UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
8–K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15 (d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date of
Report (Date of Earliest Event Reported): November 11,
2011 (November 10, 2011)
CRIMSON
EXPLORATION INC.
(Exact
Name of Registrant as Specified in Charter)
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Delaware
(State or
Other Jurisdiction of Incorporation)
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001-12108
(Commission
File Number)
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20-3037840
(IRS
Employer Identification No.)
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717 Texas
Ave., Suite 2900, Houston Texas 77002
(Address
of Principal Executive Offices)
(713)
236-7400
(Registrant’s
telephone number, including area code)
_____________________________________________________________________________
Check the
appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see General Instruction A.2.
below):
[] Written
communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[] Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[] Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 14d-2(b))
[] Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
Item 7.01
Regulation FD Disclosure
As
previously disclosed, Crimson Exploration Inc. held
an earnings conference call on November 10, 2011 to discuss
financial and operational results for the third quarter ended
September 30, 2011. A copy of the transcript of the
earnings conference call is attached as Exhibit 99.1 to this
Current Report on Form 8-K.
In
accordance with General Instruction B.2 of Form 8-K, the transcript
shall not be deemed “filed” for the purposes of Section
18 of the Exchange Act of 1934, as amended, or otherwise subject to
the liabilities of that section, nor shall such information and
Exhibit be deemed incorporated by reference into any filing under
the Securities Act of 1933 or the Exchange Act of 1934, each as
amended, except as shall be expressly set forth by specific
reference in such a filing.
Item 9.01
Financial Statements and
Exhibits.
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Exhibit
Number
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Description
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99.1
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Transcript
of Earnings Conference Call dated November 10, 2011 (furnished
herewith)
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf
by the undersigned hereunto duly authorized.
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CRIMSON
EXPLORATION INC.
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Date:
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November
11, 2011
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/s/ E.
Joseph Grady
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E. Joseph
Grady
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Senior
Vice President and Chief Financial Officer
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Exhibit
Index
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Exhibit
Number
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Description
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99.1
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Transcript
of Earnings Conference Call dated November 10, 2011 (furnished
herewith)
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EXHIBIT
99.1
CRIMSON
EXPLORATION INC
Moderator:
Joe Grady
11-10-11/9:30
am CT
Confirmation
# 4153260
Page
1
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Moderator:
Joe Grady
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November
10, 2011
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9:30 am
CT
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Operator: Good
day and welcome to the Crimson Exploration Third Quarter 2011
Financial Results conference call. As a reminder, today’s
conference is being recorded.
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At this
time, I would like to turn the call over to Chief Financial
Officer, Mr. Joe Grady. Please go ahead.
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Joe
Grady: Thank you and welcome everybody to the Third
Quarter Crimson Exploration Earnings Call.
On the
agenda today, I will start out with a review of the financial
results for the quarter. Allan Keel, our President and CEO, will
then give you an overview of our operations, and then we will open
it up for a Q&A session.
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But before
we get started, I need to go through the forward-looking statements
qualifier. I want to remind everyone that the earnings release and
the discussion that will be had here today contain forward-looking
statements as defined by the Securities & Exchange Commission
that include comments concerning Crimson’s strategic plans,
expectations, and objectives for future operations.
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CRIMSON
EXPLORATION INC
Moderator:
Joe Grady
11-10-11/9:30
am CT
Confirmation
# 4153260
Page
2
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Such
statements are based on assumptions we believe to be appropriate
under the circumstances, however those statements are just
estimates and not guarantees of future performance or results and
therefore should be considered in that context.
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Starting
with the financial results, on a net income basis, net income was a
half a million dollars for the quarter compared to a net loss of
$3.8 million in the third quarter of last year. Excluding
unrealized mark to market hedging gains and charges in the 2011 and
2010 quarters respectively, a non-cash impairment expense on our
unproved lease costs during 2011, net income for the third quarter
would have been $800,000 compared to a net loss of $2.4 million for
the 2010 quarter. This improvement resulted from an approximate 23%
increase in production, lower operating costs partly offset by
slightly lower realized prices.
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Earnings
per share per basic share was 1 cent for the third quarter compared
to a net loss per share of 10 cents for the prior year quarter.
Exclusive of the previously mentioned unrealized mark to market
results in the impairment, our net income per basic share would
have been 2 cents per share for the third quarter of ’11
compared to a net loss of 6 cents per share for the 2010 quarter.
Basic shares outstanding during the two quarters were 45.1 million
for 2011 and 38.8 million in the third quarter of 2010.
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On a cash
flow basis for the third quarter of ’11, adjusted EBITDAX as
we defined it in our release was $22.5 million compared to the
prior year quarter of $15.5 million or a 45% increase. Cash flow,
which is adjusted EBITDAX les interest expense, was $16.4 million
or 36 cents a share and a 41% increase over cash flow of $9.7
million or 25 cents per basic share in the third quarter of
2010.
