March 16, 2011

RAM Energy Resources Reports Fourth Quarter and Year-End 2010 Results

TULSA, Okla., Mar 16, 2011 (BUSINESS WIRE) -- RAM Energy Resources, Inc. (Nasdaq: RAME) today announced fourth quarter and year ended December 31, 2010 earnings and financial results.

2010 Highlights

  • Debt reduced to $196.7 million from $250 million at mid-year
  • $51.7 million (before closing adjustments) of non-core property sales with proceeds used to reduce debt
  • Free cash flow was $32.6 million, or $0.42 per share, fully funding the capital budget and a reduction in long term debt
  • G&A expenses dropped nearly $2.0 million to $14.8 million

"In mid-year it became clear that a bold step was required and accordingly we adopted a program to review strategic alternatives aimed at increasing shareholder value. We sold non-core, largely natural gas producing assets and substantially reduced our debt. These actions paved the way for a refinancing of our debt, completed in March 2011. This refinancing extended the maturity of our outstanding debt, substantially improved our financial flexibility and reduced our anticipated interest expense. We are thus well positioned to take advantage of growth opportunities in our major oil producing fields and in our Osage Mississippi oil concession," said Larry Lee, Chairman and CEO.

Financial Results for the 2010 Year

Revenues and Production

Oil and natural gas sales for the year totaled $111.0 million, up 13% from $98.2 million in 2009. The average price of each of RAM's hydrocarbon products were up across the board with the average price per BOE up 33% for the year. The average price realized for oil rose 32%, the price for natural gas liquids ( NGLs) increased 43% and the price received for natural gas was higher by 21%. Total production for the year was 2.2 million BOE. This 15% decrease from the prior year was principally a function of the company's reduction of planned capital expenditures which resulted in natural production declines not being offset by increased drilling. Weather interruptions early in the year and delays in bringing production online in South Texas, where competition for fracturing and stimulation crews and equipment was intense, also contributed to the overall decline. However, the positive impact of the rise in hydrocarbon prices more than offset the negative impact from lower production volumes.

Costs and Expenses

Due to cost saving measures implemented during the year, production expense decreased by 10% to $33.9 million. General and administrative expenses declined 11% to $14.8 million, primarily due to lower professional fees and employee costs. Production taxes rose 14% to $6.1 million, primarily as a result of higher hydrocarbon prices during the year. Interest expense increased 22% to $22.7 million, the product of higher effective interest rates for the entirety of 2010 compared with substantially lower interest rates during the first half of the 2009 year prior to RAM amending its credit facility.

RAM reported net income of $2.4 million, or $0.03 per share, for the 2010 year compared to a net loss of $58.4 million, or $0.75 a share, in 2009.

Modified EBITDA for the 2010 year was $51.0 million, 13% below the $58.3 million in 2009. Similarly, free cash flow was $32.6 million, or $0.42 per share, for the 2010 year compared to $44.6 million, or $0.57 per share, for 2009.

Fourth Quarter 2010 Financial Results

Oil and natural gas sales for the quarter totaled $27.5 million compared to $29.7 million in the year-ago quarter. A 10% higher average price per BOE of $54.37, driven by a 13% higher average price for oil and a 15% higher average price for NGLs, compared favorably to the average price per BOE of $49.22 in the fourth quarter of 2009. The higher average price per BOE in the fourth quarter 2010 largely offset the 16% decline in production to 505,000 BOE.

Production taxes fell 32% to $1.5 million as a result of lower production more than offsetting the impact of higher average prices for oil and NGLs in the 2010 quarter compared to the year-ago quarter. Production expenses rose 3% to $8.7 million compared to the same period in 2009. Interest expense decreased 5% to $5.5 million compared to $5.8 million in the fourth quarter of last year, principally a result of lower outstanding borrowings resulting from debt reduction associated with asset sales and a lower blended interest rate.

For the fourth quarter ended December 31, 2010, RAM recorded a loss of $4.3 million, or $0.05 per share, compared to a loss of $12.6 million, or $0.16 per share, in the year ago quarter. The current year fourth quarter included $2.4 million in realized derivative losses which primarily reflect the risk-adjustment modification of the company's hedge portfolio after the $51.7 million gross proceeds from the sale of non-core properties in December.

Modified EBITDA (a non-GAAP measure) was $10.8 million for the fourth quarter, compared with $15.1 million in last year's quarter. Similarly, free cash flow (a non-GAAP measure) was $6.6 million, or $0.08 per share, for this year's fourth quarter compared to $10.8 million, or $0.14 per share, in last year's fourth quarter.

