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For Release at 6:00pm
EST on February 28, 2007
GASCO ENERGY ANNOUNCES 2006 FINANCIAL RESULTS;
PROVIDES INITIAL 2007 CAPEX BUDGET GUIDANCE;
DRILLS BLACKHAWK WELL IN RECORD 14 DAYS
DENVER – February
28, 2007 – (PR Newswire) – Gasco
Energy (AMEX: GSX) today announced financial and
operating results for the fourth quarter and full-year
ended December 31, 2006.
Full-year 2006 Financial
Results
For the year-ended December 31, 2006, Gasco reported
a net loss attributable to common shareholders of
$55.8 million, or $0.65 per share, as compared to breakeven
results for 2005 of $71,000 net loss, or $0.00 per
share. All per share figures are basic and diluted.
Included in the full-year operating expenses is a non-cash
charge of $51 million related to an impairment of the
carrying value of oil and gas properties that was incurred
in
the second quarter of 2006. Net income before the impairment
charge (1), a non-GAAP measure, was a net
loss for the year of $4.8 million or $0.06 per share.
Total
revenues grew by 52% to a company-record $25.7 million,
as compared to $16.9 million in 2005. Oil and
gas sales for 2006 were a company-record $21.0 million
as compared to $14.1 million for the same period in
2005. The $7.0 million increase in oil and gas sales
during 2005 is comprised of $17.3 million related to
the
production increase offset by $10.3 million related
to the decrease in commodity prices. Gathering revenues
from the company’s pipeline grew to $1.9 million
from $1.4 million in 2005. The revenue growth is attributed
to
increased throughput of natural gas volumes gathered
and processed. For the full year, the average prices
received for Gasco’s natural gas and liquids
were $5.38 per thousand cubic feet of natural gas (Mcf)
and
$54.86 per barrel of liquid hydrocarbons. This compares
to $8.16 per Mcf and $56.91 per barrel for 2005. The
company has no hedges in place.
Gasco's total assets
at year-end were $165.5 million, down from $201.2 million
at year-end 2005. The decline
in total assets is attributed to the above-mentioned
loss of $55.8 million.
Net cash provided by
operating activities for 2006 was a record $9.4 million
as compared to $2.1 million in 2005,
an increase of 348%.
Fourth Quarter 2006 Financial
Results
For the quarter-ended December 31, 2006, Gasco reported
a net loss of $1.8 million, or $0.02 per share, as
compared to net income for 2005 of $2.0 million, or
$0.03 per share. Total revenues were $6.6 million,
as
compared to $8.3 million in 2005. The decrease in total
revenue is attributed to lower prices received for
sales
of the company’s natural gas offset by increased
natural gas production. Oil and gas sales for the fourth
quarter 2006 were $5.6 million as compared to $7.4
million for the same period in 2005. For the fourth
quarter
of 2006 the average price received for sales of Gasco’s
natural gas and liquids was $4.96 per Mcf and $46.55
per barrel of liquid hydrocarbons. This compares to
$9.58 per Mcf and $58.37 per barrel for the same period
in
2005.
Record Quarterly and
Annual Production
Estimated cumulative net production for the year-ended
December 31, 2006 was 3,817 million cubic feet of
natural gas equivalent (MMcfe), an increase of 123%
over full-year 2005 production of 1,713 MMcfe. Included
in the 2006 equivalent calculation is 21,646 barrels
of oil, an increase of 104% over 2005 oil volumes produced.
Estimated
cumulative net production for the quarter ended December
31, 2006 was 1,106 MMcfe, an increase of 17% over third
quarter 2006 production of 947 MMcfe, and 43% above
fourth quarter 2005’s production
of
776 MMcfe. Net production increases are attributed
to the completion of new wells and to a higher average
working interest in those wells partially offset by
normal production declines in existing wells. The Riverbend
Project constitutes 100% of Gasco’s gross and
net production.
2007 Initial Capital
Expenditure Budget
Gasco also today announced an initial budget of $40
million for its 2007 capital expenditure (Capex) program
subject to approval by its board of directors. The
program will primarily cover the drilling and completion
of
approximately 10 net wells on Gasco’s Riverbend
Project located in the Uinta Basin of Utah and the
installation
of associated pipeline infrastructure, distribution
facilities and geophysical operations. The Capex budget
also
includes the completion of a well suspended in 2006
in Wyoming. This budget will be funded primarily from
cash on hand, cash flow from operations and borrowings
under the company’s reserve-based revolving line
of
credit. Currently borrowing base for the revolving
line of credit is $25 million, of which none of the
facility is
drawn.
