RAME Ram Energy Resources, Inc. (MM)

In paragraph labeled "RAM to Webcast Second Quarter 2006 Conference Call," fourth sentence should read: The teleconference may be accessed by dialing 866-383-8009 (domestic) or 617-597-5342 (international) and providing the call identifier "RAM" to the operator. (sted The teleconference may be accessed by dialing 888-383-8009 (domestic) or 617-597-5342 (international) and providing the call identifier "RAM" to the operator.) The corrected release reads: RAM ENERGY RESOURCES REPORTS SECOND QUARTER 2006 RESULTS; KEY OPERATING AND FINANCIAL HIGHLIGHTS RAM Energy Resources, Inc. (Nasdaq:RAME) today announced second quarter 2006 earnings and operating results. For the quarter ended June 30, RAM incurred a loss of $3.1 million, or $0.13 per share based upon 23.0 million weighted average shares outstanding. Results of the current quarter were negatively impacted by $3.3 million in non-cash charges related to the merger ($2.2 million for share based compensation and the write-off of unamortized loan fees of $1.1 million) and by non-cash unrealized derivative losses of $2.1 million, all on a pre-tax basis. Exclusive of the non-cash items, RAM would have had pre-tax income of $2.3 million and, assuming the same tax rate, net income of $1.5 million, or $0.06 per share. By comparison, in the second quarter 2005 RAM Energy, Inc., the exploration and production entity acquired by the company in May, 2006, reported a loss of $291,000 or $0.04 per share, which included a pre-tax non-cash charge of $3.2 million for unrealized derivative losses. All comparative information in this release relates to same period 2005 financial and operating results of RAM Energy, Inc. Cash flow from operations, a non-GAAP measure, was $4.0 million for the second quarter of 2006 compared to cash flow of $3.6 million in the same quarter of 2005. See the attached table for reconciliation of these non-GAAP financial measures to the corresponding GAAP amounts of cash provided by operating activities of $8.3 million for the second quarter of 2006 and $6.7 million for the same quarter in 2005. Second Quarter Highlights -- RAM Energy, Inc. completes merger with Tremisis to become publicly traded RAM Energy Resources, Inc.; -- RAM was selected for inclusion in the Russell 2000 index, a widely used investment benchmark; -- Second quarter 2006 production of 329,000 barrel equivalents (BOE) of oil and natural gas increased three percent sequentially over the first quarter level of 318,000 BOE; -- Emerging production from the Barnett Shale growing in importance, currently represents fourth largest producing area in the company; -- RAM initiates exploration play, targets Wolfcamp shale in Southwest Texas; -- First half capital spending of $10.5 million on pace with full-year 2006 planned non-acquisition spending of $24.3 million. Production Total production for the second quarter 2006 was 329,000 BOE, a decrease of 11,000 BOE or three percent compared to the year-ago quarter of 340,000 BOE. The decline is primarily attributable to the vesting of an outstanding back-in interest in favor of a non-operating partner in the Boonsville area which occurred in late 2005 and, to a lesser extent, natural production decline. The vesting of the reversionary interest had the effect of reducing daily production by 193 BOE, or a total of 17,563 BOE for the second quarter of 2006. Similarly, before giving effect to the reversionary interest, our daily average production in the second quarter of 2006 would have been 3,804 BOE versus 3,741 BOE for last year's second quarter, an increase of two percent. However, the reversionary interest negatively impacted second quarter 2006 production resulting in average daily production of 3,611 BOE compared to 3,741 BOE for the same quarter last year. Commodity Prices and Revenues The company's realized price for oil increased 32 percent to an average of $67.35 per barrel in the second quarter of 2006, compared with last year's second quarter average realized price of $50.95 per barrel. The company's realized price for natural gas decreased 13 percent to average $5.54 per thousand cubic feet (Mcf) compared to an average of $6.36 per Mcf in the second quarter of 2005. The increase in the average realized oil price more than offset the effect of the decrease in production resulting from the back-in interest, allowing oil and gas sales to increase 17 percent to $18.0 million for the second quarter of 2006 compared to $15.3 million in the same