RAM to Webcast Conference Call to Review Fourth Quarter and Year-End 2010 Results

The company's teleconference call to review fourth quarter and year-end 2010 results will be broadcast live on a listen-only basis over the internet on Wednesday, March 16, at 10:00 a.m. Central Daylight Time. Interested parties may access the webcast by visiting the RAM Energy Resources, Inc. website at www.ramenergy.com. The teleconference may be accessed by dialing (866)202-4367 (domestic) or (617)213-8845 (international) and providing the call pass code "21516029" to the operator. An audio replay will be available until March 23, 2011 by dialing (888)286-8010 (domestic) or (617)801-6888 (international) and using call pass code "36771245".

Forward-Looking Statements

This release includes certain statements that may be deemed to be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements in this release, other than statements of historical facts that address estimates of capital spending, prices of oil and gas and company realizations, drilling activities 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.

About RAM Energy Resources

RAM Energy Resources, Inc. is an independent energy company engaged in the acquisition, exploitation, exploration, and development of oil and gas properties and the marketing of crude oil and natural gas. Company headquarters are in Tulsa, Oklahoma, and its common shares are traded on the Nasdaq under the symbol RAME. For additional information, visit the company website at www.ramenergy.com.

RAM Energy Resources, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share amounts)

    As of December 31,
   

2010

 

 

2009

ASSETS          
CURRENT ASSETS:          
Cash and cash equivalents   $ 37       $ 129  
Accounts receivable:          
Oil and natural gas sales, net of allowance of $50 ($50 at December 31, 2009)     9,797         12,585  
Joint interest operations, net of allowance of $479 ($641 at December 31, 2009)     631         1,303  
Other, net of allowance of $48 ($48 at December 31, 2009)     155         193  
Derivative assets     1,340         -  
Prepaid expenses     1,657         1,970  
Deferred tax asset     3,526         3,531  
Inventory     3,382         3,900  
Other current assets     4         27  
Total current assets     20,529         23,638  
PROPERTIES AND EQUIPMENT, AT COST:          
Proved oil and natural gas properties and equipment, using full cost accounting     689,472         702,502  
Other property and equipment     10,072         9,337  
      699,544         711,839  
Less accumulated depreciation, amortization and impairment     (489,634 )       (462,541 )
Total properties and equipment     209,910         249,298  
OTHER ASSETS:          
Deferred tax asset     31,001         31,573  
Deferred loan costs, net of accumulated amortization of $5,012 ($2,924 at December 31, 2009)     2,609         4,697  
Other     952         1,956  
Total assets   $ 265,001       $ 311,162  
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)          
CURRENT LIABILITIES:          
Accounts payable:          
Trade   $ 17,149       $ 15,697  
Oil and natural gas proceeds due others     9,414         10,113  
Other     452         636  
Accrued liabilities:          
Compensation     1,948         2,664  
Interest     2,448         2,933  
Income taxes     699         655  
Other     10         10  
Derivative liabilities     -         4,471  
Asset retirement obligations     639         711  
Long-term debt due within one year     127         126  
Total current liabilities     32,886         38,016  
DERIVATIVE LIABILITIES     203         358  
LONG-TERM DEBT     196,965         246,041  
ASSET RETIREMENT OBLIGATIONS     30,770         26,363  
OTHER LONG-TERM LIABILITIES     10         10  
COMMITMENTS AND CONTINGENCIES     -         900  
           
STOCKHOLDERS' EQUITY (DEFICIT):          
Common stock, $0.0001 par value, 100,000,000 shares authorized, 82,597,829 and 80,748,674 shares issued,          
78,386,983 and 76,951,883 shares outstanding at December 31, 2010 and 2009, respectively     8         8  
Additional paid-in capital     226,042         222,979  
Treasury stock - 4,210,846 shares (3,796,791 shares at December 31,2009) at cost     (6,976 )       (6,189 )
Accumulated deficit     (214,907 )       (217,324 )
Stockholders' equity (deficit)     4,167         (526 )
Total liabilities and stockholders' equity (deficit)   $ 265,001       $ 311,162  
           

RAM Energy Resources, Inc.
Consolidated Statements of Operations
(in thousands, except share and per share amounts)

