RAM Energy Resources, Inc. (Nasdaq: RAME) today announced second
quarter 2007 earnings and financial highlights. Second Quarter 2007
Highlights RAM�s production for the second quarter was 337,000
barrels of oil equivalent (BOE), an increase of nearly eight
percent sequentially from the first quarter 2007 production level
of 313,000 BOE. Daily production for the second quarter averaged
3,706 BOE compared to first quarter�s daily production average of
3,478 BOE. Income for the second quarter was $902,000, or $0.02 per
share, compared to a loss of $3.1 million in the year-ago quarter.
The Ashe C 1H and the T.L. Dickenson 1-H wells were completed
during the quarter; individually each posted among the best initial
production rates tested by the company in any of its jointly held
Barnett Shale wells to date. In addition two Chesapeake-operated
wells were completed during the quarter, the Weyerhaeuser #8-22 and
Weyerhaeuser #10-22. Net daily production from these four wells at
June 30, 2007 totaled approximately 376 BOE. Production from these
wells will contribute fully to third quarter production. In
addition, the Weyerhaeuser #9-22 was completed as a producer in
late July. Current Highlights The company�s most recent well
proposed to EOG Resources, Inc. and others that jointly own
interests with RAM in the company�s Barnett Shale acreage spud in
late July and is currently drilling. This well, the Dethloff #1H,
is to be drilled to test the Lower Barnett Shale formation in Wise
County, Texas. The Dethloff #1H well is the second RAM-proposed
well that EOG has drilled this year. In addition, EOG has elected
to drill and participate as operator in each of three additional
wells proposed by RAM in jointly held Barnett Shale leases. RAM�s
mid-year review of reserves supported by results of drilling
activity has led to an increase in the number of identified proved
undeveloped reserve (PUD) locations booked in the company�s jointly
owned Barnett Shale leases to nine, compared to five at year-end
2006. In addition to the Dethloff #1H and the previously mentioned
nine PUD locations, currently the company has an inventory of 15
probable and seven possible seismically identified locations,
bringing the current total inventory available to support potential
future growth to a substantial 32 locations. Eleven wells in the
company�s Barnett Shale play are currently producing. Subsequent to
June 30, 2007, RAM�s credit facility was amended. The effect of the
amendment was to raise borrowing availability to $150 million from
the previous level of $140 million, lower interest charged on
existing outstanding balances and improve certain other covenants.
As a result, liquidity is currently a substantial $60 million.
Income and Cash Flow For the quarter ended June 30, 2007, RAM
reported net income of $902,000, or $0.02 per share, based upon
40.4 million weighted average fully diluted shares outstanding.
Results for the current quarter were negatively impacted by pre-tax
unrealized mark-to-market derivative losses of $102,000. Results of
the second quarter 2007 compared to the year-ago quarter were the
product of higher natural gas and natural gas liquids production,
higher realized prices for natural gas and natural gas liquids
combined with lower net interest expense, which were partially
offset by lower oil production and a lower average price of oil as
well as higher operating expenses. By comparison, in the second
quarter 2006, RAM reported a net loss of $3.1 million, or a
restated loss of $0.10 a share, which included a pre-tax,
unrealized mark-to-market derivative loss of $2.1 million and the
impact of $3.3 million in non-cash charges related to the merger
with Tremisis. Cash flow from operations, a non-GAAP measure, was
$6.0 million for the second quarter of 2007 compared to cash flow
from operations of $4.0 million in the same quarter of 2006. See
the attached table for a reconciliation of these non-GAAP financial
measures to the corresponding GAAP amounts of cash provided by
operating activities of $7.5 million and $7.4 million for the
second quarter of 2007 and second quarter of 2006 respectively.
