Crusader Energy Group Third Quarter 2008 Financial Update

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Proshares Ultra S&P Regional Banking (delisted)	AMEX:KRU	AMEX	Common Stock

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Proshares Ultra S&P Regional Banking (delisted) (AMEX:KRU)
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OKLAHOMA CITY, Nov. 10 /PRNewswire-FirstCall/ -- Crusader Energy Group Inc. (AMEX:KRU) today reports financial results for the third quarter of 2008. For operational results for the third quarter of 2008, Crusader issued a press release on November 6, 2008. Crusader's results include the activity of the Westside Transaction for the three months ended September 30, 2008. Crusader's results for the nine months ended September 30, 2008 include the operations of Knight Energy Group, LLC for the complete period and ninety-six days of activity (June 27, 2008 through September 30, 2008) of the acquired parties (see Westside Transaction below). Certain pro-forma information has been presented as if the acquisitions had occurred on January 1, 2007. Reconciliations of the non-GAAP measures of ebitda, adjusted ebitda, pro-forma ebitda, pro-forma adjusted ebitda and adjusted earnings per share are presented in Exhibits C and D. Analysts and investors regularly use these or similar metrics when comparing to other oil and gas companies. FINANCIAL HIGHLIGHTS -- Net income of $16.4 million for the third quarter of 2008 as compared to net income of $3.6 million for the third quarter of 2007 -- Net income (loss) per share of $.08 and $(0.77) for the three and nine months ended September 30, 2008, respectively -- Adjusted earnings per share of $.02 and $.11 for the three and nine months ended September 30, 2008, respectively -- Adjusted EBITDA increased 164% in the third quarter of 2008 to $25.5 million as compared to $9.6 million in the third quarter of 2007 -- Pro-Forma adjusted EBITDA increased 182% in the third quarter of 2008 to $25.5 million as compared to $9.0 million in the third quarter of 2007 -- Adjusted EBITDA increased 143% in the nine months ended September 30, 2008 to $57.0 million as compared to $23.5 million in the nine months ended September 30, 2007 -- Pro-Forma adjusted EBITDA increased 152% in the nine months ended September 30, 2008 to $68.0 million as compared to $27.0 million in the nine months ended September 30, 2007 -- The Company has significant oil and gas hedges in place to mitigate a portion of the effect of a prolonged downturn of oil and gas prices: Natural Gas Production ---------------------- Collars Swaps Puts ----------------------- ----------- ------------ Year Month MCF Floor Ceiling MCF MCF Floor ---- --------- ------- ----- ------- ------ ----- --------- ----- 2008 Oct - Dec 937,000 $8.10 $10.58 30,000 $7.45 45,450 $8.00 2009 Jan - Mar 678,500 $8.13 $10.12 - $- 259,131 $8.00 2009 Apr - Jun 441,000 $8.00 $9.56 - $- 259,131 $8.00 2009 Jul - Dec 882,000 $8.00 $9.56 - $- 518,262 $8.00 2010 Jan - Dec - $- $- - $- 2,144,988 $8.00 Oil Production -------------- Collars ------------------------- Year Month Bbls Floor Ceiling ---- --------- ------- ------- ------- 2008 Oct - Dec 56,280 $77.74 $88.00 2009 Jan - Dec 163,200 $79.56 $117.72 2010 Jan - Dec 115,200 $100.00 $161.75 Production Results ------------------ Three Months Ended September 30, Reported ----------------------------------------- 2008 2007 change % change --------- --------- --------- -------- Gas (Mcf) 2,208,667 809,653 1,399,014 173% Oil (Bbls) 120,766 79,489 41,277 52% Mcfe 2,933,263 1,286,587 1,646,676 128% Mcfe/day 31,883 13,985 17,899 128% Three Months Ended September 30, Pro Forma ----------------------------------------- 2008 2007 change % change --------- --------- --------- -------- Gas (Mcf) 2,208,667 1,272,140 936,527 74% Oil (Bbls) 120,766 98,717 22,049 22% Mcfe 2,933,263 1,864,442 1,068,821 57% Mcfe/day 31,883 20,266 11,618 57% Nine Months Ended September 30, Reported ---------------------------------------- 2008 2007 change % change --------- --------- --------- -------- Gas (Mcf) 4,373,077 2,213,065 2,160,012 98% Oil (Bbls) 318,693 191,554 127,139 66% Mcfe 6,285,235 3,362,389 2,922,846 