KRU Proshares Ultra S&P Regional Banking (delisted)

OKLAHOMA CITY, Aug. 14 /PRNewswire-FirstCall/ -- Crusader Energy Group Inc. (AMEX:KRU) today reports financial and operational results for the second quarter of 2008. Crusader's results include the operations of Knight Energy Group, LLC for the complete period with four days of activity (June 27, 2008 through June 30, 2008) of the acquired parties (see Westside Transaction below). Certain pro-forma information has been presented as if the acquisitions had occurred on January 1, 2007. Reconciliations of EBITDA, adjusted EBITDA, pro-forma EBITDA, pro-forma adjusted EBITDA and adjusted earnings per share are presented in Exhibits C and D. FINANCIAL HIGHLIGHTS * Adjusted EBITDA increased 144% in the second quarter of 2008 to $18,514,981 as compared to $7,593,403 in the second quarter of 2007 * Pro-Forma adjusted EBITDA increased 160% in the second quarter of 2008 to $24,983,009 as compared to $9,620,830 in the second quarter of 2007 * Net loss of $(120,207,230) for the second quarter of 2008 as compared to net income of $4,223,275 for the second quarter of 2007 * Adjusted EBITDA increased 120% in the first half of 2008 to $30,585,575 as compared to $13,882,256 in the first half of 2007 * Pro-Forma adjusted EBITDA increased 137% in the first half of 2008 to $42,519,658 as compared to $17,967,025 in the first half of 2007 * Reported net loss of $(119,525,399) for the first half of 2008 as compared to net income of $3,596,405 for the first half of 2007 * Adjusted earnings per share of $.06 and $.10 for the three and six months ended June 30, 2008, respectively * Net loss per share of $(1.15) and $(1.17) for the three and six months ended June 30, 2008, respectively OPERATIONAL HIGHLIGHTS * Production increased 60% versus 2nd quarter of 2007 and 20% over 1st quarter of 2008 * Current production exceeds 30 Mmcfe per day * Immediately following the Westside Transaction, total proved reserves were 177.2 Bcfe * Currently 7 drilling rigs active on operated properties (1 in Williston Basin, 1 in Permian Basin and 5 in Anadarko Basin) and 9 drilling rigs active on non-operated properties (3 in Permian Basin, 2 in Ft. Worth Basin and 4 in Anadarko Basin) * Currently acquiring, processing or initiating over 600 square miles of proprietary 3-D seismic primarily in the Permian Basin and Anadarko Basin; Crusader geoscientists are working over 1800 square miles of 3-D seismic * Current net acres exceed 480,000 (~1,000,000 gross) (approximately 90% undeveloped) PRODUCTION RESULTS Three Months Ended June 30, Reported Pro Forma 2008 2007 2008 2007 Gas (Mcf) 1,178,599 761,394 1,910,580 1,159,095 Oil (Bbls) 108,307 63,210 120,602 73,351 Mcfe 1,828,441 1,140,654 2,634,192 1,599,201 Mcfe/day 20,093 12,535 28,947 17,574 Six Months Ended June 30, Reported Pro Forma 2008 2007 2008 2007 Gas (Mcf) 2,164,410 1,403,412 3,623,418 2,159,276 Oil (Bbls) 197,927 112,065 222,471 130,483 Mcfe 3,351,972 2,075,802 4,958,244 2,942,174 Mcfe/day 18,417 11,469 27,243 16,255 MANAGEMENT COMMENTS Commenting on the announcement, David D. Le Norman, Crusader's President and CEO, said, "We are pleased to report our first operating results as a public company as we integrate the Westside Transaction. We continue to optimize the production from the Westside legacy properties while finalizing our revised development schedule for Crusader. During this process, our employees continue to execute our business strategy and deliver consistent growth in production." WESTSIDE TRANSACTION On December 31, 2007, Westside Energy Corporation ("Westside"), a public company traded on the American Stock Exchange, entered into a definitive agreement to combine with several affiliated privately held entities including Knight Energy Group, LLC ("Knight"), Knight Energy Group II, LLC ("Knight II"), RCH Upland Acquisition, LLC ("RCH"), Hawk Energy Fund I, LLC ("Hawk") and other entities acquired (consisting of Knight Energy Management, LLC, Crusader Energy Group, LLC and Crusader Management Corporation) (with Knight II, Hawk, RCH and the other entities acquired collectively referred to as the "Crusader Entities"). On June 26, 2008, the