Production Total production for the first quarter 2007 rose to
337,000 BOE, an increase of 24,000 BOE, or eight percent, compared
to the first quarter of this year and two percent ahead of last
year�s second quarter production of 329,000 BOE. The rise in the
current quarter�s production is due to the positive impact of the
acquisition of reserves and accompanying production in May of this
year which, together with volume additions from drilling PUD
locations and additional exploitation activities, more than offset
the natural declines in our existing inventory of predominately
mature producing fields. Second quarter 2007 production of natural
gas and natural gas liquids rose 21 percent and 16 percent
respectively while production of oil dipped eight percent, compared
to the previous year�s quarter. Commodity Prices and Revenues The
company�s realized price for oil declined seven percent to an
average of $62.54 per barrel in the second quarter of 2007,
compared with last year�s second quarter average realized price of
$67.35 per barrel. By contrast, the company�s realized price for
natural gas rose 21 percent to an average of $6.70 per thousand
cubic feet (Mcf) compared to an average of $5.54 per Mcf in the
second quarter of 2006. Similarly, the price of natural gas liquids
increased 17 percent, averaging $44.64 per barrel for this year�s
second quarter. The increase in natural gas and natural gas liquids
production combined with higher average realized prices for natural
gas and natural gas liquids allowed oil and natural gas revenues to
reach $17.9 million in the second quarter of 2007 and remain
essentially flat with the $18.0 million of oil and natural gas
revenues 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.
In the second quarter 2007, contract settlements and premium costs
of derivatives were a nominal $105,000 and unrealized
mark-to-market losses were $102,000, resulting in realized and
unrealized losses impacting the quarter of $207,000. As a result,
total revenues and other operating income for the second quarter
were $17.8 million. In the similar quarter last year, realized
derivative losses of $2.0 million and unrealized derivative losses
of $2.1 million combined with oil and gas revenue of $18.0 million
to reduce total revenues and other operating income to $14.0
million. Costs and Expenses Production expenses were $13.89 per BOE
in the second quarter of 2007, or a total of $4.7 million, one
percent lower on a BOE basis than the $14.02 per BOE, or a total of
$4.6 million, in the previous year�s quarter. The slight reduction
in expense on a BOE basis was primarily due to lower workover
costs. Production taxes were $3.04 per BOE in this year�s second
quarter, or a total of $1.0 million. This was 14 percent above the
$2.66 per BOE, or a total of $874,000 during the 2006 quarter,
principally as a result of selling a larger quantity of natural gas
in a higher taxing state than in the comparable quarter of 2006.
General and administrative expenses of $2.6 million, or $7.64 per
BOE, rose 20 percent on a BOE basis as a result of higher salary
expense and an increased number of employees. General and
administrative expenses in last year�s second quarter were $2.1
million. Interest expense net of interest income for the second
quarter decreased by $2.0 million, or 35 percent, to $3.7 million
compared to the prior year�s quarter due to the absence of the
write-off of unamortized loan fees and pre-payment premiums
incurred in the year-ago quarter in association with the
establishment of new credit facilities, which were partially offset
by higher interest rates and higher outstanding indebtedness in the
current quarter. Capital Expenditures Capital expenditures totaled
$24.0 million in the second quarter 2007; $2.1 million was
allocated to lower risk development activities, $2.9 million to
exploratory activities, $18.7 million to an acquisition and $0.4
million for the acquisition of leases. On May 15, 2007, RAM closed
an acquisition agreement covering 120 wells in Southeast New Mexico
and West Texas. The purchase price of $18.7 million was funded
primarily from the company�s available balance provided under its
revolving credit facility. Total non-acquisition capital
commitments for the first half of the year were $9.9 million. The
non-acquisition capital budget for the 2007 year remains at $36.3
million. RAM participated in the drilling of 30 gross (30 net)
development wells and nine gross (1.6 net) exploratory wells in the
first six months of the year in contrast to a total of 42 gross
(41.7 net) development wells and four gross (2.1 net) exploratory
wells drilled in the same period of 2006. Liquidity Subsequent to
June 30, 2007, RAM�s borrowing availability under its credit
facility was expanded to $150 million from the previous level of
$140 million. The amendment to the credit facility raises RAM�s
borrowing availability under the revolving credit facility to $100
million from the previous level of $50 million and called for RAM
to reduce its outstanding balance under its term loan to $50
million from the previous level of $90 million. The amended and
restated credit agreement which expanded availability also lowered