87% Mcfe/day 22,939 12,316 10,706 87% Nine Months Ended September 30, Pro Forma ------------------------------------------ 2008 2007 change % change --------- --------- --------- -------- Gas (Mcf) 5,832,085 3,431,416 2,400,669 70% Oil (Bbls) 343,237 229,200 114,037 50% Mcfe 7,891,507 4,806,616 3,084,891 64% Mcfe/day 28,801 17,607 11,300 64% MANAGEMENT COMMENTS Commenting on the financial results achieved to date, David D. Le Norman, Crusader's President and CEO, said, "We have worked hard to integrate the entities associated with the Westside Transaction from both an accounting and operational perspective. We have accomplished these tasks while keeping our focus on the efficient development of Crusader's reserves." Le Norman further stated, "Crusader was able to secure $250 million in a previously announced second lien facility with JP Morgan in order to consolidate and retire all previous debt obligations of the merged entities, and to fund capital expenditure initiatives to date without tapping our $140 million, senior debt facility. These funding sources coupled with our anticipated development programs and initiatives should be sufficient to fund Crusader for the foreseeable future while remaining flexible to add or subtract from the programs based upon the macro-economic environment." WESTSIDE TRANSACTION On December 31, 2007, Westside Energy Corporation ("Westside"), a public company traded on the American Stock Exchange, entered into a definitive agreement to combine with several affiliated privately held entities including Knight Energy Group, LLC ("Knight"), Knight Energy Group II, LLC ("Knight II"), RCH Upland Acquisition, LLC ("RCH"), Hawk Energy Fund I, LLC ("Hawk") and other entities acquired (consisting of Knight Energy Management, LLC, Crusader Energy Group, LLC and Crusader Management Corporation) (with Knight II, Hawk, RCH and the other entities acquired collectively referred to as the "Crusader Entities"). On June 26, 2008, the business combination contemplated by the contribution agreement (the "Westside Transaction") was completed and Westside changed its name to Crusader Energy Group Inc. ("Crusader" or the "Company"). For accounting purposes, the Westside Transaction was treated as a reverse acquisition with Knight as the acquirer and Westside and the Crusader Entities as the acquired parties. As such, the historical financial statements of Crusader are Knight's historical financial statements which were included in the proxy statement filed with the Securities and Exchange Commission ("SEC") on May 28, 2008. The acquisitions have been accounted for using the purchase method and the results of operations for Westside and the Crusader Entities are included subsequent to June 26, 2008. ABOUT CRUSADER ENERGY Oklahoma City-based Crusader Energy Group Inc. is an oil and gas company with assets focused in various producing domestic basins. The company has a primary focus on the development of unconventional resource plays which includes the application of horizontal drilling and cutting edge completion technology aimed at developing shale and tight sand reservoirs. The Crusader assets are located in various domestic basins, the majority of which are in the Anadarko Basin and Central Uplift, Ft. Worth Basin Barnett Shale, Delaware Basin, Val Verde Basin, and the Bakken Shale of the Williston Basin. For other information regarding Crusader, please visit the Company's Internet Web site at http://www.crusaderenergy.com/. In addition to SEC filings and press releases, the Company posts materials of general interest to investors including any current investor meeting information or Crusader conference or analyst presentations. CONFERENCE CALL INFORMATION The Company will host a conference call today at 10:00 a.m. (CST) to review the Company's third quarter 2008 financial and operating results. The call can be accessed by calling 866-543-6403 (U.S. domestic) or 617-213-8896 (international). The pass code for the call is "Crusader Energy." A live audio Web cast of the call will be available on the Company's Web site at http://www.crusaderenergy.com/. A replay of the call will be made available one hour following the conclusion