SOURCE: Rancher Energy

July 01, 2008 13:13 ET

Rancher Energy Corp. Announces Fiscal 2008 Year End Financial Results

DENVER, CO--(Marketwire - July 1, 2008) - Rancher Energy Corp. (OTCBB: RNCH) today announced financial results for its fiscal year ended March 31, 2008.

The Company reported revenue of $6.3 million in fiscal 2008, up from $1.2 million in fiscal 2007. Rancher Energy sold 86,626 barrels of oil, which represents its net interest in its properties, at an average price of $73.24 per barrel in fiscal 2008 as compared with the sale of 23,838 barrels of oil at an average price of $48.74 per barrel in the prior year.

Total operating expenses in fiscal 2008 increased to $12.9 million from $6.8 million in the prior year during which the Company had fewer than four months of full operating expenses due to the late December 2006 and January 2007 acquisitions of producing properties in the Powder River Basin. The year-over-year increase in total operating expenses was primarily due to the following: Lease operating expenses grew to $2.9 million from $670,000; non-cash depreciation, depletion and amortization increased to $1.4 million from $380,000; an increase in production taxes to $770,000 from $140,000; and an increase in general and administrative expenses to $7.5 million, including $1.0 million in non-cash stock-based and restricted stock compensation expense, from $4.5 million. The Company recently implemented headcount and other overhead expense reductions that have reduced its general and administrative expense run rate significantly, positioning Rancher Energy to operate at or near break-even. Total other expense in fiscal 2008 increased to $5.6 million from $3.1 million in fiscal 2007 due primarily to higher interest expense relating to the GasRock note payable and a $1.9 million increase in amortization of deferred financing costs and discount on note payable. Net loss in fiscal 2008 was $13.2 million, or $0.12 per basic and diluted share, versus a net loss of $8.7 million, or $0.16 per basic and diluted share, in fiscal 2007. Rancher Energy closed the fiscal year with cash and cash equivalents of $6.8 million, up from $5.1 million at 2007 fiscal year end.

"We continue to work to secure financing to fund the CO2 recovery phase of our enhanced oil recovery (EOR) program," said John Works, President & CEO of Rancher Energy. "We remain confident that we will be successful in these efforts based on the quality of our properties, the high price of oil and the value of our CO2 supply agreement with ExxonMobil."

About Rancher Energy Corp.

Rancher Energy is an innovative oil & gas exploration & development company with a targeted strategy to reinvigorate older, historically productive oil fields in the hydrocarbon-rich Rocky Mountain region of the United States. Using waterflood injection and CO2 flooding, coupled with other leading edge hydrocarbon recovery techniques such as 3-D seismic data and directional drilling, Rancher Energy expects to extract proven in-place oil that remains behind in mature fields. Rising energy demand and strong oil & gas prices combined with advances in oil recovery have made this strategy profitable. Rancher Energy is taking advantage of this convergence by acquiring low risk, high quality, historically productive plays with under-exploited reserves and developing customized enhanced recovery strategies to maximize production.

Forward-Looking Statements

This press release includes forward-looking statements as determined by the U.S. Securities and Exchange Commission (the "SEC"). All statements, other than statements of historical facts, included in this press release that address activities, events, or developments that the Company believes or anticipates will or may occur in the future are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include the Company's ability to obtain financing to implement its waterflood plan, to construct pipeline and other infrastructure, and for other operational and working capital purposes, the uncertainty of recovery factors for the enhanced oil recovery projects, the volatility of oil prices, general economic and business conditions, and other factors over which the Company has little or no control. The Company does not intend (and is not obligated) to update publicly any forward-looking statements. The contents of this press release should be considered in conjunction with the warnings and cautionary statements contained in the Company's recent filings with the SEC.

