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

SAN DIEGO--()--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.

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.

Contacts

Osage Exploration and Development, Inc.
Kim Bradford, President and CEO
Phone: 619-677-3956
Fax: 619-677-3964
kbradford@osageexploration.com
or
Jack Zedlitz, VP of Corporate Development
Phone: 405-270-0989
jzedlitz@osageexploration.com
or
http://www.osageexploration.com

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Contacts

Osage Exploration and Development, Inc.
Kim Bradford, President and CEO
Phone: 619-677-3956
Fax: 619-677-3964
kbradford@osageexploration.com
or
Jack Zedlitz, VP of Corporate Development
Phone: 405-270-0989
jzedlitz@osageexploration.com
or
http://www.osageexploration.com