business combination contemplated by the contribution agreement (the "Westside Transaction") was completed and Westside changed its name to Crusader Energy Group Inc. ("Crusader" or the "Company"). For accounting purposes, the Westside Transaction was treated as a reverse acquisition with Knight as the acquirer and Westside and the Crusader Entities as the acquired parties. As such, the historical financial statements of Crusader are Knight's historical financial statements which were included in the proxy statement filed with the Securities and Exchange Commission ("SEC") on May 28, 2008. The acquisitions have been accounted for using the purchase method and the results of operations for Westside and the Crusader Entities are included subsequent to June 26, 2008, and did not materially contribute to Crusader's operating results. The aggregate purchase price paid by Knight in the Westside Transaction was approximately $228.8 million, consisting of unregistered common stock (valued at the closing price ($2.27) of Westside common stock on January 2, 2008, the announcement date of the Westside Transaction), cash and warrants assumed. The contribution agreement also called for certain Crusader employees to receive stock options totaling 35 million shares with an exercise price of $3.00 which were granted on June 26, 2008 and resulted in a non-cash stock compensation expense of approximately $106.7 million. When the contribution agreement was executed in December 2007 and the grant of 35 million options to certain Crusader employees at an exercise price of $3.00 was agreed to, Westside stock closed at $1.92 per share; 36% below the $3.00 strike price. In addition, because the market price of the Westside stock was above $3.00 per share at closing, rather than being exercisable immediately the options are exercisable over 4 years, beginning in 2009. We believe that the structuring of management's consideration and incentive in the form of stock options benefits the combined company by resulting in the contribution of $105.0 million in capital to the Company in the event all of the options are exercised and aligning of the interests of our employees, management team and stockholders. The allocation of the purchase price and the estimated fair market values of the assets acquired and liabilities assumed are subject to modification and are shown below. The purchase price allocation is preliminary because certain items, such as the determination of the final tax bases and the fair value of certain assets and liabilities as of the acquisition date, have not been completed. Preliminary calculation and allocation of purchase price: Westside Knight II Hawk Shares of common stock issued 26,471,274 53,223,684 14,700,000 Westside closing stock price $2.27 $2.27 $2.27 Fair value of common stock issued $60,089,792 $120,817,763 $33,369,000 Plus cash consideration - - - Plus merger cost 920,894 1,851,568 511,390 Plus warrants assumed 2,250,449 - - Total purchase price 63,261,135 122,669,331 33,880,390 Plus fair value of liabilities assumed: Current liabilities 5,886,977 19,638,912 8,792,461 Note payable 34,650,225 - - Deferred tax liabilities 31,377,741 - 11,863,524 Other long-term liabilities 146,660 42,985 94,181 Total purchase price plus liabilities assumed $135,322,738 $142,351,228 $54,630,556 Fair value of assets acquired: Current assets $4,051,513 $26,198,728 $2,611,932 Oil and gas properties 114,803,907 110,435,298 51,944,068 Deferred tax asset 16,406,657 4,009,479 - Other long-term assets 60,661 1,707,723 74,556 Total fair value of assets acquired $135,322,738 $142,351,228 $54,630,556 Preliminary calculation and allocation of purchase price: Other RCH Entities Total Shares of common stock issued 3,700,000 - 98,094,958 Westside closing stock price $2.27 $2.27 $2.27 Fair value of common stock issued $8,399,000 $- $222,675,555 Plus cash consideration - 501,000 501,000 Plus merger cost 128,717 - 3,412,569 Plus warrants assumed - - 2,250,449 Total purchase price 8,527,717 501,000 228,839,573 Plus fair value of liabilities assumed: Current liabilities - - 34,318,350 Note payable - - 34,650,225 Deferred tax liabilities 4,407,860 - 47,649,125 Other long-term liabilities 29,000 - 312,826 Total purchase price plus liabilities assumed $12,964,577 $501,000 $345,770,099 Fair value of assets acquired: Current assets $- $- $32,862,173 Oil and gas properties 12,964,577 - 290,147,850 Deferred tax asset - - 20,416,136 Other long-term assets - 501,000 2,343,940 Total fair value of assets acquired $12,964,577 $501,000 $345,770,099 ABOUT CRUSADER ENERGY Oklahoma City-based Crusader Energy Group Inc. is an oil and gas company with assets focused in various producing domestic basins. The company has a primary focus on the development of unconventional resource plays which includes the application of horizontal drilling and cutting edge completion technology aimed at developing shale and tight sand reservoirs. The Crusader assets are located in various domestic basins, the majority of which are in the Anadarko Basin and Central Uplift, Ft. Worth Basin Barnett Shale, Delaware Basin, Val Verde Basin, and the Bakken Shale of the Williston Basin. For other information regarding Crusader, please visit the Company's Internet Web site at http://www.crusaderenergy.com/. In addition to SEC filings and press releases, the Company posts materials of general interest to investors including any current investor meeting information or Crusader conference or analyst presentations. CONFERENCE CALL INFORMATION The Company will host a conference call today at 10:00 a.m. (CDT) to review the Company's second quarter 2008 financial and operating results. The call can be accessed by calling 800-299-9086 (U.S. domestic) or 617-786-2903 (international). The pass code for the call is "Crusader Energy." A live audio Web cast of the call will be available on the Company's Web site at http://www.crusaderenergy.com/. A replay of the call will be made available one hour following the conclusion of the call. To access the domestic audio replay, call 888-286- 8010. The international replay number is 617-801-6888. The audio replay will be available through August 28, 2008. The passcode for the replay is 15192121. The replay will also be available on the Company's Web site indefinitely. FORWARD-LOOKING STATEMENT DISCLOSURE This press release contains "forward-looking statements" within the meaning of the Federal securities laws and regulations. Forward-looking statements are estimates and predictions by management about the future outcome of events and conditions that could affect Crusader's business, financial condition and results of operations. We use words such as, "will," "should," "could," "plans," "expects," "likely," "anticipates," "intends," "believes," "estimates," "may," and other words of similar expression to indicate forward-looking statements. There is no assurance that the estimates and predictions contained in our forward-looking statements will occur or be achieved as predicted. Any number of factors could cause actual results to differ materially from those referred to in a forward-looking statement, including drilling risks, operating hazards and other uncertainties inherent in the exploration for, and development and production of, oil and natural gas; volatility in oil and natural gas prices, including the adverse impact of lower prices on the amount of our cash flow available to meet capital expenditures, our ability to borrow and raise capital and on the values attributed to our proven reserves; drilling and operating risks in the unconventional shales and other reservoirs in which we operate, including uncertainties in interpreting engineering, reservoir and reserve data; the availability of technical personnel and drilling equipment; the timing and installation of processing and treatment facilities, third- party pipelines and other transportation facilities and equipment; changes in interest rates; and increasing production costs and other expenses. Further information on risks and uncertainties affecting our business is described under Risk Factors in this report and are also available in our reports filed with the SEC which are incorporated by this reference as though fully set forth herein. We undertake no obligation to publicly update or revise any