Richard B. Stevens Independent businessman and oil 131,687 (4.1%)
Age: 72; Director operator since 1987; President
since 1987 of SECO Energy Corporation from
1981 to 1987
CLASS II - DIRECTORS WHOSE TERMS WILL EXPIRE AT THE
2003 ANNUAL MEETING
James T. Huffman Chairman and President since 461,429 (15.5%)(3)
Age: 54; Chairman 1981
of the Board,
President;
Director since 1978
Clarence H. Brown Independent businessman and 16,667 (0.5%)(4)
Age: 67; Director oil operator since December 2000;
since 2000 Executive Vice President, Chief
Operating Officer and Director
of Columbus Energy, Inc. from
1989 to November 2000; previously
Chairman and Chief Executive Officer
of Kimbark Oil and Gas Company
CLASS I - DIRECTORS WHOSE TERMS WILL EXPIRE AT THE
2004 ANNUAL MEETING
Oakley Hall Independent businessman since 17,667 (0.6%)(4)
Age: 55; Director 2000; previously a
since 2000 Pricewaterhouse Coopers partner
William F. Skewes Attorney in private practice 40,130 (1.3%)
Age: 56; Corporate since 1988; previously a
Secretary and partner in the Denver law
General Counsel; firm of Kelly, Stansfield &
Director since 1980 O'Donnell from 1977 to 1988
All Directors and Officers as a Group (seven persons) 732,580 (23.1%)
_______________________
(1) Owned of record and beneficially unless otherwise indicated.
(2) Includes 6,000 shares owned by members of Mr. Beach's family.
(3) Includes 149,780 shares owned by members of Mr. Huffman's family.
(4) Includes 16,667 shares subject to currently exercisable stock options.
</Table>
<Page>
Information Concerning Meetings of the
Board of Directors and Board Committees
The Board of Directors met four times during fiscal 2001.
All directors were present for not less than 75% of the meetings.
The Board has an Executive Committee consisting of
Messrs. Hall, Huffman and Skewes. The Executive Committee did
not meet during fiscal 2001. There are no compensation or
nominating committees because such matters were considered by the
Executive Committee or the Board of Directors.
The Audit Committee of the Board of Directors consists of
three members: Mr. Hall, a CPA; Mr. Brown, a former oil company
executive; and Mr. Skewes, an attorney. Mr. Skewes, an attorney
in private practice, serves as the Company's General Counsel and
Corporate Secretary although he is not an employee of the Company
and has not received consulting services compensation from the
Company for the past three years. Because he is an officer of
the Company, Mr. Skewes does not technically meet the definition
of an "independent" director under the applicable National
Association of Securities Dealers' listing standards.
Nevertheless, the Board of Directors believes that Mr. Skewes is
independent from management of the Company and that his legal
background and his knowledge of financial statements qualify him
for membership on the Audit Committee.
Audit Committee Report
The responsibilities of the Audit Committee are set forth in
the Audit Committee Charter which has been adopted by the Board
of Directors. A copy of the Charter was included as an Appendix
to the 2001 Proxy Statement and will be included at least once
every three years in future Proxy Statements.
The Audit Committee met twice during fiscal 2001 and has met
twice since fiscal 2001 year-end. The Committee reviewed and
discussed the Company's audited financial statements for fiscal
2001 with management and the Company's independent auditors, and
discussed with the Company's independent auditors the matters
required by Statement of Auditing Standards No. 61. The
Committee has received from the independent auditors appropriate
disclosures regarding the auditors' independence as required by
Independence Standards Board Standard No. 1. Based on these
reviews and discussions, the Audit Committee recommended to the
Board of Directors that the Company's audited financial
statements for the year ended October 31, 2001 be included in the
Company's Annual Report on Form 10-KSB.
Submitted by the Audit Committee of the Board of Directors
Oakley Hall, Chairman
Clarence H. Brown
William F. Skewes
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Compensation of and Agreements With Non-Employee Directors
Non-employee directors receive $1,000 plus reimbursement of
out-of-pocket expenses for each meeting of the Board of Directors
attended and may be paid $100 per hour for committee meeting
attendance or for consulting services provided at the request of
the majority of the Board of Directors.
Messrs. Beach, Skewes, and Stevens were each granted a stock
option to purchase 30,000 shares of the Company's common stock at
$1.94 per share, and Messrs. Brown and Hall were each granted a
stock option to purchase 25,000 shares at $4.94 and $5.00,
respectively. The option price is the price of the Company's
common stock on the option grant date. The options vest in
one-third increments beginning on the date of grant and then on
each anniversary thereafter until fully vested, and they expire
on the fifth anniversary of the date of grant.
The Company has entered into indemnification agreements with
each of its non-employee directors. Those agreements require the
Company to indemnify such directors to the fullest extent
permitted by Colorado Law and to advance expenses in connection
with certain claims against the directors.
Information Concerning Other Executive Officers
and Significant Employees
In addition to the directors and executive officers listed
above, the following persons are executive officers or
significant employees as defined by Securities and Exchange
Commission regulations.