of the call. To access the domestic audio replay, call 888-286-8010. The international replay number is 617-801-6888. The audio replay will be available through November 24, 2008. The passcode for the replay is 15627545. The replay will also be available on the Company's Web site indefinitely. FORWARD-LOOKING STATEMENT DISCLOSURE This press release contains "forward-looking statements" within the meaning of the Federal securities laws and regulations. Forward-looking statements are estimates and predictions by management about the future outcome of events and conditions that could affect Crusader's business, financial condition and results of operations. We use words such as, "will," "should," "could," "plans," "expects," "likely," "anticipates," "intends," "believes," "estimates," "may," and other words of similar expression to indicate forward-looking statements. There is no assurance that the estimates and predictions contained in our forward-looking statements will occur or be achieved as predicted. Any number of factors could cause actual results to differ materially from those referred to in a forward-looking statement, including drilling risks, operating hazards and other uncertainties inherent in the exploration for, and development and production of, oil and natural gas; volatility in oil and natural gas prices, including the adverse impact of lower prices on the amount of our cash flow available to meet capital expenditures, our ability to borrow and raise capital and on the values attributed to our proven reserves; drilling and operating risks in the unconventional shales and other reservoirs in which we operate, including uncertainties in interpreting engineering, reservoir and reserve data; the availability of technical personnel and drilling equipment; the timing and installation of processing and treatment facilities, third-party pipelines and other transportation facilities and equipment; changes in interest rates; and increasing production costs and other expenses. Further information on risks and uncertainties affecting our business is described in our reports filed with the SEC which are incorporated by this reference as though fully set forth herein. We undertake no obligation to publicly update or revise any forward-looking statement. CRUSADER ENERGY GROUP INC. EXHIBIT A CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, ------------------------ -------------------------- OPERATING REVENUES 2008 2007 2008 2007 ----------- ---------- ------------- ---------- Gas sales $19,461,726 $5,236,783 $40,291,425 $14,789,573 Oil sales 13,682,006 5,508,222 35,337,557 12,127,594 Other 368,873 271,747 1,097,661 614,319 ----------- ---------- ------------- ---------- Total operating revenue 33,512,605 11,016,752 76,726,643 27,531,486 OPERATING COSTS AND EXPENSES Lease operating 3,176,995 1,102,303 6,227,443 2,347,783 Production taxes 2,531,769 763,536 5,303,388 1,766,532 General and administrative 3,227,305 952,426 113,599,183 2,715,870 Depreciation, depletion and amortization 10,885,522 4,523,575 22,392,645 11,809,640 Accretion of asset retirement obligations 20,637 21,471 48,181 32,823 ----------- ---------- ------------- ---------- Total operating costs and expenses 19,842,228 7,363,311 147,570,840 18,672,648 ----------- ---------- ------------- ---------- Income (loss) from operations 13,670,377 3,653,441 (70,844,197) 8,858,838 OTHER (EXPENSE) INCOME Interest expense (8,283,932) (862,468) (11,384,422) (1,797,650) Interest income and other 480,469 24,862 603,926 68,182 Risk management 19,008,980 832,160 (1,197,988) 115,030 ----------- ---------- ------------- ---------- Total other (expenses) income 11,205,517 (5,446) (11,978,484) (1,614,438) ----------- ---------- ------------- ---------- Income (loss) before income taxes 24,875,894 3,647,995 (82,822,681) 7,244,400 Income tax expense 8,456,038 - 20,282,862 - ----------- ---------- ------------- ---------- NET INCOME (LOSS) $16,419,856 $3,647,995 $(103,105,543) $7,244,400 =========== ========== ============= ========== EARNINGS (LOSS) PER SHARE Basic and Diluted $0.08 $(0.77) =========== =========== WEIGHTED AVERAGE SHARES OUTSTANDING Basic 198,194,958 134,469,036 =========== =========== Diluted 209,973,306 134,469,036 =========== =========== PRO FORMA INFORMATION Historical income (loss) from operations before income taxes $3,647,995 $7,244,400 Pro forma provision (benefit) for income taxes 1,419,070 2,818,072 ----------- ----------- Pro forma net income (loss) $2,228,925 $4,426,328 =========== =========== PRO FORMA EARNINGS PER SHARE Basic and Diluted $0.02 $0.04 =========== =========== WEIGHTED AVERAGE SHARES OUTSTANDING Basic and Diluted 100,100,000 100,100,000 =========== =========== CRUSADER ENERGY GROUP INC. EXHIBIT B CONSOLIDATED BALANCE SHEETS (Unaudited) September 30, 2008 December 31, 2008 ASSETS ------------------ ----------------- CURRENT ASSETS Cash and cash equivalents $27,637,842 $7,941,663 Accounts receivable: Accrued oil and gas production revenue 18,095,835 7,581,187 Joint interest billings 23,545,280 14,045,470 Other 456,132 770,584 Prepaid and other assets 4,816,657 126,450 ------------ ------------ Total current assets 74,551,746 30,465,354 OIL AND GAS PROPERTIES - AT COST, net, based on full cost accounting ($181,309,360 and $12,558,796 excluded from amortization at 2008 and 2007, respectively) 652,790,008 243,560,456 Derivative financial instruments 2,337,651 - Other assets 20,298,926 5,199,199 ------------ ------------ $749,978,331 $279,225,009 ============ ============ LIABILITIES AND MEMBERS'/STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $14,692,198 $11,856,699 Accrued liabilities 22,987,939 5,934,262 Derivative financial instruments 13,989 1,775,617 ------------ ------------ Total current liabilities 37,694,126 19,566,578 LONG-TERM LIABILITIES Asset retirement obligations 1,151,419 718,316 Derivative financial instruments - 403,883 Other - 215,778 Deferred tax liabilities, net 49,223,602 - Notes payable 237,770,833 67,000,000 ------------ ------------ Total long-term liabilities 288,145,854 68,337,977 COMMITMENTS AND CONTINGENCIES MEMBERS' EQUITY - 191,320,454 STOCKHOLDERS' EQUITY Common stock, $.01 par value, 500,000,000 authorized; 198,564,958 shares issued and outstanding at September 30, 2008 1,985,650 - Additional paid-in capital 523,198,521 - Accumulated deficit (101,045,820) - ------------ ------------ Total Stockholders' Equity 424,138,351 - ------------ ------------ $749,978,331 $279,225,009 ============ ============ CRUSADER ENERGY GROUP INC. EXHIBIT C RECONCILIATION OF INCOME (LOSS) BEFORE INCOME TAXES AS REPORTED TO ADJUSTED EARNINGS EXCLUDING CERTAIN NON-CASH ITEMS, a non-GAAP measure (Unaudited) Three months ended Nine months ended September 30 September 30 ------------------------ ------------------------ 2008 2007 2008 2007 ----------- ----------- ----------- ----------- Net income (loss), as reported $16,419,856 $3,647,995 $(103,105,543) $7,244,400 Income tax expense, as reported 8,456,038 - 20,282,862 - ----------- ----------- ----------- ----------- Income (loss) before income taxes, as reported 24,875,894 3,647,995 (82,822,681) 7,244,400 Adjustment for certain non-cash items Change in mark-to-market on unrealized derivatives (18,762,144) 574,278 (859,072) 2,579,122 Non-cash stock compensation 155,925 - 106,833,144 - ----------- ----------- ----------- ----------- As adjusted 6,269,675 4,222,273 23,151,391 9,823,522 Income taxes, adjusted Current - - - - Deferred 2,367,429 1,594,330 8,741,965 3,709,362 ----------- ----------- ----------- ----------- Adjusted earnings excluding certain items, a non-GAAP measure $3,902,246 $2,627,943 $14,409,426 $6,114,160 =========== =========== =========== =========== non-GAAP earnings per share Basic $0.02 $0.03 $0.11 $0.06 =========== =========== =========== =========== Diluted $0.02 $0.03 $0.10 $0.06 =========== =========== =========== =========== non - GAAP basic shares outstanding 198,194,958 100,100,000 134,469,036 100,100,000 =========== =========== =========== =========== non - GAAP diluted shares outstanding 209,973,306 100,100,000 137,608,771 100,100,000 =========== =========== =========== =========== CRUSADER ENERGY GROUP INC. EXHIBIT D Reconciliation of EBITDA and Adjusted EBITDA The following summary presents unaudited pro forma consolidated net income (loss), EBITDA and Adjusted