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Cano Petroleum Reports Third Quarter and First Nine Months Results
FORT WORTH, Texas, May 12 /PRNewswire-FirstCall/ -- Cano Petroleum Inc. today reported results for the third quarter and first nine months of operation as a publicly traded company. In the quarter ended March 31, 2005, the company posted a net loss before certain non-cash accounting charges of $0.3 million on revenues of $1.5 million. For the nine months ended March 31, 2005, the net loss before certain non-cash accounting charges was $0.8 million on revenues of $3.8 million. (See reconciliation on page five.) Recent key events include:
* In March, Cano sold 1,350,000 shares of common stock to two accredited
institutional investors at $3.75 per share, with net proceeds of
$4.8 million.
* Also in March, the company completed its $8 million acquisition of its
fourth and largest asset, Square One Energy, which included
10,300 acres in the mature Desdemona Field in central Texas.
* On May 5, Cano was listed for trading on the American Stock Exchange.
"We believe these recent events position our company for future success," said Jeff Johnson, chairman and chief executive officer. "Our waterflooding and enhanced oil-recovery techniques, such as ASP, may generate healthy long- term growth in production and revenues beginning in mid 2006. At the same time, we are seeking additional acquisitions to build on our existing operations." Cano's capital spending program for its existing properties, planned for $3.6 million, will focus on implementing waterflood operations at its Desdemona Field and Alkaline Surfactant Polymer (ASP) technology at its Nowata Field. ASP is an advanced combination of chemical additives that has proven effective in the recovery of additional oil in place following the initial waterflood. Johnson added that Cano is seeking to farm out exploration rights to extensive Barnett Shale formations on its recent 10,300-acre Desdemona Field (Square One Energy) acquisition and focus on the company's core expertise -- secondary and enhanced oil recovery. Cano's cash flow used in operations was $0.6 million for the nine months ended March 31, 2005. This resulted primarily from higher lease operating expenses ("LOE") at Cano's newly acquired properties and start-up costs incurred to fund the support services. The LOE was unusually high due to operational improvements required at several of Cano's fields as these newly acquired operations were brought up to Cano's operating standards. The certain non-cash accounting charges pertain to the deferred compensation expense and preferred stock discount. ABOUT CANO PETROLEUM: Cano Petroleum Inc. is an independent Texas-based energy producer with properties in the mid-continent region of the United States. Led by an experienced management team, Cano's primary focus is on increasing domestic production from proven fields using enhanced recovery methods. Cano is traded on the American Stock Exchange under the ticker symbol CFW. Additional information is available at http://www.canopetro.com/ . INFORMATION REGARDING FORWARD-LOOKING STATEMENTS: Except for historical information contained herein, the statements in this Press Release are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause our actual results in future periods to differ materially from forecasted results. These risks and uncertainties include, among other things, volatility of natural resource prices, product demand, market competition, and risks inherent in our operations. These and other risks are described in our Annual Report on Form 10-K and other filings with the Securities and Exchange Commission. CANO PETROLEUM, INC.