<Table>
<Caption>
Name Position Age Work Experience
- -------- ---------- ------ ---------------------------------
John A. Alsko Vice President 60 Prior to joining the Company,
and Chief Secretary/Treasurer and Director of
Financial Bishop Capital Corporation from 1995
Officer to 2000. Previously, Vice
since June 2000 President-Finance of Metro Capital
Corporation from 1987 to 1995.
Certified Public Accountant.
Kenneth J. Manager-Petroleum 52 Prior to joining the Company,
DeFehr Engineering since Senior Reservoir Engineer for
October 1990 Axem Resources, Inc. from 1982
to 1990. Previously Reservoir
Engineer for Phillips Petroleum
Company. Registered
Professional Engineer.
Torie A. Manager-Geology 47 Prior to joining the Company,
Vandeven and Exploration Regional Geologist for Key
since August 1999 Production Company from 1997 to
1998. Previously Senior Staff
Geologist and Regional
Exploitation Geologist for Amoco
Production Company from 1995 to
1997 and from 1998 to 1999,
respectively. Prior to 1995,
Senior Staff Geologist for
Santa Fe Minerals, Inc.
Certified Petroleum Geologist.
</Table>
<Page>
Executive Compensation
The following table shows, for the fiscal year ended
October 31, 2001, the compensation paid or accrued by the Company
for services in all capacities to the chief executive officer of
the Company. No other executive officer had salary and bonus in
excess of $100,000.
Summary Compensation Table
<Table>
<Caption>
Annual Compensation Long TermCompensation
------------------------------- -----------------------------
Awards Payouts
--------------------- -------
Securities
Other Restricted Underlying All
Name and Principal Annual Stock Options LTIP Other
Position Year Salary Bonus Compensation Award(s) (Shares) Payouts Compensation
- ------------------ ---- -------- -------- ------------ --------- -------- ------- ------------
James T. Huffman, 2001 $115,000 $ 30,000 $ 24,300(2) - - - $ 10,200(1)
Chief Executive 2000 $115,000 $ 15,000 $ 20,900(2) - - - $ 9,500(1)
Officer 1999 $118,000 $ 15,000 $ 15,800(2) - - - $ 3,700(1)
___________________
(1) Of this amount, approximately 48% represents life insurance premiums and
the remainder
represents Mr. Huffman's share of employer matching contributions to the
Company's 401(K) Retirement Plan.
(2) Of this amount, approximately 87% represents health insurance premiums.
</Table>
Option Grants in Last Fiscal Year
There were no stock options or stock appreciation rights
("SARs") granted to the named executive during the fiscal year.
Aggregate stock option and SAR exercises in the fiscal year are
set forth in the following table.
<Table>
<Caption>
Aggregated Option/SAR Exercises In Last
Fiscal Year And Fiscal Year End Option/SAR Values
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
Number of at FY-End at FY-End
Shares Acquired Value (Exercisable/ (Exercisable/
Name on Exercise Realized Unexercisable) Unexercisable)
- ------------- --------------- -------- -------------- --------------
James T. Huffman 66,667 $247,000 -0- / -0- -0- / -0-
</Table>
<Page>
SELECTION OF INDEPENDENT AUDITORS
(Item 2 on Proxy Card)
The Board of Directors has appointed, subject to
ratification by the stockholders, Hein + Associates LLP as the
independent auditors of the Company for fiscal 2002.
Representatives of Hein + Associates LLP will be present at the
Annual Meeting to make any statement they so desire and to answer
appropriate stockholder questions.
In the absence of contrary instructions by a stockholder,
the shares represented by the proxies will be voted FOR the
ratification of the appointment of Hein + Associates LLP as the
Company's independent auditors for fiscal 2002.
Audit Fees
The aggregate fees billed for professional services rendered
by Hein + Associates LLP for its audit of the Company's annual
financial statements for the fiscal year ending October 31, 2001,
and its reviews of the financial statements included in the
Company's Form 10-QSB for that fiscal year, were $33,800.
Financial Information Systems Design and Implementation
and All Other Fees
Hein + Associates LLP billed no fees to the Company for
financial information systems design and implementation or for
any other services during the most recent fiscal year.
The Board of Directors recommends a vote FOR this proposal
and will be governed by the decision of a majority of shares
voting.
INCREASE SHARES FOR ISSUANCE UNDER 1997 STOCK OPTION PLAN
(Item 3 on Proxy Card)
The Board of Directors has amended the CREDO Petroleum
Corporation 1997 Stock Option Plan (the "Plan"), to increase the
number of shares of the Company's common stock authorized for
issuance upon the exercise of options granted under the Plan from
450,000 shares to 650,000 shares. As the amendment involves an
increase in the number of options that may be granted under the
Plan, the Board of Directors has directed that the amendment be
submitted to the shareholders for their approval. An affirmative
vote of a majority of the shares voting on this issue is required
to approve the amendment.
Under the Plan as originally adopted, of the 450,000 shares
authorized for option grants under the Plan, only 270,000 shares
could be issued upon the grant of Incentive Stock Options
("ISO"), as defined in Section 422 of the Internal Revenue Code.
