HOUSTON, July 15, 2009 (GLOBE NEWSWIRE) -- Index Oil and Gas Inc. (OTCBB:IXOG) announced today that the company filed its audited financial results for the fiscal year ended March 31, 2009 in its Annual Report on Form 10-K filed on July 10, 2009 with the Securities and Exchange Commission.
In the Annual Report, Index reported a net loss of $9.4 million for the 2009 fiscal year compared to a net loss of $1.9 million for the 2008 fiscal year. The increased year-over-year loss is primarily the result of an approximate $7.0 million impairment charge reflecting reserve write-downs together with the significant decline in commodity prices. Revenue increased by $1.1 million from the previous fiscal year while operating income decreased by $7.3 million, including the impairment. General and administrative costs of $2.4 million reflected a decrease of $0.1 million from the previous fiscal year while depletion increased by $1.0 million to $2.1 million. Index also earned lower interest income on previously raised capital which was used in operations in the 2009 fiscal year.
"Index has a promising portfolio of assets and we continue to evaluate new opportunities and make strenuous efforts to access capital for forward and new projects," said Lyndon West, chief executive officer. "We are positioned in two significant projects in South Texas, and despite the decrease in commodity prices, we maintain revenue in line with operating and overhead costs and remain debt free. Our challenge is to reduce costs in the near-term while raising an appropriate amount of new capital to allow us to take advantage of existing and emerging opportunities and continue our ongoing commitment to direct all capital toward value-creating activities. We are exploring all ways to conserve our capital, including potentially deregistering our common stock and having it quoted on the Pink Sheets going forward. We expect this move to save significant capital for our company and will allow our shareholders to continue to have access to public sales."
Potential Deregistration and Pink Sheets Quotations
In reviewing the current business climate, the board of directors has concluded that the costs of remaining registered under the Securities Exchange Act of 1934 outweigh the benefits and have authorized the company to file a Form 15 when and as eligible to deregister. Therefore, Index intends to file to deregister on or about August 3, 2009. The company expects to reduce the ongoing general and administrative costs significantly by deregistering while Index's common stock will continue to trade via a broker-to-broker system as quoted on the "Pink Sheets" going forward. The company will provide an update on a new ticker symbol and the ability for shareholders to obtain business and financial information once quoted on the Pink Sheets. Until that time, the company's information will continue to be available at the Securities and Exchange Commission.
Significant developments for the fiscal year ending March 31, 2009 are the following:
Production continues from Cochran #1 exploratory well -- The Cochran #1 well in the Garwood prospect in Colorado County, completed in December 2008 and brought on stream in January 2009, continues to perform to expectation based on the two producing sands. Currently, two additional drill sites adjacent to the producing well are under evaluation with five potential drilling locations identified to the northeast containing at least one additional productive sand than at the Cochran #1 location. Subject to commodity prices and drilling costs, the company expects to participate in a second well early in 2010 and an additional exploration well during the calendar year. Index has a five percent working interest (3.75 percent net revenue interest) in the project operated by El Paso and is looking to expand its position in the leases.
Continued testing operations at the Alligator Bayou Project -- During the 2009 fiscal year, Index participated in arguably one of the most significant wells drilled onshore in the continental United States in 20 years. The Armour Runnells #1 well in Matagorda County was drilled to 23,380 feet to test multiple sands between 18,500 and 23,500 feet. The testing and completion program was divided into two phases with the first testing a number of the lower sands from 22,000 to 23,500 feet. Despite encouraging results these sands were deemed sub-commercial. The second phase of testing is to begin shortly and will focus on eight sand intervals between 18,500 and 21,200 feet. Index holds a five percent working interest (3.5 percent net revenue interest) in the well and leases.
Final write down of reserves in two wells -- After encouraging initial production, efforts to revive production from the Vieman #1 well in the Manor Lake area of Brazoria County, Texas and Shadyside #1 in Saint Mary's Parish Louisiana were unsuccessful. Index holds a 19.5 and 30 percent working interest in the two wells, respectively. Volumes from both wells were written off over the course of the several quarters causing impairment charges under full cost accounting rules. The severe decrease in commodity prices in the second half of the fiscal years compounded the cost of the impairment.
The following table summarizes key items of comparison and their related increase (decrease) for the fiscal years ended March 31, 2009 and 2008.
Years Ended March 31, Increase
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2009 2008 (Decrease)
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Oil and gas sales $ 2,828,751 $ 1,705,593 $ 1,123158
Production expenses:
Lease operating 520,434 188,521 331,913
Taxes other than income 183,748 114,952 68,796
General and administrative:
General and administrative 2,218,695 2,155,018 63,677
Stock-based compensation 211,748 302,911 (91,163)
Depletion -- Full cost 2,085,976 1,091,673 994,303
Depreciation -- Other 8,506 4,556 3,949
Impairment 7,002,472 -- 7,002,472
Interest expense (income)
and other (24,207) (205,608) 181,401
Income tax benefit (provision) -- -- --
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Net income (loss) $(9,378,621) $(1,946,430) $(7,432,191)
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About Index Oil and Gas:
Index Oil and Gas Inc. is an oil and gas exploration and production company with activities primarily in Texas, Louisiana and Kansas and offices in Houston. Its goal is to generate increasing reserves and cash flow from a portfolio of moderate and higher risk potential prospects in the United States. To learn more about Index Oil and Gas, visit http://www.indexoil.com.
The statements in the press release that relate to the Company's expectations with regard to the future impact on the Company's results from acquisitions or actions in development are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. This release may also contain other "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, such statements should not be regarded as a representation by the Company, or any other person, that such forward-looking statements will be achieved. Because the information may contain statements that involve risk and uncertainties and are subject to change at any time, the Company's actual results may differ materially from expected results. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. In light of the foregoing, readers are cautioned not to place undue reliance on such forward-looking statements. For a description of risks and other factors that may affect the Company's results of operations and financial performance, see the Company's reports filed with the Securities and Exchange Commission, including the Company's annual report on Forms 10-K for the fiscal year ended March 31, 2009, copies of which may be obtained from the SEC's website at http://www.sec.gov.