Crimson Exploration increases capital budget, plans for acquisitions

By Lisa Kerner

Charlotte, N.C., July 18 - Crimson Exploration Inc. president and chief executive officer Allan Keel said his company has no near-term debt maturities and sufficient liquidity to meet the goals of its strategic plan, which includes looking to the market for potential acquisitions.

Keel made his comments at the 2011 Global Hunter Securities Conference in San Francisco on Monday.

In addition to acquisitions, which Keel called the "third leg of the stool," the Houston-based independent energy company is focused on drilling conventional oil wells and pursuing resource plays primarily in land it already owns in southeast Texas.

Keel believes Crimson can boost its daily production levels of liquids to 40%-50% of production from 18%-20% by the middle of next year while maintaining its natural gas properties.

Crimson also announced on Monday that its board of directors approved a 30% increase to the 2011 capital budget for a total of $78 million, marking the beginning of an Eagle Ford development program that represents a strategic shift to oil and liquids-rich projects in proven areas, according to Keel.

Looking ahead, Keel said Crimson plans to live within its cash flow based on production forecasts.

"We can have a very nice growth rate going forward," Keel said, even without bringing in any outside projects.

While Crimson stock currently trades at around $3.60 (Nasdaq: CXPO) a share, Keel said there is a lot of near-term catalyst to boost the stock. In addition, Crimson controls most of what it operates and is in a "pretty good position" financially.

Crimson's challenge - and an opportunity for investors - is to get the stock to trade at $16.00 per share, said Keel.

At March 31, the company had long-term debt of about $168 million and cash and cash equivalents of about $23 million.

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