forward-looking statement. EXHIBIT A CRUSADER ENERGY GROUP INC. CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) Three Months Ended June 30, Six Months Ended June 30, OPERATING REVENUES 2008 2007 2008 2007 Gas sales $12,567,181 $5,434,107 $20,829,699 $9,552,790 Oil sales 13,184,508 3,894,122 21,655,551 6,619,372 Other 394,795 157,467 728,788 342,572 Total operating revenue 26,146,484 9,485,696 43,214,038 16,514,734 OPERATING COSTS AND EXPENSES Lease operating 1,558,378 826,461 3,050,448 1,245,480 Production taxes 1,681,044 571,474 2,771,619 1,002,996 General and administrative 108,767,228 949,642 110,371,878 1,763,444 Depreciation, depletion and amortization 5,938,330 4,003,696 11,507,123 7,286,065 Accretion of asset retirement obligations 14,316 5,676 27,544 11,352 Total operating costs and expenses 117,959,296 6,356,949 127,728,612 11,309,337 Income (loss) from operations (91,812,812) 3,128,747 (84,514,574) 5,205,397 OTHER (EXPENSE) INCOME Interest expense (1,590,061) (559,524) (3,100,490) (935,182) Interest income and other 34,806 27,236 123,457 43,320 Risk management (15,012,339) 1,626,816 (20,206,968) (717,130) Total other (expenses) income (16,567,594) 1,094,528 (23,184,001) (1,608,992) Income (loss) before income taxes (108,380,406) 4,223,275 (107,698,575) 3,596,405 Income tax expense 11,826,824 - 11,826,824 - NET INCOME (LOSS) $(120,207,230) $4,223,275 $(119,525,399) $3,596,405 EARNINGS (LOSS) PER SHARE Basic and Diluted $(1.15) $(1.17) WEIGHTED AVERAGE SHARES OUTSTANDING Basic and Diluted 104,411,866 102,255,933 PRO FORMA INFORMATION Historical income (loss) from operations before income taxes $4,223,275 $3,596,405 Pro forma provision (benefit) for income taxes 1,642,854 1,399,002 Pro forma net income (loss) $2,580,421 $2,197,403 PRO FORMA EARNINGS PER SHARE Basic and Diluted $0.03 $0.02 WEIGHTED AVERAGE SHARES OUTSTANDING Basic and Diluted 100,100,000 100,100,000 EXHIBIT B CRUSADER ENERGY GROUP INC. CONSOLIDATED BALANCE SHEETS (Unaudited) June 30, December 31, 2008 2007 ASSETS CURRENT ASSETS Cash and cash equivalents $10,936,633 $7,941,663 Accounts receivable Accrued oil and gas production revenue 17,940,658 7,581,187 Joint interest billings 16,008,130 14,045,470 Other 1,607 770,584 Prepaid and other assets 1,770,724 126,450 Total current assets 46,657,752 30,465,354 OIL AND GAS PROPERTIES - AT COST, net, based on full cost accounting ($136,438,772 and $12,558,796 excluded from amortization at 2008 and 2007, respectively) 574,225,420 243,560,456 Other assets 14,633,928 5,199,199 $635,517,100 $279,225,009 LIABILITIES AND MEMBERS'/STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $18,744,460 $11,856,699 Accrued liabilities 16,084,992 5,934,262 Derivative financial instruments 18,247,696 1,775,617 Total current liabilities 53,077,148 19,566,578 LONG-TERM LIABILITIES Asset retirement obligations 1,100,038 718,316 Derivative financial instruments 4,532,710 403,883 Other - 215,778 Deferred tax liabilities, net 39,271,859 - Notes payable 130,000,000 67,000,000 Total long-term liabilities 174,904,607 68,337,977 COMMITMENTS AND CONTINGENCIES MEMBERS' EQUITY - 191,320,454 STOCKHOLDERS' EQUITY Common stock, $.01 par value, 500,000,000 authorized; 198,194,958 shares issued and outstanding at June 30, 2008 1,981,950 - Additional paid-in capital 523,019,071 - Accumulated deficit (117,465,676) - Total Stockholders' Equity 407,535,345 - $635,517,100 $279,225,009 CRUSADER ENERGY GROUP INC. EXHIBIT C RECONCILIATION OF INCOME (LOSS) BEFORE INCOME TAXES AS REPORTED TO ADJUSTED EARNINGS EXCLUDING CERTAIN NON-CASH ITEMS, a non-gaap measure (Unaudited) Three months ended Six months ended June 30 June 30 2008 2007 2008 2007 Net income (loss), as reported $(120,207,230) $4,223,275 $(119,525,399) $3,596,405 Income tax expense, as reported 11,826,824 - 11,826,824 - Income (Loss) before income taxes, as reported (108,380,406) 4,223,275 (107,698,575) 3,596,405 Adjustment for certain non-cash items Change in mark-to-market on unrealized derivatives 12,689,777 (1,193,092) 16,999,318 2,064,604 Non-cash stock compensation 106,677,219 - 106,677,219 - As adjusted 10,986,590 3,030,183 15,977,962 5,661,009 Income taxes, adjusted