           
    Three months ended December 31,     Years ended December 31,
    2010     2009     2010     2009
REVENUES AND OTHER OPERATING INCOME:                      
Oil and natural gas sales                      
Oil   $ 19,665       $ 20,541       $ 76,563       $ 66,281  
Natural gas     4,095         5,254         20,265         20,818  
NGLs     3,695         3,934         14,156         11,068  
Total oil and natural gas sales     27,455         29,729         110,984         98,167  
Realized gains (losses) on derivatives     (2,375 )       223         (5,193 )       19,255  
Unrealized gains (losses) on derivatives     250         (4,476 )       6,386         (30,561 )
Other     32         40         157         217  
Total revenues and other operating income     25,362         25,516         112,334         87,078  
                       
OPERATING EXPENSES:                      
Oil and natural gas production taxes     1,498         2,201         6,063         5,320  
Oil and natural gas production expenses     8,738         8,479         33,891         37,455  
Depreciation and amortization     6,838         7,273         27,225         31,650  
Accretion expense     239         527         1,527         1,976  
Impairment     -         -         -         47,613  
Share-based compensation     826         547         3,110         2,179  
General and administrative, overhead and other expenses, net of                      
operator's overhead fees     4,105         4,330         14,799         16,667  
Total operating expenses     22,244         23,357         86,615         142,860  
Operating income (loss)     3,118         2,159         25,719         (55,782 )
                       
OTHER INCOME (EXPENSE):                      
Interest expense     (5,539 )       (5,820 )       (22,655 )       (18,590 )
Interest income     3         13         27         82  
Other income (expense)     28         89         321         (440 )
INCOME (LOSS) BEFORE INCOME TAXES     (2,390 )       (3,559 )       3,412         (74,730 )
INCOME TAX PROVISION (BENEFIT)     1,904         9,062         995         (16,347 )
Net income (loss)   $ (4,294 )     $ (12,621 )     $ 2,417       $ (58,383 )
                       
BASIC INCOME (LOSS) PER SHARE   $ (0.05 )     $ (0.16 )     $ 0.03       $ (0.75 )
BASIC WEIGHTED AVERAGE SHARES OUTSTANDING     78,618,703         76,876,320         78,426,179         77,601,057  
                       
DILUTED INCOME (LOSS) PER SHARE   $ (0.05 )     $ (0.16 )     $ 0.03       $ (0.75 )
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING     78,618,703         76,876,320         78,426,179         77,601,057  
     

RAM Energy Resources, Inc.
Consolidated Statements of Cash Flows
(in thousands)

     
    Years ended December 31,
    2010     2009     2008
OPERATING ACTIVITIES:                
Net income (loss)   $ 2,417       $ (58,383 )     $ (129,953 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities-              

 

Depreciation and amortization     27,225         31,650         46,512  
Amortization of deferred loan costs     2,088         1,642         1,197  
Non-cash interest     3,086         1,605         -  
Accretion expense     1,527         1,976         2,207  
Impairment     -         47,613         269,886  
Unrealized (gain) loss on derivatives, net of premium amortization     (1,498 )       32,147         (31,762 )
Deferred income tax provision (benefit)     577         (16,865 )       (92,595 )
Other expense (income)     (574 )       448         13,184  
Share-based compensation     3,110         2,179         2,563  
Loss (gain) on disposal of other property, equipment and subsidiary     (38 )       35         180  
Undistributed losses on investment     -         -         165  
Changes in operating assets and liabilities, net of acquisitions                
Accounts receivable     3,704         (650 )       4,168  
Prepaid expenses, inventory and other assets     1,857         905         (4,283 )
Derivative premiums     (4,468 )       (1,781 )       (2,288 )
Accounts payable and proceeds due others     543         (10,641 )       14,606  
Accrued liabilities and other     (1,527 )       (15,387 )       (3,124 )
Restricted cash     -         16,000         (16,000 )
Income taxes payable     44         256         231  
Asset retirement obligations     (198 )       (377 )       (440 )
Total adjustments     35,458         90,755         204,407  
Net cash provided by operating activities     37,875         32,372         74,454  
INVESTING ACTIVITIES:                
Payments for oil and natural gas properties and equipment     (33,535 )       (29,871 )       (84,723 )
Proceeds from sales of oil and natural gas properties     49,366         6,120         2,950  
Payments for other property and equipment     (865 )       (604 )       (1,275 )
Proceeds from sales of other property and equipment     4         434         23  
Proceeds from sale of subsidiary, net of cash     -         -         308  
Acquisition of Ascent, net of cash acquired     -         -         35  
Other investments     -         -         114  
Net cash provided by (used in) investing activities     14,970         (23,921 )       (82,568 )
FINANCING ACTIVITIES:                
Payments on long-term debt     (98,490 )       (36,156 )       (175,306 )
Proceeds from borrowings on long-term debt     46,340         30,022         90,253  
Payments for deferred loan costs     -         (2,324 )       (74 )
Stock repurchased     (787 )       (28 )       (82 )
Warrants exercised     -         -         86,614  
Net cash provided by (used in) financing activities     (52,937 )       (8,486 )       1,405  
DECREASE IN CASH AND CASH EQUIVALENTS     (92 )       (35 )       (6,709 )
CASH AND CASH EQUIVALENTS, beginning of year     129         164         6,873  
CASH AND CASH EQUIVALENTS, end of year   $ 37

