DENVER, CO--(Marketwire - November 14, 2008) - Rancher Energy Corp. (
Second Quarter Summary
The Company reported a 100% increase in second quarter revenue, to $3.3 million from $1.7 million in the same quarter last year. Total revenue included oil & gas sales of $2.0 million, up from $1.7 million in the same quarter last year, and gains on derivative activities of $1.3 million. The Company had no derivative contracts in place for the second quarter of 2007. The increased oil & gas sales revenue was due to a higher average sales price of $109.79 per barrel in the second quarter versus $69.88 per barrel in the second quarter a year ago. Rancher Energy sold 18,179 barrels of oil -- its net interest -- in the second quarter, down from 23,622 barrels a year ago due to mechanical-related downtime on certain producing wells as well as normal, year-over-year production declines.
The Company recorded a $6.8 million, non-cash impairment charge in the second quarter, reflecting excess carrying costs of certain properties over the anticipated future realized value. With the exception of production taxes, which increased 21% to $243,000 in the second quarter, the Company reduced costs in all other expense categories. In particular, general and administrative expense declined by 37% to $960,000 from $1.5 million, reflecting year-over-year reductions in headcount, professional fees and other overhead expenses. Due to the $6.8 million, non-cash impairment, total operating expenses in the second quarter increased to $8.9 million from $2.9 million a year ago.
Other expense in the second quarter totaled $1.7 million versus $1.4 million in the corresponding quarter a year ago. Other expense primarily included amortization of deferred financing costs and interest expense on the GasRock note payable, which due date has been extended to April 30, 2009. Net loss for the second quarter, which included the $6.8 million, non-cash impairment charge, was $7.3 million, or $0.06 per basic and diluted share, versus a net loss of $2.6 million, or $0.02 per basic and diluted share, in the same quarter last year.
Rancher Energy closed the second quarter with cash and cash equivalents of $5.1 million versus $6.8 million at March 31, 2008, fiscal year end.
Six-Month Summary
Total revenue through six months ended September 30, 2008, increased to nearly $3.3 million from $3.0 million in the same period last year. Oil & gas sales of $3.9 million were partially offset by a $590,000 loss related to hedging activities required by the GasRock loan. Through six months the Company sold 34,262 barrels of oil at an average price of $113.68 versus 46,056 barrels of oil sold at an average price of $64.73 per barrel in the same period last year. Again, the decline in production was attributed to mechanical problems at certain producing wells.
Total operating expenses increased to $11.1 million from $6.6 million due to the $6.8 million, non-cash impairment charge incurred in the second quarter. Excluding the $6.8 million impairment charge, total operating expenses declined by $2.3 million, reflecting decreases in all expense categories except production taxes, which increased to $474,000 from $363,000 in the same period last year based on higher oil & gas sales revenue. General and administrative expense declined by more than 50% to $2.0 million from $4.1 million as the Company aggressively cut overhead expenses.
Total other expense in the six-month period was $3.4 million, up from $2.8 million in the same period last year. Interest expense increased to $747,000 from $113,000 in association with the GasRock note payable. The Company also incurred a $2.7 million charge for amortization of deferred financing costs and discount on note payable in the six-month period, up from $99,000 in the year-ago period. Conversely, in the year-ago six-month period the Company had $2.6 million in liquidated damages pursuant to a registration rights arrangement versus no expense in that category in the 2008 period. Net loss for the six-month period, including the $6.8 million impairment, was $11.2 million, or $0.10 per basic and diluted share, as compared with $6.4 million, or $0.06 per basic and diluted share, in the same period last year.
About Rancher Energy Corp.
Rancher Energy is an innovative oil & gas exploration & development company with a targeted strategy to reinvigorate older, historically productive oil fields in the hydrocarbon-rich Rocky Mountain region of the United States. Using waterflood injection and CO2 flooding, coupled with other leading edge hydrocarbon recovery techniques such as 3-D seismic data and directional drilling, Rancher Energy plans to extract proven in-place oil that remains behind in mature fields. Rising energy demand combined with advances in oil recovery have made this strategy profitable. Rancher Energy is taking advantage of this convergence by acquiring low risk, high quality, historically productive plays with under-exploited reserves and developing customized enhanced recovery strategies to maximize production.
Forward-Looking Statements
This press release includes forward-looking statements as determined by the U.S. Securities and Exchange Commission (the "SEC"). All statements, other than statements of historical facts, included in this press release that address activities, events, or developments that the Company believes or anticipates will or may occur in the future are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include the Company's ability to obtain financing to implement its plan, to construct pipeline and other infrastructure, and for other operational and working capital purposes, the uncertainty of recovery factors for the enhanced oil recovery projects, the volatility of oil prices, general economic and business conditions, and other factors over which the Company has little or no control. The Company does not intend (and is not obligated) to update publicly any forward-looking statements. The contents of this press release should be considered in conjunction with the warnings and cautionary statements contained in the Company's recent filings with the SEC.
