RAME Ram Energy Resources, Inc. (MM)

RAM Energy Resources, Inc. (Nasdaq: RAME) today announced an update to operating activity. Operational Highlights: Four wells drilled on the company�s North Texas Barnett Shale properties during the last several months recently began producing during August, adding to production in the third quarter 2008; RAM expanded its position in the company�s West Virginia Devonian Shale play with the purchase of a 14 mile pipeline, 6,000 acres of leases and approximately one billion cubic feet of natural gas reserves; Also in West Virginia, RAM has executed a letter of intent with another operator in the area to evaluate the potential productivity of the Devonian Shale in an area covering approximately 22,000 acres of jointly owned leases north of the Kanawha River in RAM�s Bug Run area; Production guidance for the second half of 2008 targeting production growth of two to three percent above that of the first half of the year currently remains intact, in spite of shut-in production experienced in the third quarter due to electrical power outages resulting from hurricanes Gustav and Ike which affected the company�s South Texas and Louisiana properties. RAM Continues Stepped-Up Activity in its Conventional South Texas Plays Since November 2007, RAM has drilled six wells on its South Texas acreage principally targeting the multi-pay Vicksburg formation in its La Copita field located in Starr County. Five of the initial six wells have been completed in the La Copita field and flowed at an average initial gross daily rate of production exceeding 3.0 MMcfe per well. Continuing with the pace of activity, three additional wells, the Brannan, the Heard #4, and the Garza Hitchcock # 18, are scheduled to be spud in the La Copita field during the fourth quarter 2008. RAM is also testing a field revitalization development project in the Wilcox formation in Wharton and Colorado Counties. The company owns and operates the West Lissie field and recently drilled the Wiese #1, which is currently awaiting sidetracking operations to achieve a more favorable completion. The Thomas Trust #1, a second well in West Lissie, is rigging up and preparing to spud and will also target the Wilcox formation at a depth of approximately 9,800 feet. If successful, these wells could expand the company�s existing inventory of opportunities in South Texas. Beyond the wells drilled to date and planned for the near future, RAM has an inventory of identified well locations to support future drilling consisting of 18 PUD locations, 45 probable locations and 15 possible locations in its South Texas leases. RAM has a 100 percent working interest over much of its acreage and operates all of these South Texas wells. Activity Continues on RAM�s Unconventional Shale Plays Targeting the Barnett Shale of North Texas and Devonian Shale in West Virginia Continued Progress in Barnett Shale Play of North Texas Seven wells have been drilled year-to-date in RAM�s North Texas Barnett Shale play, where the company has joint operating agreements with EOG Resources (NYSE: EOG) and Devon Energy (NYSE: DVN). Three wells were spud in the Barnett Shale play during the first quarter. Two of these three wells, the Etta Burress 3H and Molloy A1-H began producing late in the second quarter with combined gross initial daily production rates of 5,166 Mcfe (1,860 Mcfe net) and are making a full quarter�s contribution to the third quarter production. Four additional horizontal wells, the TL Dickenson A-2H, A-3H, A-4H and A-5H began producing at a combined gross daily rate of 8,582 Mcf in August, partially impacting the third quarter and contributing fully to the fourth quarter. The company is continuing completion operations on its Brown 2H well and has proposed another well, the Reddell #2-H, to its joint interest participants. The Reddell # 2-H well, which RAM expects to spud in the fourth quarter, is planned as a horizontal well in Wise County, Texas targeting the Barnett Shale formation at a depth of approximately 6,800 feet with a 2,200 foot lateral. Additional 3-D Seismic Acquisition Planned to Expand Barnett Shale Project Inventory and Support Future Growth Potential RAM is participating in a program to acquire an additional 50 square miles of 3-D seismic over jointly held Barnett Shale acreage this year. This program is being undertaken in order to continue to increase the company�s inventory of approximately 30 seismically identified potential drilling locations. RAM Continues to Evaluate it�s West Virginia Devonian Shale Acreage RAM is making progress toward its planned drilling of 12 Devonian Shale test wells for 2008 with the aim of determining the commerciality of the company�s acreage. To date in 2008, the company has drilled a total of five wells, four horizontal wells and one vertical monitoring well in its West Virginia Devonian shale play. The sixth well in the series is currently drilling. Additionally, the company is building a drilling location for the seventh well and also securing a permit for the eighth well in the series. The initial horizontal wells were drilled to a measured depth in the targeted Huron Shale of approximately 6,400 feet, which included a lateral section of approximately 2,500 feet. The company expects that the application of various completion techniques on all of the planned wells will provide the necessary information to ultimately determine the commerciality of the Cornstalk area of its West Virginia acreage. In addition to the company�s activity in the Cornstalk area during the third quarter 2008, RAM has also taken steps to provide increased control of its ability to secure a market for the gas produced from its Cornstalk area drilling program, expand its lease acreage in the Devonian play by over 6,000 acres and add reserves and production. RAM recently purchased a gathering system consisting of approximately 14 miles of pipeline which connect to an end user market for natural gas as well as adjoining properties with existing daily net production of 200 Mcf and reserves of approximately one billion cubic feet equivalent of natural gas. Importantly, this addition provides