 

    $ 129       $ 164  

SUPPLEMENTAL CASH FLOW INFORMATION:

                           

Cash paid for income taxes

 

$

380

 

   

$

303

     

$

682

 

Cash paid for interest

 

$

17,988

     

$

13,428

     

$

25,813

 

DISCLOSURE OF NON CASH INVESTING AND FINANCING ACTIVITIES:

 

 

 

     

 

 

 

   

 

 

 

Asset retirement obligations

 

$

3,006

     

$

(4,724

)

   

$

787

 

Receipt of common stock for settlement of contingent receivable

 

$

-

     

$

2,134

     

$

-

 

                             

RAM Energy Resources, Inc.
Production by Area

                             
    Texas     Oklahoma     Louisiana     Other     Total
Year Ended December 31, 2010                            
Aggregate Net Production                            
Oil (MBbls)   559     322     79     35     995
NGLs (MBbls)   341     10     -     13     364
Natural Gas (MMcf)   3,128     849     689     150     4,816
MBoe   1,421     473     194     73     2,161
                             
Year Ended December 31, 2009                            
Aggregate Net Production                            
Oil (MBbls)   664     356     83     35     1,138
NGLs (MBbls)   375     15     -     16     406
Natural Gas (MMcf)   3,821     1,266     743     164     5,994
MBoe   1,676     582     207     77     2,542
                             
Change in MBoe   (255)     (109)     (13)     (4)     (381)
Percentage Change in MBoe   -15.2%     -18.7%     -6.3%     -5.2%     -15.0%
                             
                             
    Texas     Oklahoma     Louisiana     Other     Total
Three Months Ended December 31, 2010                            
Aggregate Net Production                            
Oil (MBbls)   134     78     17     9     238
NGLs (MBbls)   79     3     -     2     84
Natural Gas (MMcf)   688     205     175     34     1,102
MBoe   327     115     46     17     505
                             
Three Months Ended December 31, 2009                            
Aggregate Net Production                            
Oil (MBbls)   162     87     23     8     280
NGLs (MBbls)   96     3     -     4     103
Natural Gas (MMcf)   862     249     186     39     1,336
MBoe   402     131     54     17     604
                             
Change in MBoe   (75)     (16)     (8)     -     (99)
Percentage Change in MBoe   -18.7%     -12.2%     -14.8%     0.0%     -16.4%
                           

RAM Energy Resources, Inc.
Production and Prices Summary 

                           
      For the Three Months Ended     Increase       For Year Ended     Increase
      December 31,     (Decrease)       December 31,     (Decrease)
      2010     2009     %       2010     2009     %
                                       
  Production volumes:                                    
  Oil (MBbls)     238         280       -15 %       995         1,138     -13 %
  NGL (MBbls)     84         103       -18 %       364         406     -10 %
  Natural gas (MMcf)     1,102         1,336       -18 %       4,816         5,994     -20 %
  Total (Mboe)     505         604       -16 %       2,161         2,542     -15 %
                                       
  Average sale prices received:                                    
  Oil (per Bbl)   $ 82.63       $ 73.36       13 %     $ 76.95       $ 58.24     32 %
  NGL (per Bbl)   $ 43.99       $ 38.19       15 %     $ 38.89       $ 27.26     43 %
  Natural gas (per Mcf)   $ 3.72       $ 3.93       -5 %     $ 4.21       $ 3.47     21 %
  Total per Boe   $ 54.37       $ 49.22       10 %     $ 51.36       $ 38.62     33 %
                                       
  Cash effect of derivative contracts:                                    
  Oil (per Bbl)   $ (12.70 )     $ (1.70 )     647 %     $ (6.14 )     $ 4.94     -224 %
  NGL (per Bbl)   $ -       $ -      