Rancher Energy Corp.
Statements of Operations

                                                Twelve months ended
                                                     March 31,
                                              2008               2007
                                          -------------      -------------
  Oil and gas sales                       $   6,344,414      $   1,161,819
  Losses on derivative activities              (956,142)                 -
                                          -------------      -------------
     Total revenues                           5,388,272          1,161,819
Operating expenses:
  Production taxes                              772,010            136,305
  Lease operating expenses                    2,906,210            668,457
  Depreciation, depletion and amortization    1,360,737            375,701
  Impairment of unproved properties                   -            734,383
  Accretion expense                             121,740             29,730
  Exploration expense                           223,564            333,919
  General and administrative expense          7,538,242          4,512,427
                                          -------------      -------------
     Total operating expenses                12,922,503          6,790,922
                                          -------------      -------------
Loss from operations                         (7,534,231)        (5,629,103)
                                          -------------      -------------
Other income (expense):
  Liquidated damages pursuant to
   registration rights arrangement           (2,645,393)        (2,705,531)
  Amortization of deferred financing
   costs and discount on note payable        (2,423,389)          (537,822)
  Interest expense                             (794,693)           (37,647)
  Interest and other income                     232,880            207,848
                                          -------------      -------------
     Total other income (expense)            (5,630,595)        (3,073,152)
                                          -------------      -------------
Net loss                                  $ (13,164,826)     $  (8,702,255)
                                          =============      =============
Basic and diluted net loss per share      $       (0.12)     $       (0.16)
                                          =============      =============
Basic and diluted weighted
 average shares outstanding                 109,942,627         53,782,291

Rancher Energy Corp.
Balance Sheets

                                            March 31,          March 31,
ASSETS                                        2008               2007
                                          -------------      -------------
Current Assets:
  Cash and cash equivalents               $   6,842,365      $   5,129,883
  Accounts receivable and prepaid
   expenses                                   1,170,641            453,709
                                          -------------      -------------
     Total current assets                     8,013,006          5,583,592
                                          -------------      -------------
Oil & gas properties
 (successful efforts method):
  Unproved                                   54,058,073         56,533,934
  Proved                                     20,734,143         18,552,188
  Less: Accumulated depletion,
   depreciation and amortization             (1,531,619)          (347,821)
                                          -------------      -------------
     Net oil & gas properties                73,260,597         74,738,301
                                          -------------      -------------
Furniture and equipment, net of
 accumulated depreciation of $204,420
 and $27,880, respectively                      997,196            513,556
Other assets                                  1,300,382            642,582
                                          -------------      -------------
Total other assets                            2,297,578          1,156,138
                                          -------------      -------------
     Total assets                         $  83,571,181      $  81,478,031
                                          =============      =============
Current liabilities:
  Accounts payable and accrued
   liabilities                            $   2,114,204      $   1,542,840
  Accrued oil & gas property costs              250,000            250,000
  Asset retirement obligation                   337,685            196,000
  Liquidated damages pursuant to
   registration rights arrangement                    -          2,705,531
  Derivative liability                          590,480                  -
  Note payable, net of unamortized
   discount of $2,527,550                     9,712,450                  -
                                          -------------      -------------
     Total current liabilities               13,004,819          4,694,371
                                          -------------      -------------
Long-term liabilities:
  Derivative liability                          246,553                  -
  Asset retirement obligation                   922,166          1,025,567
                                          -------------      -------------
     Total long-term liabilities              1,168,719          1,025,567
                                          -------------      -------------
Stockholders' equity:
  Common stock                                    1,150              1,021
  Additional paid-in capital                 91,790,181         84,985,934
  Accumulated deficit                       (22,393,688)        (9,228,862)
                                          -------------      -------------
     Total stockholders' equity              69,397,643         75,758,093
                                          -------------      -------------
  Total liabilities and stockholders'
   equity                                 $  83,571,181      $  81,478,031
                                          =============      =============

Contact Information

  • Contacts:

    John Works
    Chief Executive Officer
    Rancher Energy Corp.

    Jay Pfeiffer
    Pfeiffer High Investor Relations, Inc.