OEDVQ Osage Exploration and Development Inc (CE)

Operated Properties Begin Providing Strong Quarter-over-Quarter Gains

Osage Exploration and Development, Inc. (OTCBB:OEDV), an independent exploration and production company focused on the Horizontal Mississippian and Woodford plays in Oklahoma, reported its operational and financial results for the quarter ended September 30, 2014. The full text of the Company’s Form 10-Q is available on the SEC EDGAR system or on Osage’s website: http://www.osageexploration.com. Highlights include:

• Record revenue from continuing operations of $3.3 million, a 34.3% increase over the previous quarter;
• Adjusted EBITDA* of $2.0 million, up 63.6% quarter-over-quarter;
• Record average daily production net of royalties of 537 barrels of oil equivalent per day (BOEPD) during the third quarter of 2014, a 26.1% increase versus the previous quarter; and,
• Record quarterly production of 49,440 BOE, 27.5% higher quarter-over-quarter and 63.8% higher than the third quarter of 2013;

Operational Update

Since the end of the third quarter of 2014, Osage has:

• Brought two horizontal wells into production, the previously announced McNally 1-29MH and the McNally 1-20WH;
• Drilled and fracture stimulated its fifth and sixth operated wells, the George Plagg 1-19MH and the George Plagg 1-18MH;
• Drilled its seventh operated well, the Everest 1-9MH, which is scheduled for fracture stimulation in late November; and,
• Begun preparations to drill its eighth horizontal well, the Norval Gooch 1-7MH, which is scheduled to spud early next week.

The Company anticipates bringing the two George Plagg wells into production prior to year-end.

Cumulative production on the McNally 1-29MH has reached in excess of 18,400 BOE in its first six weeks of production with a product mix composed of approximately 82% oil. Cumulative production on the McNally 1-20WH has topped 10,700 BOE in just over five weeks of production with a product mix of approximately 80% crude oil. In order to preserve the long-term value of the reservoir, both wells were initially produced on a tightly controlled choke.

2014 Drilling and Exit Rate

Osage’s operational plan remains drilling one operated horizontal well per month, and is ahead of its previously stated objective of drilling six operated wells by year-end. The Company may surpass its stated target exit rate of 850 BOE net to its working interest.

Management Comments

“With record results and production gains of more than 25% in just 90 days’ time, the third quarter is the first time we’ve been able to show the fruits of Osage’s efforts as an Operator and the potential to drive growth to our shareholders,” stated Mr. Kim Bradford, Chairman and CEO of Osage Exploration.

“Beyond the success in growing our daily production, we are preparing the entire asset for rapid development. We are nearing completion on the buildout of a three-phase power grid that will serve every well location. We have drilled and permitted a high-capacity salt water disposal well, are networking all present and future well locations to the salt water disposal well via pipeline, and are almost done building a natural gas gathering system in order to get our liquids-rich gas to the most efficient cryogenic plan in the area, maximizing realized pricing.”

Mr. Bradford continued, “We should have the vast majority of our operated acreage in Logan County held by production by March of 2015. Our current efforts to build infrastructure will provide the basis for even higher returns as we begin developmental drilling of de-risked acreage as early as the first quarter of next year. Given the above, we do not intend to slow down our growth plans due to the lower commodity price environment. Product pricing has reinforced our effort to reduce our completed well costs, but has not slowed us down. Quarter by quarter, we are building Osage into a larger, stronger company.”

*GAAP Reconciliation

In addition to revenue and net income determined in accordance with GAAP, we have provided a reconciliation of our Adjusted EBITDA in this release. Adjusted EBITDA is a non-GAAP financial measure that we use as a supplemental measure of our performance. Adjusted EBITDA is not a measurement of our financial performance under GAAP and should not be considered as an alternative to revenue, net income, operating income or any other performance measure derived in accordance with GAAP. It should not be assumed that Adjusted EBITDA is comparable to similarly named figures disclosed by other companies. We define Adjusted EBITDA as net income before the effects of the items listed in the table below. Management believes Adjusted EBITDA is a useful measure of performance, along with operating income (loss) and net income (loss) from continuing operations.

        Q3, 2014 Q2, 2014 Net income (loss) from continuing operations $ 107,137 $ (4,397,749 ) Interest expense, net 1,018,584 1,211,170 Depreciation, depletion and accretion 1,549,842 1,346,123 Stock based compensation 236,906 2,923,252 Unrealized (gains) losses on derivatives (643,529 ) 243,422 Gain on sale of land interests (226,715 ) (77,950 ) Taxation   -     -   Adjusted EBITDA $ 2,042,225 $ 1,248,268  

About Osage Exploration and Development, Inc.

Based in San Diego, California, with production offices in Oklahoma City, Oklahoma, Osage Exploration and Development, Inc. is an independent exploration and production company with interests in oil and gas wells and prospects in the U.S. http://www.osageexploration.com

Safe Harbor Statement

The information in this release includes certain forward-looking statements as defined by the Securities and Exchange Commission that are based on assumptions that in the future may prove not to have been accurate. Those statements and Osage Exploration and Development, Inc. are subject to a number of risks, including production variances from expectations, volatility of product prices, inability to raise sufficient capital to fund its operations, environmental risks, competition, government regulation, and the ability of the Company to execute its business strategy, among others.

Osage Exploration and Development, Inc.Jack Zedlitz, 405-270-0989VP of Corporate Developmentjzedlitz@osageexploration.comorKim Bradford, 619-677-3956President and CEOkbradford@osageexploration.comhttp://www.osageexploration.com