Rancher Energy Corp.
Consolidated Statements of Operations
(unaudited)
Three months ended Six months ended
September 30, September 30,
2008 2007 2008 2007
------------ ------------ ------------ ------------
Revenues:
Oil & gas sales $ 1,995,901 $ 1,650,628 $ 3,894,869 $ 2,981,107
Gain (loss) on
derivative
activities, net 1,305,551 - (589,743) -
------------ ------------ ------------ ------------
Total revenues 3,301,452 1,650,628 3,305,126 2,981,107
Operating expenses:
Production taxes 243,366 201,182 473,649 362,651
Lease operating
expenses 549,441 691,429 1,172,863 1,279,661
Depreciation,
depletion and
amortization 301,708 368,724 577,549 700,256
Accretion expense 30,835 31,618 77,111 77,608
Impairment of
unproved
properties 6,800,000 - 6,800,000 -
Exploration expense - 89,668 9,602 130,829
General and
administrative
expense 959,777 1,513,100 2,008,154 4,053,091
------------ ------------ ------------ ------------
Total operating
expenses 8,885,127 2,895,721 11,118,928 6,604,096
------------ ------------ ------------ ------------
Loss from operations (5,583,675) (1,245,093) (7,813,802) (3,622,989)
------------ ------------ ------------ ------------
Other income (expense):
Liquidated damages
pursuant to
registration rights
arrangement - (1,268,283) - (2,645,393)
Amortization of
deferred financing
costs and discount
on note payable (1,366,527) (99,254) (2,675,702) (99,254)
Interest expense (375,399) (41,941) (746,694) (113,180)
Interest and other
income 8,737 25,541 19,318 73,865
------------ ------------ ------------ ------------
Total other
expense (1,733,189) (1,383,937) (3,403,078) (2,783,962)
------------ ------------ ------------ ------------
Net loss $ (7,316,864) $ (2,629,030) $(11,216,880) $ (6,406,951)
============ ============ ============ ============
Basic and diluted
net loss per share $ (0.06) $ (0.02) $ (0.10) $ (0.06)
============ ============ ============ ============
Basic and diluted
weighted average
shares outstanding 115,457,475 108,018,888 115,213,149 105,888,646
Rancher Energy Corp.
Consolidated Balance Sheets
(Unaudited)
September 30, March 31,
2008 2008
ASSETS ------------ ------------
Current Assets:
Cash and cash equivalents $ 5,141,371 $ 6,842,365
Accounts receivable and prepaid expenses 1,000,029 1,170,641
------------ ------------
Total current assets 6,141,400 8,013,006
Oil & gas properties, at cost
(successful efforts method):
Unproved 54,054,852 54,058,073
Proved 20,920,412 20,734,143
Less: Accumulated depletion, depreciation,
amortization and impairment (8,810,672) (1,531,619)
------------ ------------
Net oil & gas properties 66,164,592 73,260,597
Other assets:
Furniture and equipment, net of accumulated
depreciation of $288,107 and $204,420,
respectively 863,643 997,196
Other assets 903,630 1,300,382
------------ ------------
Total other assets 1,767,273 2,297,578
------------ ------------
Total assets $ 74,073,265 $ 83,571,181
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 1,229,472 $ 2,114,204
Accrued oil & gas property costs 250,000 250,000
Asset retirement obligation 360,638 337,685
Note payable, net of unamortized discount
of $366,123 and $2,527,550, respectively 11,873,877 9,712,450
Derivative liability 713,063 590,480
------------ ------------
Total current liabilities 14,427,050 13,004,819
Long-term liabilities:
Derivative liability 55,158 246,553
Asset retirement obligation 974,311 922,166
------------ ------------
Total long-term liabilities 1,029,469 1,168,719
Commitments and contingencies: - -
Stockholders' equity:
Common stock 1,162 1,150
Additional paid-in capital 92,226,152 91,790,181
Accumulated deficit (33,610,568) (22,393,688)
------------ ------------
Total stockholders' equity 58,616,746 69,397,643
------------ ------------
Total liabilities and stockholders' equity $ 74,073,265 $ 83,571,181
============ ============
Contact Information: Contacts: John Works Chief Executive Officer Rancher Energy Corp. 303-629-1125 Jay Pfeiffer Pfeiffer High Investor Relations, Inc. 303-393-7044