quarter of 2005. The company does not formally designate its derivative contracts as hedges nor are its derivative contracts associated with its production therefore, realized prices are not associated with derivative gains or losses. With the addition of realized and unrealized losses on derivatives, total revenues for the second quarter of 2006 were reduced to $14.0 million, 19 percent above the comparable year-ago second quarter. Costs and Expenses Production costs totaled $4.6 million or $14.02 per BOE in the second quarter of 2006, 24 percent higher than the $11.28 per BOE for the previous year's quarter. The increase was primarily due to increased utility costs and higher maintenance costs due to additional producing wells. Production taxes were $874,000 or $2.66 per BOE in this year's second quarter, 17 percent above the $2.28 per BOE for the second quarter of 2005, principally as a result of higher oil prices. Total amortization and depreciation expense for the second quarter was $3.3 million, of which $3.2 million was attributable to oil and gas properties. Amortization and depreciation expense of $9.60 per BOE associated with oil and gas properties and equipment rose 20 percent compared to the $8.00 per BOE level in last year's quarter. The higher charges per BOE are attributable to higher capitalized costs resulting from an increase in drilling and increased amortization rates. General and administrative expenses rose 12 percent to $2.1 million. The increase of $228,000 was due to higher legal fees, costs of public reporting, and accounting. Net interest expense for the quarter rose by $2.9 million to $5.8 million compared to $2.9 million in last year's second quarter. Approximately $1.1 million or 37 percent of the increase represents the write-off of unamortized loan fees related to the establishment of new credit facilities during the quarter while the remaining portion of the increase is a result of higher outstanding indebtedness and higher effective interest rates in this year's quarter. Six Months Results For the six months ended June 30, 2006 RAM reported a loss of $255,000, or $0.02 a share, on 15.4 million weighted average basic shares outstanding. Results of the first six months of 2006 were negatively impacted by $3.3 million in non-cash charges related to the merger ($2.2 million for share-based compensation and the write-off of unamortized loan fees of $1.1 million) partially offset by an unrealized gain of $844,000 on derivatives, all on a pre-tax basis. Exclusive of the non-cash items RAM would have had pre-tax income of $2.0 million and, assuming the same tax rate, net income of $1.3 million, or $0.08 per share. For the six months ended June 30, 2005, RAM recorded net income of $1.2 million, or $0.16 per share, which included a pre-tax derivative mark-to-market loss of $3.2 million. Cash flow from operations, a non-GAAP measure, was $9.3 million for the first six months of 2006, down seven percent compared to $10.0 million for the same period in 2005. See the attached table for reconciliation of these non-GAAP financial measures to the corresponding GAAP amounts of cash provided by operating activities of $16.2 million for the six months ended June 30, 2006 and $9.1 million for the six months ended June 30, 2005. First Half 2006 Operations Update Oil and gas related capital expenditures were $5.3 million in the quarter, of which $4.3 million was allocated to new lower risk development activities and approximately $1.0 million for exploratory costs. Total non-acquisition capital expenditures of $10.5 million for the first half of 2006 are in line with RAM's targeted non-acquisition capital budget of $24.3 million for the 2006 year and are considerably higher than non-acquisition capital expenditures of $7.4 million in last year's first half. RAM participated in the drilling of 43 gross (42.1 net) development wells and three gross (1.74 net) exploratory wells in the first half of the year in contrast to a total of 27 gross (24.6 net) wells drilled in the first half of 2005, the higher number of wells reflecting the increase in capital expenditures. All of the development wells and one of the exploratory wells drilled to date in 2006 are believed capable of commercial production. In the Electra/Burkburnett area of North Texas, the company's largest producing area, RAM drilled 41 net wells of which 36 were completed as producing wells during the first six months of the year and five were in various stages of completion at the