OPERATIONAL SUMMARY
(unaudited)
Three months Nine months
ended 3/31/05 ended 3/31/05
SALES
Oil (MBbls) 24 62
Gas (MMcf) 41 133
Total (MBOE) 31 84
AVERAGE PRICE
Oil ($/Bbl) $49.39 $47.78
Gas ($/Mcf) $5.60 $5.94
RESERVES
Based on reports prepared by independent petroleum engineers dated
January 1, 2005:
Rich
Nowata Valley Davenport Desdemona Total
Proved
Oil--Mbbls 1,592 274 213 679 2,758
Gas--Mmcf 234 2,780 15 1,985 5,014
Proved Barrels of
Equivalent Oil (MBOE) 1,631 738 215 1,010 3,594
Proved Producing (MBOE) 1,593 583 57 505 2,738
CANO PETROLEUM, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
2005 2004 2005 2004
Operating Revenues:
Crude oil and natural
gas sales $1,461,885 $ --- $ 3,780,437 $ ---
Operating Expenses:
Lease operating expenses 819,093 --- 1,815,837 ---
General and administrative 729,988 59,901 2,121,967 88,009
Deferred compensation
expense 431,439 --- 1,341,285 ---
Depletion and depreciation 159,822 --- 403,538 ---
Other expenses, net 96,824 247,717
Total operating expenses 2,237,166 59,901 5,930,344 88,009
Net loss (775,281) (59,901) (2,149,907) (88,009)
Preferred stock discount --- --- 416,534 ---
Loss applicable to common
stock $(775,281) $(59,901) $(2,566,441) $(88,009)
Net loss per share -
basic and diluted $ (0.07) $ (0.01) $ (0.24) $ (0.01)
Weighted average common
shares outstanding
- basic and diluted 11,204,155 6,982,204 10,722,854 6,982,204
RESULTS OF OPERATIONS
BEFORE CERTAIN NON-CASH ACCOUNTING CHARGES
Net Loss Before Certain
Accounting Charges $(343,842) $ (808,622)
Less:
Deferred Compensation
Expense 431,439 1,341,285
Preferred Stock Discount --- 416,534
Subtotal 431,439 1,757,819
Loss Applicable to
Common Stock $(775,281) $(2,566,441)
CANO PETROLEUM, INC.
CONSOLIDATED CONDENSED BALANCE SHEET
(Unaudited)
ASSETS
March 31,
Current assets 2005
Cash and cash equivalents $ 401,220
Accounts receivable and other
current assets 682,028
Total current assets 1,083,248
Oil and gas properties, net 15,808,164
Other assets 373,065
TOTAL ASSETS $17,264,477
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 763,382
Other current liabilities 106,238
Total current liabilities 869,620
Long-term liabilities
Asset retirement obligations 581,397
Commitments and contingencies (Note 10)
Stockholders' equity
Preferred stock ---
Common stock, par value $.0001 per share;
50,000,000 authorized; 20,352,757 issued
and outstanding, including 5,165,000 shares
held in escrow 2,036
Additional paid-in capital 25,880,305
Accumulated deficit (9,182,760)
Deferred compensation (886,121)
Total stockholders' equity 15,813,460
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $17,264,477
CANO PETROLEUM, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended March 31,
Cash flow from operating activities: 2005 2004
Net loss $(2,149,907) $(88,009)
Adjustments needed to reconcile
to net cash flow used in operations:
Accretion of asset retirement
obligations 16,444 ---
Depletion and depreciation 403,538 ---
Deferred compensation expense 1,341,285 ---
Stock-based compensation expense 78,666 ---
Changes in assets and liabilities
relating to operations: (248,748) 839
Net cash used in operations (558,722) (87,170)
Cash flow from investing activities:
Additions to oil and gas properties
and other (1,987,391)
Acquisition of Nowata (2,551,721) ---
Acquisition of Square One Energy, Inc. (4,020,363) ---
Acquisition of Ladder (2,111,517) ---
Net cash used in investing activities (10,670,992) ---
Cash flow from financing activities:
Proceeds from issuance of preferred
stock, net 5,304,872 ---
Proceeds from issuance of common
stock, net 4,750,783 ---
Loan by principal stockholder --- 70,000
Net cash from financing activities 10,055,655 70,000
Net decrease in cash and cash
equivalents (1,174,059) (17,170)
Cash and cash equivalents at
beginning of period 1,575,279 20,000
Cash and cash equivalents at end of
period $ 401,220 $ 2,830
Supplemental disclosure of noncash
transactions:
Common stock issued for acquisition
of Square One Energy, Inc. $ 3,519,996 $ ---
Amortization of preferred stock discount $ 416,534 $ ---
For Immediate Release
For media inquiries, contact: For investor inquiries, contact:
Kenneth Kracmer Bob Schwaller
Michael & Partners Michael & Partners
972-716-0500 ext. 15 972-243-0439
kkracmer@michaelpartners.com bob@horizonmarcom.net
Website: http://www.canopetro.com/ |
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