the interest rate margin applied above the company�s LIBOR base on
the existing level of borrowings and improved certain covenants,
representing a potentially meaningful reduction to future interest
on RAM�s current borrowings of $119 million under the credit
facility. Inclusive of $29 million in cash on hand, the company
estimates current liquidity to be $60 million. �We are pleased by
the confidence demonstrated by our lenders in RAM�s assets and
operations which supported the concomitant increase in our credit
facility and reduction in interest rates applied to outstanding
balances, particularly given the recent volatility in the corporate
debt markets which is being reflected in widening credit spreads,�
said Larry Lee, Chairman and CEO of RAM Energy Resources. Six
Months Results For the six months ended June 30, 2007, RAM reported
net income of $322,000, or $0.01 per share, on 38.9 million
weighted average diluted shares outstanding. Results of the first
six months of 2007 compared to the same time last year were
positively impacted by slightly higher total production, lower
realized and unrealized losses on derivatives and lower interest
expense net of interest income. Total revenues for the first half
of 2007 were $32.0 million compared to $32.4 million recorded in
the first half of 2006. Total operating costs rose two percent
during the first half of 2007 compared to those of the same period
in 2006. The notable exception to the cost trend was interest
expense net of interest income, which totaled $7.3 million in the
first half of 2007, 21 percent below the same total during the
first six months of 2006. As a result of the above mentioned
factors, pre-tax income in this year�s first half increased to
$508,000 compared to the loss of $412,000 posted in last year�s
first half, primarily due to lower interest expense net of interest
income recorded in the first six months of 2007. Net income for the
first six months of 2007 was $322,000, or $0.01 per share, compared
to a loss of $255,000, or a restated loss of $0.01 per share in the
first six months of 2006. Cash flow from operations, a non-GAAP
measure, was $10.1 million for the first six months of 2007, up
eight percent compared to $9.3 million for the same period in 2006.
See the attached table for a reconciliation of these non-GAAP
financial measures to the corresponding GAAP amounts of cash
provided by operating activities of $7.5 million for the six months
ended June 30, 2007 and $15.4 million for the six months ended June
30, 2006. RAM Intends to File Amended 10-K and 10-Q � To Clarify
Accounting Treatment On or before August 13, 2007 RAM intends to
file a Form 10-K/A with the SEC, to amend the company�s Annual
Report on Form 10-K for the fiscal year ended December 31, 2006.
The primary purpose of the filing will be to clarify the accounting
treatment applied to the reverse merger recapitalization of RAM
Energy, Inc. arising from an interpretive disparity in methodology
followed in the calculation of past share activity of RAM Energy,
Inc. and adjusting common stock and additional paid-in-capital to
reflect the impact to these balance sheet accounts of the preferred
accounting treatment. The filing will indicate that reported net
income remains unchanged in each year of the three year period
ending December 31, 2006; however, the change in methodology
impacts the calculation of shares outstanding of the accounting
acquirer (RAM Energy, Inc.) during the periods and thus earnings
per share. (See attached table entitled Summary of Recalculation of
Weighted Average Shares Outstanding and Earnings Per Share.) As
restated, pursuant to the planned filing, diluted earnings per
share for RAM Energy Resources, Inc. were $0.16, $0.02 and $0.20
for the periods ended December 31, 2006, December 31, 2005 and
December 31, 2004, respectively, based on recalculated weighted
average diluted shares outstanding of 32,105,885 in 2006,
26,492,286 in 2005 and 29,706,104 in 2004 respectively. As
originally reported, diluted earnings per share were $0.20, $0.07
and $1.06 for the periods ended December 31, 2006, December 31,
2005 and December 31, 2004, respectively, based on calculations
using weighted average diluted shares outstanding of 25,658,711 in
2006, 7,700,000 in 2005 and 5,739,057 in 2004 respectively.
Similarly, with respect to balance sheet accounts, the restatement
will have no effect on reported shareholder deficit, but rather the
components of paid-in-capital and common stock will be adjusted to
reflect the preferred accounting interpretation. The interpretative
issue necessitating the filing of the Form 10-K/A for the year
ended 2006 also applies to the first quarter 2007 reported results,
requiring the company�s similar restatement of the Form 10-Q for
this period, which the company also intends to file with the SEC on
or before August 13, 2007. For the period ended March 31, 2007,
although weighted average diluted shares outstanding will be
restated, there will be no change to the previously reported loss
of $0.02 per diluted share. However, as restated, diluted earnings
per share for RAM Energy Resources, Inc. were $0.11 and $0.06 for
the periods ended March 31, 2006 and March 31, 2005 respectively.