As amended, options for all 650,000 shares may be ISOs. In
addition, as originally adopted, the Plan provided that in no
event will the sum of the number of shares issued under the Plan
and the number of shares subject to option under the Plan exceed
fifteen percent (15%) of the outstanding stock of the Company
(including treasury shares) as of the date of grant of any
option. This limitation has been deleted by the amendment.
<Page>
The Board of Directors believes that the availability of
stock options to be granted to key employees of the Company is
essential to attracting and retaining key people for the Company.
The increased number of shares authorized pursuant to the
amendment and the elimination of the restrictions on the number
of ISOs and the percentage of outstanding shares on which options
may be granted provide additional opportunity for the Company to
attract the most qualified employees. The Board of Directors
therefore unanimously recommends approval of the amendment.
Under the Plan, the Board of Directors is authorized to
grant stock options to full-time employees of the Company and to
non-employee directors and consultants of the Company whose
judgment, initiative and efforts are, or are expected to be,
important to the successful conduct of the Company's business.
Any employee of the Company is eligible for a stock option grant
by the Board in its discretion.
Options are granted on such terms as the Board of Directors
determines. Generally options are granted at exercise prices not
less than the fair market value of the Company's common stock on
the date of grant. Options generally vest over periods of two to
four years and expire after five years. In the event of a change
of control of the Company, outstanding options will be
immediately vested unless the Board specifies otherwise. Options
may generally be exercised only by the optionee and are not
transferable except upon death or disability.
The Company's stock option agreements generally provide
that, upon exercise of an option, the Company and the option
holder may agree that, in lieu of issuing stock, the Company may
repurchase the option for an amount equal to the difference
between the option exercise price and the fair market value of
the stock. The agreements also generally include provisions
allowing the Company to loan the option holder all or a portion
of the option exercise price.
The Plan expires on July 29, 2007, ten years after the date
of its adoption; however, options granted under the Plan prior to
its expiration continue to be exercisable after that date in
accordance with their terms.
MANNER AND EXPENSES OF SOLICITATION
Solicitation of proxies will be by mail. The total expenses
of such solicitation will be borne by the Company and will
include reimbursement of brokerage firms and others for their
expenses in forwarding solicitation material regarding the
meeting to beneficial owners. Solicitation of proxies may be
made by telephone or oral communication by regular employees of
the Company who will not be directly compensated. In addition,
the Company may employ a proxy solicitor. Costs of a proxy
solicitor, if any, will be paid by the Company and will not
exceed $50,000.
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Any proposal which a stockholder intends to present for
consideration and action at the next annual meeting of
stockholders must be received in writing by the Company no later
than October 10, 2002 and must conform to applicable Securities
and Exchange Commission rules and regulations.
OTHER MATTERS
The Company knows of no other matters to be brought before
the Annual Meeting. However, if other matters come to their
attention before the meeting, it is the intention of the persons
named in the proxy to vote such proxy in accordance with their
judgement on such matters.
A copy of the Company's Annual Report for the fiscal year
ended October 31, 2001, which includes financial statements, is
enclosed for your information. The Annual Report is not a part
of the proxy solicitation material.
<Page>
PROXY CREDO PETROLEUM CORPORATION PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned stockholder of CREDO Petroleum Corporation (the
"Company") acknowledges receipt of the Notice of Annual Meeting
of the Stockholders to be held March 14, 2002, at 2:30 p.m., MST,
in the Wells Fargo Bank, N.A., Forum Room, Seventeenth and
Broadway, Denver, Colorado, and hereby appoints James T. Huffman
and William F. Skewes, and each of them, with the power of
substitution, as Proxies to vote all the shares of the
undersigned at said Annual Meeting of Stockholders and at all
adjournment thereof, hereby ratifying and confirming all that
said Proxies may do or cause to be done by virtue thereof. The
above named Proxies are instructed to vote all of the
undersigned's shares as follows:
1. Election of Directors: ___ FOR the Class III nominees
(except as marked to the
contrary below)
___ WITHHOLD AUTHORITY to vote for
the Class III nominees
listed below
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST
BELOW)
Class III - William N. Beach Richard B. Stevens
2. Proposal to ratify appointment of Hein + Associates LLP as
the independent auditors of the Company for fiscal 2002:
___ FOR ___ AGAINST ___ ABSTAIN
3. Proposal to approve an amendment to the Company's
1997 Stock Option Plan that increases the number of shares
approved for issuance under the Plan together with related
matters:
___ FOR ___ AGAINST ___ ABSTAIN
4. In their discretion, the Proxies are authorized to vote
upon such other business as may properly come before the
meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL
BE VOTED AS DIRECTED HEREIN BY THE
UNDERSIGNED STOCKHOLDER. IF NO DIRECTION
IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2 AND 3.
Dated this ___ day of ____________, 2002.
_______________________________________
Signature
_______________________________________
Signature
Please sign your name exactly as it
appears on your stock certificate. If
shares are held jointly, each holder
should sign. Executors, trustees and
other fiduciaries should so indicate when
signing.