EBITDA for the three and nine months ended September 30, 2008 and 2007, respectively, as if the Westside Transaction had occurred as of January 1, 2007. The pro forma results are for illustrative purposes only and include adjustments in addition to the pre-acquisition historical results, such as increased depreciation, depletion and amortization expense resulting from the allocation of fair value to oil and gas properties acquired. The unaudited pro forma information is not necessarily indicative of the operating results that would have occurred if the acquisitions had been consummated at that date, nor is it necessarily indicative of future operating results. Three Months Ended September 30, ---------------------------------------------------- Reported Pro Forma -------------------------- ------------------------ 2008 2007 2008 2007 ----------- ----------- ----------- ----------- Net income (loss) $16,419,856 $3,647,995 $16,419,856 $2,419,002 Income tax expense 8,456,038 - 8,456,038 - Interest expense 8,283,932 862,468 8,283,932 1,524,190 DD&A 10,906,159 4,545,046 10,906,159 4,989,644 ----------- ----------- ----------- ----------- EBITDA* 44,065,985 9,055,509 44,065,985 8,932,836 Adjustments: Stock compensation expense 155,925 - 155,925 - Unrealized (gains) losses on derivatives (18,762,144) 574,278 (18,762,144) 103,845 ----------- ----------- ----------- ----------- Adjusted EBITDA** $25,459,766 $9,629,787 $25,459,766 $9,036,681 =========== =========== =========== =========== Nine Months Ended September 30, ---------------------------------------------------- Reported Pro Forma -------------------------- ------------------------ 2008 2007 2008 2007 ----------- ----------- ----------- ----------- Net income (loss) $(103,105,543) $7,244,400 $(98,906,378) $5,330,636 Income tax expense 20,282,862 - 20,282,862 - Interest expense 11,384,422 1,797,650 13,077,472 4,176,417 DD&A 22,440,826 11,842,463 27,453,178 15,101,147 ----------- ----------- ----------- ----------- EBITDA* (48,997,433) 20,884,513 (38,092,866) 24,608,200 Adjustments: Stock compensation expense 106,833,144 - 106,833,144 - Unrealized (gains) losses on derivatives (859,072) 2,579,122 (760,854) 2,395,506 ----------- ----------- ----------- ----------- Adjusted EBITDA** $56,976,639 $23,463,635 $67,979,424 $27,003,706 =========== =========== =========== =========== * EBITDA represents net income (loss) before income tax expense and depreciation, depletion and amortization expense. EBITDA is presented as a supplemental financial measurement in the evaluation of our business. We believe that it provides additional information regarding our ability to meet our future debt service, capital expenditures and working capital requirements. This measure is widely used by investors and rating agencies in the valuation, comparison, rating and investment recommendations of companies. EBITDA is a financial measurement that, with certain negotiated adjustments, is reported to our lenders pursuant to our bank credit agreement and is used in the financial covenants in our bank credit agreement. EBITDA is not a measure of financial performance under GAAP. Accordingly, it should not be considered as a substitute for net income, income from operations, or cash flow provided by operating activities prepared in accordance with GAAP. ** Adjusted EBITDA excludes certain items that management believes affect the comparability of operating results. The Company discloses these non-GAAP financial measures due to the following: (a) Management uses adjusted EBITDA to evaluate the Company's operational trends and performance relative to other natural gas and oil producing companies, (b) Adjusted EBITDA is the financial metric used in determining our compliance with certain financial covenants under our debt agreements, (c) Items excluded generally are one-time items or items whose timing or amount cannot be reasonably estimated. DATASOURCE: Crusader Energy Group Inc. CONTACT: Roy A. Fletcher, Investor Relations of Crusader Energy Group Inc., +1-405-241-1847 Web Site: http://www.crusaderenergy.com/

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KRU Proshares Ultra S&P Regional Banking (delisted)