As originally reported, diluted earnings per share were $1,195.41
and $644.44 for the periods ended March 31, 2006 and March 31, 2005
respectively. RAM to Webcast Second Quarter 2007 Conference Call
The company�s teleconference call to review second quarter results
will be broadcast live on a listen-only basis over the internet on
Friday, August 10, at 8:30 a.m. Central Daylight 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 (866)510-0712
(domestic) or (617)597-5380 (international) and providing the call
identifier �33540148� 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 August
17, 2007 by dialing (888)286-8010 (domestic) or (617)801-6888
(international) and using pass code �50972600.� 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 natural 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) � June 30, December
31, 2007 2006 (unaudited) (Restated) ASSETS CURRENT ASSETS: Cash
and cash equivalents $ 28,519 $ 6,721 Accounts receivable: Oil and
natural gas sales 6,756 6,194 Joint interest operations, net of
allowances of $189 ($187 at December 31, 2006) 240 750 Income taxes
20 121 Other, net of allowance of $29 ($33 at December 31, 2006)
184 236 Derivative assets - 677 Prepaid expenses 691 1,013 Other
current assets � 156 � � - � Total current assets 36,566 15,712 �
PROPERTIES AND EQUIPMENT, AT COST: Oil and natural gas properties
and equipment, using full cost accounting 213,749 185,284 Other
property and equipment � 6,207 � � 6,098 � 219,956 191,382 Less
accumulated amortization and depreciation � (56,214 ) � (48,577 )
Total properties and equipment 163,742 142,805 OTHER ASSETS:
Deferred loan costs, net of accumulated amortization of $5,232
($4,840 at December 31, 2006) 2,201 2,593 Other � 764 � � 615 �
Total assets $ 203,273 � $ 161,725 � � LIABILITIES AND
STOCKHOLDERS' DEFICIT CURRENT LIABILITIES: Accounts payable: Trade
$ 6,283 $ 7,810 Oil and natural gas proceeds due others 3,022 3,886
Related party 44 14 Other 109 31 Accrued liabilities: Compensation
746 1,611 Interest 5,489 3,849 Income taxes 369 223 Derivative
liabilities 133 - Long-term debt due within one year � 28,665 � �
756 � Total current liabilities 44,860 18,180 � OIL & NATURAL
GAS PROCEEDS DUE OTHERS 2,558 2,481 DERIVATIVE LIABILITIES 545 -
LONG-TERM DEBT 119,103 131,481 DEFERRED AND OTHER NON-CURRENT
INCOME TAXES 26,612 26,677 ASSET RETIREMENT OBLIGATIONS 10,933
10,801 COMMITMENTS AND CONTINGENCIES - - � STOCKHOLDERS' DEFICIT:
Common stock, $0.0001 par value, 100,000,000 shares authorized;
42,050,136 and 34,276,805 shares issued; 41,212,861 and 33,439,530
shares outstanding at June 30, 2007 and December 31, 2006,
respectively 4 3 Additional paid-in capital 30,067 2,308 Treasury
stock - 837,275 shares at cost (3,768 ) (3,768 ) Accumulated
deficit � (27,641 ) � (26,438 ) Stockholders' deficit � (1,338 ) �
(27,895 ) Total liabilities and stockholders' deficit $ 203,273 � $
161,725 � � RAM Energy Resources, Inc. Condensed consolidated
statements of operations (in thousands, except share and per share
amounts) (unaudited) � Three months ended Six months ended June 30,
June 30, 2007 � 2006 2007 � 2006 (Restated) (Restated) REVENUES AND
OTHER OPERATING INCOME: Oil and natural gas sales $ 17,883 $ 17,973
$ 33,027 $ 34,783 Realized and unrealized losses on derivatives
(207 ) (4,178 ) (1,291 ) (2,770 ) Other � 99 � � 180 � � 302 � �
424 � Total revenues and other operating income � 17,775 � � 13,975
� � 32,038 � � 32,437 � � OPERATING EXPENSES: Oil and natural gas
production taxes 1,026 874 1,850 1,684 Oil and natural gas
production expenses 4,683 4,607 9,210 8,913 Depreciation and
amortization 4,129 3,311 7,554 6,524 Accretion expense 144 132 290
265 Share-based compensation 221 2,218 394 2,218 General and
administrative, overhead and other expenses, net of operator's
overhead fees � 2,578 � � 2,088 � � 4,924 � � 4,047 � Total
operating expenses � 12,781 � � 13,230 � � 24,222 � � 23,651 �
Operating income � 4,994 � � 745 � � 7,816 � � 8,786 � � OTHER
INCOME (EXPENSE): Interest expense (3,990 ) (5,778 ) (7,828 )
(9,307 ) Interest income � 313 � � 82 � � 520 � � 109 � INCOME
(LOSS) BEFORE INCOME TAXES � 1,317 � � (4,951 ) � 508 � � (412 ) �
INCOME TAX PROVISION (BENEFIT) � 415 � � (1,882 ) � 186 � � (157 )
� NET INCOME (LOSS) $ 902 � $ (3,069 ) $ 322 � $ (255 ) � EARNINGS
(LOSS) PER SHARE: Basic $ 0.02 $ (0.10 ) $ 0.01 $ (0.01 ) Diluted $
0.02 $ (0.10 ) $ 0.01 $ (0.01 ) � WEIGHTED AVERAGE SHARES
OUTSTANDING: Basic 40,292,725 30,703,058 38,759,576 28,609,304
Diluted 40,384,374 30,703,058 38,850,432 28,609,304 � RAM Energy
Resources, Inc. Condensed consolidated statements of cash flows (in
thousands) (unaudited) � Six months ended June 30, 2007 � 2006
OPERATING ACTIVITIES: Net income (loss) $ 322 $ (255 ) Adjustments
to reconcile net income (loss) to net cash provided by operating
activities: Depreciation and amortization- Oil and natural gas
properties and equipment 7,250 6,176 Amortization of deferred loan
costs and Senior notes discount 413 562 Charge off of unamortized
deferred loan costs - 1,055 Other property and equipment 304 348
Accretion expense 290 265 Unrealized (gain) loss on derivatives
1,156 (844 ) Deferred income taxes (66 ) (157 ) Share-based
compensation 394 2,218 Gain on disposal of other property and
equipment - (99 ) Changes in operating assets and liabilities-
Accounts receivable 101 1,093 Prepaid expenses and other current
assets 166 567 Accounts payable (2,283 ) 616 Income taxes payable
146 (109 ) Accrued liabilities and other � (697 ) � 3,930 � Total
adjustments � 7,174 � � 15,621 � Net cash provided by operating
activities 7,496 15,366 � INVESTING ACTIVITIES: Payments for oil
and natural gas properties and equipment (28,515 ) (10,493 )
Proceeds from sales of oil and natural gas properties and equipment
50 3,502 Payments for other property and equipment (109 ) (566 )
Proceeds from sales and disposals of other property and equipment �
- � � 366 � Net cash used in investing activities (28,574 ) (7,191
) � FINANCING ACTIVITIES: Payments on long-term debt (546 ) (87,508
) Payments of loan fees - (2,977 ) Proceeds from borrowings on
long-term debt 16,056 106,454 Common stock offering, net of direct
costs 27,366 - Stock redemption - (9,792 ) Repurchase of stock -
(593 ) Payments of merger costs - (4,187 ) Cash acquired in merger
- 3,801 Dividends paid � - � � (500 ) Net cash provided by
financing activities � 42,876 � � 4,698 � � INCREASE IN CASH AND
CASH EQUIVALENTS 21,798 12,873 � CASH AND CASH EQUIVALENTS,
beginning of period � 6,721 � � 70 � CASH AND CASH EQUIVALENTS, end
of period $ 28,519 � $ 12,943 � � � SUPPLEMENTAL CASH FLOW
INFORMATION: Cash paid for interest $ 7,300 � $ 2,618 � Cash paid
for income taxes $ 5 � $ 109 � � DISCLOSURE OF NONCASH FINANCING
ACTIVITIES: Accrued interest added to principal balance of
revolving Credit Facility $ - � $ 2,797 � � RAM Energy Resources,
Inc. Summary of Recalculation of Weighted Average Shares
Outstanding and Earnings Per Share(a) � Years ended December 31,
2006 � 2005 � 2004 � Net Income $ 5,048,000 � $ 543,000 � $
6,076,000 � AS ORIGINALLY REPORTED: Weighted average shares - basic
24,347,607 7,700,000 5,739,057 Dilutive effect of unvested stock
grants 92,148 - - Dilutive effect of warrants � 1,218,956 � � - � �
- Weighted average shares - diluted � 25,658,711 � � 7,700,000 � �
5,739,057 � Basic earnings per share $ 0.21 � $ 0.07 � $ 1.06
Diluted earnings per share $ 0.20 � $ 0.07 � $ 1.06 � AS RESTATED:
Weighted average shares - basic 30,808,065 26,492,286 29,706,104
Dilutive effect of unvested stock grants 78,864 - - Dilutive effect
of warrants � 1,218,956 � � - � � - Weighted average shares -
diluted � 32,105,885 � � 26,492,286 � � 29,706,104 � Basic earnings
per share $ 0.16 � $ 0.02 � $ 0.20 Diluted earnings per share $
0.16 � $ 0.02 � $ 0.20 � � (a) The stockholders of RAM Energy, Inc.
