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
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