end of the second quarter. In the first half of 2005, 24 wells were drilled and completed. The company owns a 100 percent working interest in and operates Electra/Burkburnett. Activity is also continuing in the company's Boonsville area. Following the drilling of the Sealy #B-6 well in the Boonsville area late in the second quarter, RAM plans to spud a second well at another proved undeveloped location during the third quarter. In the company's Barnett Shale acreage in Jack and Wise Counties, Texas, RAM participated in the drilling of two wells in the first half of 2006 compared to one in the prior year's first half. Currently the company owns an interest in nine gross (3.9 net) Barnett Shale producing wells, two of which are operated by RAM, six of which are operated by Devon Energy, and one of which is operated by EOG Resources. Average daily production attributable to the company's interest in Barnett Shale wells in the second quarter 2006 was 11 Bbls of oil and 1,101 Mcf of gas or 195 BOE. RAM currently owns 27 square miles of 3-D seismic and is currently acquiring an additional seven square miles of seismic on the company's 27,700 gross (6,800 net) acres in the Barnett Shale. The seismic data is being used to target additional drilling locations. In the company's non-operated Vinegarone Field in South Texas, the Coe 27-2 well was spudded in early July and is in the process of being completed. This is the first of three successive wells planned for this field. The second well in the series, which spud in early August, is drilling and nearing targeted total depth of 11,000 feet. RAM has a 25 percent working interest in the Vinegarone Field and is participating in all three of the wells. Merger Completed With Tremisis On May 8, 2006 RAM Energy, Inc., previously a privately held company, consummated a merger with a subsidiary of Tremisis Energy Acquisition Corporation, a publicly held specified purpose acquisition company. Following the merger, the corporate name of Tremisis was changed to RAM Energy Resources, Inc. and on May 9, the common stock, warrants and units began trading on the Nasdaq Capital Market under the symbols RAME, RAMEW and RAMEU, respectively assigned to the newly combined organization. In connection with the merger, 25.6 million Tremisis shares were issued to stockholders of RAM Energy plus $30 million in cash. RAM Energy Resources has a total of 33.5 million common shares outstanding currently. RAM to Webcast Second Quarter 2006 Conference Call The company's second quarter 2006 teleconference call to review second quarter results will be broadcast live on a listen-only basis over the internet on Tuesday, August 15 at 3 p.m. Central Time. Interested parties may access the webcast by visiting the RAM Energy Resources, Inc. website at www.ramenergy.com. From the home page, select the investor relations tab and then click on the microphone icon. The teleconference may be accessed by dialing 866-383-8009 (domestic) or 617-597-5342 (international) and providing the call identifier "RAM" to the operator. The webcast and the accompanying slide presentation will be available for replay at the company's website. An audio replay will be available until August 22, 2006 by dialing 888-286-8010 (domestic) or 617-801-6888 (international) and using passcode 24523294. Forward-Looking Statements This release includes certain statements that may be deemed to be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements in this release, other than statements of historical facts, that address estimates of capital spending, NYMEX prices of oil and gas and company realizations, the impact of oil and gas hedging activities, drilling locations and events or developments that the company expects or believes are forward-looking statements. Although the company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include oil and gas prices, exploitation and exploration successes, actions taken and to be taken by the government as a result of political and economic conditions, continued availability of capital and financing, and general economic, market or business conditions as well as other risk factors described from time to time in the company's filings with the SEC. The company assumes no obligation to update publicly such forward-looking statements, whether as a result of new information, future events or otherwise. RAM Energy Resources, Inc. is an independent energy company engaged in the acquisition, exploitation, exploration, and development of oil