the company greater control of the transportation of its natural gas volumes developed from drilling in its adjoining Devonian Shale properties to an initial end market. Further, the end market user is able to accept natural gas with high nitrogen content, a critical feature allowing RAM to initially produce gas into sales without incurring delays for the removal of nitrogen injected as part of the well completion process or incurring additional costs associated with acquisition of nitrogen rejection units required to raise the gas to pipeline quality standards. RAM has executed a letter of intent with another operator creating an area of mutual interest north of the Kanawha River in West Virginia into which each company contributes 11,000 acres. RAM�s contributed acreage is located in the company�s Bug Run prospect area. The objective of such an alliance is to expedite evaluation of the combined 22,000 acres of leases at an attractive cost for each party. In addition to its Cornstalk acreage, RAM also owns acreage in the adjoining Green Park and Bug Run areas, which together with its recent purchase and its acreage covered by its letter of intent total 62,000 gross (51,000 net) acres in West Virginia. Mature Fields Operations In the mature areas of Electra/Burkburnett in North Texas and the Allen and Fitts fields located in Oklahoma, which together were responsible for approximately 44 percent of total net production in the second quarter 2008, the company continues an active pace of development drilling and recompletion activity. To date during the third quarter, a total of six net wells were drilled in the Electra/Burkburnett area, of which four were completed as producing wells, and two were in various stages of completion. Together these two areas contain an identified inventory for future drilling of approximately 115 PUD locations as of the end of the second quarter 2008. Production from these areas and other mature fields, generate a substantial portion of cash flow to fund the company�s capital budget. Production As a result of the continued activity in our developing areas of South Texas, the North Texas Barnett Shale as well as capital expenditures in our mature fields, total production through the two months ended August 31, 2008 amounted to 430,893 BOE, or average net daily production of 6,950 BOE. The temporary loss of production as a result of weather driven power outages affecting volumes from RAM�s properties in South Texas and Louisiana could result in third quarter 2008 production being sequentially down slightly compared to that in the year�s second quarter. The company is experiencing a temporary loss of 500 BOE per day of production during the month of September as a result of weather driven power outages. �We continue to be on target with our planned non-acquisition capital spending and pleased with the increase in production levels, particularly in South Texas and the Barnett Shale, made possible by a significant inventory of development and exploitation projects in combination with ample cash flows. The anticipated production growth resulting from the ramp-up of drilling activity since the beginning of the year is increasingly visible and we continue to be opportunistic in looking to expand our footprint in both developing and mature areas,� said Larry Lee, Chairman and CEO. Guidance Update As discussed previously, the recent hurricanes making landfall along the Gulf Coast of Texas and Louisiana caused electrical outages and other related operating problems which have resulted in wells forcibly shut-in or facilities curtailed, temporarily impacting production in the third quarter. The negative impact from these storms to third quarter operations could result in production, revenues and EBITDA being sequentially down from our second quarter reported amounts. Currently, approximately 500 BOE per day of production is temporarily shut-in. Even with these impacts, management continues to expect that previous guidance provided for the second half of the 2008 year for production gains of 2% - 3% to a range of 1,281 MBOE � 1,294 MBOE compared to production of 1,256 MBOE reported in the first half of the 2008 year, remains intact. Management expects that shut-in volumes will be returned to production by early October 2008, however, the length of time volumes are shut-in and curtailed depends upon key items, such as return of electrical power, over which RAM has little control. This guidance continues to assume average pricing for the second half of the year, after the cash effect of settlements on derivative positions continues to approximate $96.00 per barrel for oil, $58.00 per barrel for natural gas liquids and $8.50 per Mcf for natural gas. Third quarter and second half of the 2008 year will be impacted by the effect of any loss RAM may be required to record at the end of those periods as a result of the settlement of the pending class action royalty lawsuit (Sacket v. Great Plains Pipeline Company et al.). The settlement is subject to court approval and is not likely to be final until early next year. RAM�s $16.0 million portion of the settlement amount will be recorded as a loss, offset by the mark-to-market value at the end of each period of the 3.2 million shares of company common stock deposited in escrow by the former stockholders of RAM Energy, Inc. in connection with the company�s May 2006 acquisition of RAM Energy. The final determination of the amount, if any, of loss resulting from the settlement will depend on the market price of RAM common stock during a 10 day trading period prior to final settlement approval. Based on the $3.21 per share closing price of RAM stock on September 23, 2008, the company�s loss on the settlement would be approximately $5.7 million. 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 drilling activities, production, plans to acquire seismic, EBITDA, capital spending, future drilling plans, the final amount of RAM�s loss, if any, the timing of court approved settlement in the pending lawsuit, Sacket v. Great Plains Pipeline Company, and events or other 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.