Osage Exploration and Development Announces Record Revenues, Production, and Earnings

SAN DIEGO--(BUSINESS WIRE)--Osage Exploration and Development, Inc. (OTCBB:OEDV), an independent exploration and production company focused on the Horizontal Mississippian and Woodford plays in Oklahoma, announced today record revenues, production, and earnings for the three months and for the nine months ended September 30, 2012.

“The third quarter of 2012 was the strongest quarter in Osage’s corporate history owing to solid results from our first three wells in the horizontal Mississippian. Osage has achieved profitability with only three gross wells and our legacy assets in Colombia.”

Management Comments

Mr. Kim Bradford, Chairman and Chief Executive Officer of Osage Exploration and Development, commented on the Company’s third quarter results, “The third quarter of 2012 was the strongest quarter in Osage’s corporate history owing to solid results from our first three wells in the horizontal Mississippian. Osage has achieved profitability with only three gross wells and our legacy assets in Colombia.” Mr. Bradford continued, “We currently have two additional wells drilled plus a third being drilled now that will be fracture treated in December. Effectively, with the fracture treatment of three wells in December, Osage will be doubling the number of producing oil wells to its portfolio during the late fourth quarter of 2012. We intend to maintain this accelerated drilling pace throughout 2013. We are just now beginning to realize the potential asset value and production rates that we have long recognized to be inherent in our Logan County acreage.”

Revenues - Three Months Ended September 30

For the three months ended September 30, the Company reported oil revenues of $1,262,050, pipeline revenues of $508,505, and natural gas revenues of $84,572 for total operating revenues of $1,855,127. These numbers represent a year-over-year increase in oil revenues of 230%. Total operating revenues increased 117% versus the same quarter in 2011. Oil sales increased in 2012 over 2011 due to the early development of the Company’s Nemaha Ridge project in Logan County, Oklahoma. Osage’s revenues for the three months ended September 30, 2012 and 2011 are highlighted below.

	2012				2011				Change
	Amount		Percentage		Amount		Percentage		Amount		Percentage
Oil Sales	$	1,262,050	68.0	%	$	382,059	44.7	%	$	879,991	230.3	%
Pipeline Sales		508,505	27.4	%		472,141	55.3	%		36,364	7.7	%
Natural Gas Sales		84,572	4.6	%		-	0.0	%		84,572	-
Total Revenues	$	1,855,127	100.0	%	$	854,200	100.0	%	$	1,000,927	117.2	%

Oil & Natural Gas Production - Three Months Ended September 30

Oil production, net of royalties, was 14,102 BBLs, an increase of 195.9% for the three months ended September 30, 2012. U.S. production accounted for 68.6% and 3.4% of total production for the three months ended September 30, 2012 and 2011, respectively.

Natural gas production was 50,153 Mcf for the three months ended September 30, 2012. Gas production began in the first quarter of 2012 in our Logan County properties. For the three months ended September 30, 2012 and 2011, Osage’s production of oil and natural gas is highlighted below.

	2012			2011			Increase/(Decrease)
Oil Production:	Net Barrels	% of Total		Net Barrels	% of Total		Barrels		%
United States	9,667	68.6	%	161	3.4	%	9,506		5904.3	%
Colombia	4,435	31.4	%	4,605	96.6	%	(170	)	-3.7	%
Total	14,102	100.0	%	4,766	100.0	%	9,336		195.9	%
Natural Gas Production:	Mcf	% of Total		Mcf	% of Total		Mcf		%
United States	50,153	100.0	%	-	0.0	%	50,153		-

Operating Costs Reduced

Operating costs as a percentage of total revenues were reduced to 21.9% in the 2012 period from 33.2% in the 2011 period as new wells came into production. More significantly, average operating costs per barrel of oil equivalent (“Production Cost/BOE”) in the U.S. for the three months ended September 30, 2012 was $4.65.

Operating Income Improvement

Osage generated cash flow from operations for the three months ended September 30 of $740,845, a 605% increase from the same quarter in 2011. For the nine months ended September 30, cash flow from operations was $922,076 as compared to a loss of $411,069 for the same period in 2011. Osage’s operating costs and expenses for the periods ending September 30, 2012 and 2011 are highlighted below.

	2012				2011					Change
			Percent of					Percent of
	Amount		Sales		Amount			Sales		Amount			Percentage
Operating Expenses
Operating	$	407,073	21.9	%	$	283,201		33.2	%	$	123,872		43.7	%
General & Administrative		447,649	24.1	%		569,263		66.6	%		(121,614	)	-21.4	%
Equity Tax		32,878	1.8	%		35,483		4.2	%		(2,605	)	-7.3	%
Depreciation, Depletion and Accretion		226,682	12.2	%		112,900		13.2	%		113,782		100.8	%
Total Operating Expenses	$	1,114,282	60.1	%	$	1,000,847		117.2	%	$	113,435		11.3	%
Operating Income (Loss)	$	740,845	39.9	%	$	(146,647	)	-17.2	%	$	887,492		605.2	%

Net Income

Net income was $250,976 for the three months ended September 30, 2012 which compared to a net loss of $142,787 for the three months ended September 30, 2011. The $393,763 improvement was as a result of revenue growth which exceeded growth in operating costs and expenses, offset in part by increased interest expense.

About Osage Exploration and Development, Inc.

Based in San Diego, California, with production offices in Oklahoma City, Oklahoma, and executive offices in Bogotá, Colombia, Osage Exploration and Development, Inc. is an independent exploration and production company with interests in oil and gas wells and prospects in the U.S. and Colombia. http://www.osageexploration.com

Safe Harbor Statement

The information in this release includes certain forward-looking statements as defined by the Securities and Exchange Commission that are based on assumptions that in the future may prove not to have been accurate. Those statements and Osage Exploration and Development, Inc. are subject to a number of risks, including production variances from expectations, volatility of product prices, inability to raise sufficient capital to fund its operations, environmental risks, competition, government regulation, and the ability of the Company to execute its business strategy, among others.