and gas properties and the marketing of crude oil and natural gas. Company headquarters are in Tulsa, Oklahoma, and its common shares are traded on the Nasdaq under the symbol RAME. For additional information, visit the company website at www.ramenergy.com. -0- *T RAM Energy Resources, Inc. Condensed consolidated balance sheets (in thousands, except number of shares) June 30, December 31, 2006 2005 ----------- ------------- ASSETS (unaudited) CURRENT ASSETS: Cash and cash equivalents $12,943 $70 Accounts receivable- Oil and natural gas sales 6,603 7,422 Joint interest operations, net of allowance of $334 ($31 at December 31, 2005) 555 566 Related Party 3 142 Other, net of allowance of $52 ($13 at December 31, 2005) 51 175 Prepaid expenses 535 756 Other current assets 142 484 ----------- ------------- Total current assets 20,832 9,615 PROPERTIES AND EQUIPMENT, AT COST: Oil and natural gas properties and equipment, using full cost accounting 167,695 160,704 Other property and equipment 5,972 7,276 ----------- ------------- 173,667 167,980 Less accumulated amortization and depreciation 41,830 36,848 ----------- ------------- Net properties and equipment 131,837 131,132 OTHER ASSETS: Deferred loan costs, net of accumulated amortization of $4,435 ($4,905 at December 31, 2005) 2,994 1,613 Other 894 916 ----------- ------------- Total assets $156,557 $143,276 =========== ============= LIABILITIES AND STOCKHOLDERS' DEFICIT CURRENT LIABILITIES: Accounts payable: Trade $5,156 $4,343 Oil and natural gas proceeds due others 3,012 3,201 Other 19 -- Related party 14 41 Accrued liabilities: Compensation 814 749 Interest 3,727 1,745 Income taxes 46 146 Derivative liabilities 4,135 3,510 Long-term debt due within one year 320 560 ----------- ------------- Total current liabilities 17,243 14,295 OIL & NATURAL GAS PROCEEDS DUE OTHERS 2,390 1,972 LONG-TERM DEBT 131,493 112,286 DEFERRED AND OTHER NON-CURRENT INCOME TAXES 25,181 25,300 ASSET RETIREMENT OBLIGATION 10,363 10,192 COMMITMENTS AND CONTINGENCIES -- -- STOCKHOLDERS' DEFICIT: Common stock, $0.0001 par value; authorized --100,000,000 shares; 33,630,000 shares issued; 33,531,900 shares outstanding 3 1 Additional paid-in capital 2,218 95 Treasury stock (593) -- Retained earnings (deficit) (31,741) (20,865) ----------- ------------- Stockholders' deficit (30,113) (20,769) ----------- ------------- Total liabilities and stockholders' deficit $156,557 $143,276 =========== ============= RAM Energy Resources, Inc. Condensed consolidated statements of operations (in thousands, except share and per share amounts) (unaudited) Three months ended Six months ended June 30, June 30, ---------------------- ---------------------- 2006 2005 2006 2005 ---------------------- ---------------------- OPERATING REVENUES: Oil and natural gas sales $17,973 $15,347 $34,783 $30,166 Realized and unrealized losses on derivatives (4,178) (3,794) (2,770) (4,216) Other 180 215 424 585 ----------- ---------- ----------- ---------- Total revenues 13,975 11,768 32,437 26,535 ----------- ---------- ----------- ---------- OPERATING EXPENSES: Oil and natural gas production taxes 874 777 1,684 1,541 Oil and natural gas production expenses 4,607 3,838 8,913 7,536 Amortization and depreciation 3,311 2,857 6,524 5,816 Accretion expense 132 68 265 146 Share-based compensation 2,218 -- 2,218 -- General and administrative, overhead and other expenses 2,088 1,860 4,047 3,918 ----------- ---------- ----------- ---------- Total operating expenses 13,230 9,400 23,651 18,957 ----------- ---------- ----------- ---------- Operating income 745 2,368 8,786 7,578 ----------- ---------- ----------- ---------- OTHER INCOME (EXPENSE): Interest expense (5,778) (2,851) (9,307) (5,624) Interest income 82 13 109 22 ----------- ---------- ----------- ---------- INCOME (LOSS) BEFORE INCOME TAXES (4,951) (470) (412) 1,976 ----------- ---------- ----------- ---------- INCOME TAX PROVISION (BENEFIT) (1,882) (179) (157) 750 ----------- ---------- ----------- ---------- NET INCOME (LOSS) $(3,069) $(291) $(255) $1,226 =========== ========== =========== ========== EARNINGS (LOSS) PER SHARE: Basic and diluted $(0.13) $(0.04) $(0.02) $0.16 WEIGHTED AVERAGE SHARES OUTSTANDING: Basic and diluted 23,028,820 7,700,000 15,406,755 7,700,000 RAM Energy Resources, Inc. Condensed consolidated statements of cash flows (in thousands) (unaudited) Six months ended June 30, ---------------- 2006 2005 -------- ------- OPERATING ACTIVITIES: Net income (loss) $(255) $1,226 