Current - - - - Deferred 4,273,784 1,178,741 6,215,427 2,202,133 Adjusted earnings excluding certain items, a non-gaap measure $6,712,806 $1,851,442 $9,762,535 $3,458,876 Non-GAAP earnings per share Basic $0.06 $0.02 $0.10 $0.03 Diluted $0.06 $0.02 $0.10 $0.03 Non - GAAP basic shares outstanding 104,411,866 100,100,000 102,255,933 100,100,000 Non - GAAP diluted shares outstanding 105,243,059 100,100,000 102,715,868 100,100,000 CRUSADER ENERGY GROUP INC. EXHIBIT D RECONCILIATION OF EBITDA AND ADJUSTED EBITDA The following summary presents unaudited pro forma consolidated net income (loss), EBITDA and Adjusted EBITDA for the three and six months ended June 30, 2008 and 2007, respectively, as if the Westside Transaction had occurred as of January 1, 2007. The pro forma results are for illustrative purposes only and include adjustments in addition to the pre-acquisition historical results, such as increased depreciation, depletion and amortization expense resulting from the allocation of fair value to oil and gas properties acquired. The unaudited pro forma information is not necessarily indicative of the operating results that would have occurred if the acquisitions had been consummated at that date, nor is it necessarily indicative of future operating results. Three Months Ended June 30, Reported Pro Forma 2008 2007 2008 2007 Net income (loss) $(120,207,230) $4,223,275 $(118,116,226) $4,173,537 Income tax expense 11,826,824 - 11,826,824 - Interest expense 1,590,061 559,524 2,436,586 1,206,720 DD&A 5,938,330 4,003,696 8,466,857 5,560,014 EBITDA* (100,852,015) 8,786,495 (95,385,959) 10,940,271 Adjustments: Stock compensation expense 106,677,219 - 106,677,219 - Unrealized (gains) losses on derivatives 12,689,777 (1,193,092) 13,691,749 (1,319,441) Adjusted EBITDA** $18,514,981 $7,593,403 $24,983,009 $9,620,830 Six months ended June 30 Reported Pro Forma 2008 2007 2008 2007 Net income (loss) (119,525,399) $3,596,405 $(115,326,234) $2,911,634 Income tax expense 11,826,824 - 11,826,824 - Interest expense 3,100,490 935,182 4,793,540 2,652,227 DD&A 11,507,123 7,286,065 16,547,019 10,111,503 EBITDA* (93,090,962) 11,817,652 (82,158,851) 15,675,364 Adjustments: Stock compensation expense 106,677,219 - 106,677,219 - Unrealized (gains) losses on derivatives 16,999,318 2,064,604 18,001,290 2,291,661 Adjusted EBITDA** $30,585,575 $13,882,256 $42,519,658 $17,967,025 * EBITDA represents net income (loss) before income tax expense and depreciation, depletion and amortization expense. EBITDA is presented as a supplemental financial measurement in the evaluation of our business. We believe that it provides additional information regarding our ability to meet our future debt service, capital expenditures and working capital requirements. This measure is widely used by investors and rating agencies in the valuation, comparison, rating and investment recommendations of companies. EBITDA is a financial measurement that, with certain negotiated adjustments, is reported to our lenders pursuant to our bank credit agreement and is used in the financial covenants in our bank credit agreement. EBITDA is not a measure of financial performance under GAAP. Accordingly, it should not be considered as a substitute for net income, income from operations, or cash flow provided by operating activities prepared in accordance with GAAP. ** Adjusted EBITDA excludes certain items that management believes affect the comparability of operating results. The Company discloses these non-GAAP financial measures due to the following: (a) Management uses adjusted EBITDA to evaluate the Company's operational trends and performance relative to other natural gas and oil producing companies, (b) Adjusted EBITDA is the financial metric used in determining our compliance with certain financial covenants under our debt agreements, (c) Items excluded generally are one-time items or items whose timing or amount cannot be reasonably estimated. DATASOURCE: Crusader Energy Group Inc. CONTACT: Roy A. Fletcher, Investor Relations of Crusader Energy Group Inc., +1-405-241-1847 Web site: http://www.crusaderenergy.com/

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