Crimson Exploration Posts 1Q10 Results

Crimson Exploration announced financial and operational results for the first quarter of 2010.

Summary Financial Results

The Company reported net income of $0.2 million, or $0.01 per diluted share, for the first quarter of 2010 compared to net income of $5.0 million, or $0.46 per diluted share, for the first quarter of 2009. Positively impacting each year were unrealized pre-tax gains of $5.4 million in 2010 and $9.6 million in 2009 related to the mark to market valuation of our commodity price and interest rate hedges. Fully diluted shares outstanding for the quarters were 38,653,645 and 10,856,219 for 2010 and 2009, respectively, an increase attributed to our public offering and preferred stock conversion in December 2009.

Revenues for the first quarter of 2010 were $22.5 million compared to revenue of $30.6 million in the prior year quarter, a decrease resulting from lower production, partially offset by an increase in realized commodity prices.

Production for the first quarter of 2010 was 2.8 Bcfe, or approximately 31,600 Mcfe per day, compared to production of 4.3 Bcfe, or approximately 47,900 Mcfe per day, in the first quarter of 2009. The decrease in production was primarily due to natural field decline, limited capital expenditure activity in 2009 and the first quarter 2010, and the sale of our Southwest Louisiana properties in December 2009. The Southwest Louisiana properties contributed approximately 3,000 Mcfe per day of production during the first quarter of 2009.

Average realized sales prices, after the impact of realized hedging results, were $83.77 per barrel, $6.96 per Mcf, $46.25 per barrel and $7.90 per Mcfe for oil, natural gas, natural gas liquids and natural gas equivalents, respectively for the first quarter 2010. For the first quarter of 2009, average realized sales prices were $77.18 per barrel, $6.71 per Mcf, $22.51 per barrel and $7.08 per Mcfe for oil, natural gas, natural gas liquids and natural gas equivalents, respectively.

Direct lease operating expenses for the first quarter of 2010 were $3.9 million, or $1.37 per Mcfe, compared to $5.4 million, or $1.27 per Mcfe, in the first quarter of 2009. The dollar decrease resulted from the implementation of cost reduction initiatives during 2009 and 2010 and the sale of the Southwest Louisiana properties in December 2009. Production and ad valorem tax expenses for the first quarter of 2010 were $1.7 million, or $0.60 per Mcfe, compared to $2.5 million, or $0.57 per Mcfe, for the first quarter of 2009. The decrease in production and ad valorem taxes was due to lower production in the first quarter of 2010 and the effect of the sale of the Southwest Louisiana properties, offset in part by higher sales prices.

Depreciation, Depletion and Amortization (“DD&A”) expense for the first quarter of 2010 was $10.4 million, or $3.66 per Mcfe, compared to $13.9 million, or $3.21 per Mcfe, for the first quarter of 2009, a decrease resulting from lower production and the sale of the Southwest Louisiana properties.

General and Administrative Expenses (“G&A”) were $4.9 million for the first quarter of 2010 compared to $5.2 million for the first quarter of 2009. Included in G&A expense is a non-cash stock expense of $0.5 million and $1.0 million for the first quarters ended 2010 and 2009, respectively.

Drilling Activity

Southeast Texas – Liberty County

Crimson has reached total depth of 13,075 feet on its company-operated Catherine Henderson #A-7 (66% WI) development well in the Felicia Field in Liberty County and completion operations are currently underway. Log analysis indicates the Lower Cook Mountain Objective to be gas/condensate productive, encountering approximately 56 feet of net pay. The #A-7 well should be completed and on-line prior to June 1, 2010. The #A-7 well is in the same area as the previously announced Crimson Catherine Henderson #A-6, which has been on line since June 2008 and is currently producing approximately 5,800 MCF/d and 300 BC/d (gross). Crimson is currently evaluating future drilling locations in this immediate area.

The Crimson Schwarz #2 exploratory well (60% WI) spud on May 10, 2010 and is currently drilling towards a total depth of 15,400 feet. The Schwarz #2 is the re-drill of the previously announced Schwarz #1 ST, which encountered the objective Lower Cook Mountain Sands with excellent shows but was abandoned due to mechanical failure in the first quarter 2010. The Schwarz #2 is expected to reach total depth early third quarter 2010.

East Texas – San Augustine County

Crimson has reached total depth of 14,073 feet in the pilot hole on its company-operated Grizzly #1 (55% WI) well in San Augustine County in East Texas. Open hole logs were run over the Mid-Bossier and Haynesville Shale objectives and operations are currently underway for a 4,500 foot lateral to a measured depth of approximately 18,600 feet. The Grizzly #1H is expected to reach total depth in the lateral in June 2010, with completion operations to immediately follow and first production in August 2010. Upon completion of drilling operations at Grizzly, Crimson will move the rig two miles to the west to its Gobi location.

The Halbert Trust #1 (non-op 29% WI) has spud and is currently drilling below 2,800 feet to a proposed total vertical depth of 13,700 feet. This well is located in the Fairway Farms Area approximately 5 miles east of the Grizzly #1 well.

South Texas – Eagle Ford Shale

Activity continues to increase in areas surrounding our acreage within the Eagle Ford play in Bee (1,120 net acres 40% WI), Zavala (4,320 net acres; 95% WI) and Karnes (750 net acres; 50% WI) counties. Crimson is currently working with its partners to drill an Eagle Ford well in Q4 2010.

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