CREDO Petroleum reported that oil production set a new record, growing 31% during the first quarter, on the heels of 25% growth last year. First quarter 2008 oil production was 15,700 barrels compared to 11,900 barrels last year. Natural gas production fell 26% to 392 MMcf (million cubic feet) compared to last year's record of 528 MMcf. Total production, denominated in equivalent natural gas units, fell to 486 MMcfe (million cubic feet of gas-equivalent) compared to a record 599 MMcfe last year. Natural gas accounted for 81% of the company's first quarter 2008 production.
James T. Huffman, President, stated, "While we are achieving the vast majority of our goals, we have not yet arrested the production decline caused by two exceptionally high rate discoveries which are depleting at a rapid rate. Flush production from those discoveries caused prior year production to increase 21%. However, because the wells are highly permeable, their production rates declined sharply resulting in most of their reserves being produced in a short period of time. On balance that is good news because it accelerates cash flow, however, it also creates a formidable hurdle to overcome."
"We proactively completed several gas wells this quarter that we thought would significantly arrest, or turn around, the production decline," Huffman said. "Although two of the wells looked excellent on electric logs, they are not performing up to our expectations due to water and limited reservoir size. We have several new wells coming on line in the second quarter and we have scheduled high potential drilling for South Texas which, if successful, will have a very significant impact on our production."
Huffman further stated, "Our oil drilling yielded good results in the first quarter 2008, and we are very pleased with the substantial growth in oil production. Our Central Kansas drilling project continues to show promising results and several of our Oklahoma oil projects continue to yield success. We are expanding our position in the Central Kansas oil play, and we are working on several new oil projects in Oklahoma."
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