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Amortization and depreciation- Oil and natural gas properties and equipment 6,176 5,613 Amortization of deferred loan costs and Senior notes discount 562 420 Charge off of unamortized deferred loan costs 1,055 -- Other property and equipment 348 214 Accretion expense 265 146 Unrealized (gain) loss on derivatives (844) 3,249 Deferred income taxes 686 (903) Share-based compensation 2,218 -- Gain on disposal of other property and equipment (99) -- Changes in operating assets and liabilities Accounts receivable 1,093 (1,262) Prepaid expenses and other current assets 567 (347) Accounts payable 616 4,546 Income taxes payable (109) -- Accrued liabilities and other 3,930 (3,826) -------- ------- Total adjustments 16,464 7,850 -------- ------- Net cash provided by operating activities 16,209 9,076 INVESTING ACTIVITIES: Payments for oil and natural gas properties and equipment (10,493) (7,443) Proceeds from sales of oil and natural gas properties and equipment 3,502 2,335 Payments for other property and equipment (566) (823) Proceeds from sales and disposals of other property and equipment 366 -- -------- ------- Net cash used in investing activities (7,191) (5,931) FINANCING ACTIVITIES: Payments on long-term debt (87,508) (6,760) Payments of loan fees (2,977) (283) Proceeds from borrowings on long-term debt 106,454 5,335 Stock redemption (9,792) -- Repurchase of stock (593) -- Payments of merger costs (4,187) -- Deferred income taxes on share-based compensation (843) -- Cash acquired in merger 3,801 -- Dividends paid (500) (900) -------- ------- Net cash provided by (used in) financing activities 3,855 (2,608) -------- ------- Increase in cash and cash equivalents 12,873 537 CASH AND CASH EQUIVALENTS, beginning of period 70 1,175 -------- ------- CASH AND CASH EQUIVALENTS, end of period $12,943 $1,712 ======== ======= RAM Energy Resources, Inc. Condensed consolidated statements of cash flows, continued (in thousands) (unaudited) Six months ended June 30, --------------------- 2006 2005 --------------------- SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest $2,618 $1,638 Cash paid for income taxes $109 $-- ========== ========== DISCLOSURE OF NONCASH FINANCING ACTIVITIES: Accrued interest added to principal balance of revolving Credit Facility $2,797 $3,592 ========== ========== RAM Energy Resources, Inc. Reconciliation of cash flow from operations (a non-GAAP measure) to GAAP net cash provided by operating activities 2006 ----------------------------- Three months Six months ended ended ----------------- ----------- March 31 June 30 June 30 Cash flow from operations (a non-GAAP measure) $5,286 $3,983 $9,269 Plus: working capital changes 2,643 3,454 6,097 Less: deferred income taxes on share- based compensation classified as financing activities 0 (843) (843) -------- -------- ----------- Net cash provided by operating activities per condensed consolidated statements of cash flow $7,929 $8,280 $16,209 ======== ======== =========== Cash flow from operations (a non-GAAP measure) $5,286 $3,983 $9,269 Less: realized (losses) on derivatives (1,571) (2,043) (3,614) Less: unrealized gains (losses) on derivatives per condensed consolidated statements of cash flow 2,979 (2,135) 844 -------- -------- ----------- Cash flow from operations (a non-GAAP measure) excluding realized and unrealized gains (losses) on derivatives $3,878 $8,161 $12,039 ======== ======== =========== 2005 --------------------------------------- Three months Six months ended ended Year ended ---------------- ---------- March 31 June 30 June 30 December 31 Cash flow from operations (a non-GAAP measure) $6,386 $3,579 $9,965 $22,365 Plus: working capital changes (4,035) 3,146 (889) (4,006) Less: deferred income taxes on share-based compensation classified as financing activities -- -- -- -- -------- ------- ---------- ----------- Net cash provided by operating activities per condensed consolidated statements of cash flow $2,351 $6,725 $9,076 $18,359 ======== ======= ========== =========== Cash flow from operations (a non-GAAP measure) $6,386 $3,579 $9,965 $22,365 Less: realized (losses) on derivatives (499) (468) (967) (5,393) Less: unrealized gains (losses) on derivatives per condensed consolidated statements of cash flow 77 (3,326) (3,249) (6,302) -------- ------- ---------- ----------- Cash flow from operations (a non-GAAP measure) excluding realized and unrealized gains (losses) on derivatives $6,808 $7,373 $14,181 $34,060 ======== ======= ========== =========== *T