received 25,600,000 shares of Tremisis common stock and $30 million
in cash upon consummation of a merger on May 8, 2006. We have
accounted for the merger as a reverse acquisition, treated as a
recapitalization of RAM Energy, Inc. However, our original
statements of stockholders� deficit reflect the historical shares
held by the Tremisis shareholders, rather than the shares issued in
the merger with RAM Energy, Inc., the accounting acquirer.
Accounting for a reverse merger requires that the past share
activity of the entity gaining control be recast using the exchange
ratio to reflect the equivalent number of shares received in the
acquisition, while also adjusting common stock and additional
paid-in capital of any difference in par value of the stock.
Accordingly, we have restated the shares outstanding and earnings
per share. � RAM Energy Resources, Inc. Production and Price
Summary � Three months ended Percent June 30, Increase � 2006 �
2007 (Decrease) � � Production volumes: Oil (MBbls) 202 186 (7.9 %)
NGL (MBbls) 32 37 15.6 % Natural gas (MMcf) 566 684 20.8 % Total
(Mboe) 329 337 2.4 % � Average sale prices received: Oil (per Bbl)
$ 67.35 $ 62.54 (7.1 %) NGL (per Bbl) $ 38.21 $ 44.64 16.8 %
Natural gas (per Mcf) $ 5.54 $ 6.70 20.9 % Total per Boe $ 54.70 $
53.06 (3.0 %) 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 and changes in working
capital items related to operating activities. In addition,
non-GAAP cash flow is further adjusted to exclude the impact of
realized 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 and to service debt. 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 Six months
ended March 31 June 30 June 30 Net cash provided by operating
activities per condensed consolidated statements of cash flow $ (37
) $ 7,533 $ 7,496 Less: working capital changes � (4,121 ) � 1,554
� � (2,567 ) � Cash flow from operations (a non-GAAP measure) $
4,084 � $ 5,979 � $ 10,063 � � Cash flow from operations (a
non-GAAP measure) $ 4,084 $ 5,979 $ 10,063 Less: realized gains
(losses) on derivatives � (30 ) � (105 ) � (135 ) Cash flow from
operations (a non-GAAP measure) excluding realized gains (losses)
on derivatives $ 4,114 � $ 6,084 � $ 10,198 � � 2006 Three months
ended Six months ended March 31 June 30 June 30 Net cash provided
by operating activities per condensed consolidated statements of
cash flow $ 7,929 $ 7,437 $ 15,366 � Less: working capital changes
� 2,643 � � 3,454 � � 6,097 � � Cash flow from operations (a
non-GAAP measure) $ 5,286 � $ 3,983 � $ 9,269 � � Cash flow from
operations (a non-GAAP measure) $ 5,286 $ 3,983 $ 9,269 Less:
realized gains (losses) on derivatives � (1,571 ) � (2,043 ) �
(3,614 ) Cash flow from operations (a non-GAAP measure) excluding
realized gains (losses) on derivatives $ 6,857 � $ 6,026 � $ 12,883
�
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