-

      $ -       $ -     -  
  Natural gas (per Mcf)   $ 0.59       $ 0.52       13 %     $ 0.19       $ 2.27     -92 %
  Total per Boe   $ (4.70 )     $ 0.37       -1370 %     $ (2.40 )     $ 7.57     -132 %
                                       
  Average prices computed after cash effect                                    
  of settlement of derivative contracts:                                    
  Oil (per Bbl)   $ 69.93       $ 71.66       -2 %     $ 70.81       $ 63.18     12 %
  NGL (per Bbl)   $ 43.99       $ 38.19       15 %     $ 38.89       $ 27.26     43 %
  Natural gas (per Mcf)   $ 4.31       $ 4.45       -3 %     $ 4.40       $ 5.74     -23 %
  Total per Boe   $ 49.67       $ 49.59       0 %     $ 48.96       $ 46.19     6 %
                                       
  Cash expenses (per Boe):                                    
  Oil and natural gas production taxes   $ 2.97       $ 3.64       -18 %     $ 2.81       $ 2.09     34 %
  Oil and natural gas production expenses   $ 17.30       $ 14.04       23 %     $ 15.68       $ 14.73     6 %
  General and administrative   $ 8.13       $ 7.17       13 %     $ 6.85       $ 6.56     4 %
  Interest   $ 8.85       $ 7.31       21 %     $ 8.32       $ 5.28     58 %
  Taxes   $ (0.47 )     $ (0.25 )     88 %     $ 0.18       $ 0.12     50 %
  Total per Boe   $ 36.78       $ 31.91       15 %     $ 33.84       $ 28.78     18 %
 

RAM Energy Resources, Inc.

Modified EBITDA and Free Cash Flow

(non-GAAP measures)

(Unaudited)

 

Non-GAAP Financial Measures



Modified EBITDA, a non-GAAP measure, is determined by adding the following to net income (loss): interest expense, income taxes, depreciation, amortization, accretion, share-based compensation, impairment charges and unrealized gains or losses on derivative or MTM settlement transactions. Free cash flow is also a non-GAAP measure representing modified EBITDA after adjustments for the cash portion of interest and income taxes. These non-GAAP measures are 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). These non-GAAP measures are widely accepted as financial indicators of an oil and gas company's ability to generate cash which is used to internally fund exploration and development activities and fund debt service costs. These non-GAAP measures are 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.
                       
$000s, except per share amounts                      
      Qtr Ended     Qtr Ended     Year Ended     Year Ended
      12/31/2010     12/31/2009     12/31/2010     12/31/2009
                         
Modified EBITDA:                      
  Net income (loss)   $ (4,294 )     $ (12,621 )     $ 2,417       $ (58,383 )
  Plus: Interest expense   $ 4,267       $ 4,522       $ 17,481       $ 15,343  
  Plus: PIK interest   $ 750       $ 776       $ 3,086       $ 1,605  
  Plus: Amortization of deferred loan costs   $ 522       $ 522       $ 2,088       $ 1,642  
  Plus: Depreciation, amortization and accretion   $ 7,077       $ 7,800       $ 28,752       $ 33,626  
  Plus: Share-based compensation   $ 826       $ 547       $ 3,110       $ 2,179  
  Plus: Income tax provision (benefit)   $ 1,904       $ 9,062       $ 995       $ (16,347 )
  Plus: MTM legal settlement   $ -       $ -       $ (574 )     $ 448  
  Plus: Impairment charges   $ -       $ -       $ -       $ 47,613  
  Less: Unrealized (gain) loss on derivatives   $ (250 )     $ 4,476       $ (6,386 )     $ 30,561  
                         
Modified EBITDA   $ 10,802       $ 15,084       $ 50,969       $ 58,287  
                         
Less:                        
                         
  Cash paid for interest   $ 4,470       $ 4,417       $ 17,988       $ 13,428  
  Cash paid (received) for income tax   $ (236 )     $ (154 )     $ 380       $ 303  
                         
Free cash flow   $ 6,568       $ 10,821       $ 32,601       $ 44,556  
                         
Weighted average shares outstanding - basic     78,619         76,876         78,426         77,601  
Weighted average shares outstanding - diluted     78,619         76,876         78,426         77,601  
                         
Free cash flow per share - basic   $ 0.08       $ 0.14       $ 0.42       $ 0.57  
Free cash flow per share - diluted   $ 0.08       $ 0.14       $ 0.42       $ 0.57  

SOURCE: RAM Energy Resources, Inc.

RAM Energy Resources, Inc.
Robert E. Phaneuf, 918-632-0680
Vice President - Corporate Development

 


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