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On
production, production for the current quarter averaged $45.2
million a day, which was within our guidance of $45 million to $49
million and up 23% over the third quarter of 2010.
Recent
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CRIMSON
EXPLORATION INC
Moderator:
Joe Grady
11-10-11/9:30
am CT
Confirmation
# 4153260
Page
3
successes in Liberty County and our Eagle Ford acreage also led to
a 21% increase in oil and liquids production to 2186 barrels of oil
and liquids per day.
As we
mentioned in our release, we project fourth quarter production to
range from 39 to 43 million a day, which is slightly lower than the
third quarter, due to a strategic shift in our CAPEX program to oil
and liquids (later) projects that typically produce a lower
equivalent basis and that’s based on the 6:1 volumetric ratio
than the cash projects drilled over the last year and a
half.
On a total
for the year basis and assuming the guidance we have for the fourth
quarter, we still project on a year-to-year basis an increase of
30%.
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And one
thing I will mention on the shift from gas to oil, even though on a
volumetric basis, the new production that we derived from the new
oil wells is lower than what we typical have from gas. The revenue
per unit generated by that production is almost five times that we
get from gas. So even though production going forward may be - we
might not experience the same growth rates we have in the past from
a cash flow standpoint. It should be dramatically improved. We are
currently working on our 2012 budget, so it’s premature at
this point to give any further guidance or indications on what 2012
production might be.
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On sales
prices, while the third quarter field prices for oil and liquids
were higher than the prior year quarter, natural gas pricing was
down and hedges that we had in 2011 were less profitable than what
we had in 2010. Therefore, on a realized basis, i.e. including the
results of hedges settled in the quarter, the weighted average
price was $6.96 per Mcfe versus $7.21 per Mcfe in the prior year
quarter.
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On hedging
for the remainder of 2011, we have approximately 61% of our
forecasted gas production hedged at an average floor of $5.95 and
approximately 45% of our forecasted oil production at an average
floor of $76.33.
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CRIMSON
EXPLORATION INC
Moderator:
Joe Grady
11-10-11/9:30
am CT
Confirmation
# 4153260
Page
4
Moving to
the expense side, directly lease operating costs in the third
quarter were $900,000 or 22 cents per Mcfe compared to $3.6 million
or $1.06 per Mcfe in the third quarter last year. As we described
in our Q, we recorded in the third quarter this year a $2.3 million
reduction in direct operating expenses associated with a change in
the way we estimate our liability for LOE at the end of a
particular balance sheet day.
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And in
doing that, we made that change in the third quarter of this year
and determined that our liability at that point was $2.3 million
higher than it needs to be, so we took that difference as a credit
to expense in the third quarter. If you include that adjustment,
direct LOE was approximately $3.3 million compared to that $3.6
million in the prior year quarter. For the fourth quarter,
we’ve provided guidance of $3.3 million to $3.6 million for
the fourth quarter of ’11, a slight increase over the
unadjusted amount for the current quarter as we bring new wells on
stream.
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On G&A
for the third quarter of 2011, we incurred $4.6 million compared to
$4.5 million in the prior year quarter. Exclusive of non-cash stock
option expense, cash G&A was $4.1 million or 99 cents per Mcfe
compared to $4 million or $1.20 per Mcfe for the prior year
quarter. As you noticed in our release, the guidance on fourth
quarter cash G&A is $3.9 million to $4.2 million.
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On CAPEX,
we spent a little over $17 million in the third quarter, again
that’s a year to date spend of $61.5 million. As we
previously reported, we raised our estimated total CAPEX for 2011
by 30% to a total of $78 million to accelerate drilling on our
Eagle Ford oil projects. And Allan will give you a little bit of
insight as to where we are on that in a little bit. We expect
fourth quarter CAPEX to be funded through cash flow from operations
and temporary draws on our revolver.
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As I
mentioned we are currently working on our 2012 budget, so I
don’t have any guidance to give you as to how much we might
spend in 2012. However, I can tell you that at a minimum,
we
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CRIMSON
EXPLORATION INC
Moderator:
Joe Grady
11-10-11/9:30
am CT
Confirmation
# 4153260
Page
5
expect to be active all year in the
Eagle Ford and the Woodbine plays and we do stay committed to
staying within our cash flow.
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And that
concludes the financial review and now I will turn it over to Allan
for an operations update.
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Allan
Keel: Thanks Joe and good morning everyone and thanks
for joining us this morning and to hear you know what we’ve
done in the third quarter and what our plans are going
forward.
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As a
result of some activity - you know continued activity in the field;
we’re not going to provide a full operational update this
morning because sometime in the next few weeks we will come out
with a full operational report and save that update until the end.
But until then, I will give you a brief update on our major
projects.
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In the
third quarter, we continued to experience success in our program.
Off of the success of our initial Eagle Ford oil well down in
Karnes County, as you will recall, we increased our CAPEX budget by
30% to continue drilling down in Karnes County for the remainder of
this year into the fourth quarter and into 2012.
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