Subsequent Events
- The Company recently
reached total depth (TD) on a 12,358’ well
in its Riverbend project in a record
14 days. Management has revised its target time to
reach TD to 20 days from 25 days, previously.
- The extremely cold
temperatures experienced in our Utah field (night
time temperatures as low as
35°F below zero) for much of mid-January severely
impacted our ability to flow our production to sales
and undertake completion operations. As much as 50%
of our production was curtailed for
approximately two weeks. Consequently, first quarter
2007 production will be lower than it might
otherwise have been.
- During the first
quarter of 2007 the Company reached total depth on
its Hilliard test at the Cottonwood Ranch 24-21 well
(Gasco 25% working interest) in the Green River Basin
of Wyoming. While the well
logs showed the presence of hydrocarbons they were
not deemed to be present in sufficient quantities
to make a commercial completion and the well was plugged
and abandoned.
- The high resolution 2-D seismic program in
Utah is underway with the drilling of the shot holes.
Mancos
Shale Test - Riverbend Project, Utah
Gasco recently spudded a deep well to test the productive
potential of the Wasatch, upper and lower Mesaverde
and Blackhawk formations, the Mancos Shale, and Dakota
/ Morrison sandstones. The Federal 14-31 (100%
WI – GSX operates) is currently drilling below
7,800 feet to a proposed total depth of 16,650 feet.
The
preliminary well cost estimate to drill and complete
the well is $7.3 million. Estimated time to reach total
depth is
90 days from spud.
The Federal 14-31 is
located in the core Riverbend Blackhawk Spring Canyon
marine trend where Gasco has
the most geological control and continues to have consistent
and favorable results. Gasco’s geological and
engineering team expects to encounter numerous stacked
over-pressure natural gas pay zones throughout the
wellbore. Increased activity by industry targeting
deeper pay zones is ongoing in the Uinta Basin with
encouraging preliminary results. Geological modeling
indicates that the Mancos Shale and associated
sandstone members are prevalent under much of Gasco’s
Uinta Basin leasehold where the natural gas
resource can be more efficiently recovered using the
proven, modern drilling and completion technologies
currently benefiting Rockies operators.
Teleconference
Call
A conference call with investors, analysts and other
interested parties is scheduled for 11:00 a.m. EST
on
Thursday, March 1, 2007 to discuss 2006 financial and
operating results. You are invited to listen to the
call
which will also be broadcast live over the Internet
at www.gascoenergy.com.
Date: Thursday, March 1, 2007
Time: 11:00 a.m. EST
10:00 a.m. CST
9:00 a.m. MST
8:00 a.m. PST
Call: (866) 392-4171 (US/Canada) and (706) 634-6345
(International), passcode 1173340
Internet: Live and rebroadcast over the Internet: log on to
www.gascoenergy.com
Replay: Available through Saturday, March 3, 2007 at (800) 642-1687
(US/Canada) and (706) 645-9291 (International) using
passcode 1173340 and for 30 days at www.gascoenergy.com
About Gasco Energy
Gasco Energy, Inc. is a Denver-based natural gas and
oil exploitation and development company that focuses
on natural-gas-rich prospects in the Rocky Mountain
area of the United States. The Company currently is
active in the Uinta Basin in Utah and controls acreage
in the Greater Green River Basin of Wyoming. To learn
more, visit www.gascoenergy.com.
Forward-looking statements
Certain statements set forth in this press release
relate to management’s future plans, objectives
and
expectations. Such statements are forward-looking within
the meanings of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. All statements other
than statements of historical facts included in this
press release, including, without limitation, statements
regarding the Company’s future financial position,
potential resources, business strategy, budgets, projected
costs and plans and objectives of management for future
operations, are forward-looking statements. In
addition, forward-looking statements generally can
be identified by the use of forward-looking terminology
such
as “may,” “will,” “expect,” “intend,” “project,” “estimate,” “anticipate,” “believe,” or “continue” or
the negative
thereof or similar terminology. Although any forward-looking
statements contained in this press release are to
the knowledge or in the judgment of the officers and
directors of the Company, believed to be reasonable,
there
can be no assurances that any of these expectations
will prove correct or that any of the actions that
are
planned will be taken. Forward-looking statements involve
known and unknown risks and uncertainties that may
cause the Company’s actual performance and financial
results in future periods to differ materially from
any
projection, estimate or forecasted result. Some of
the key factors that may cause actual results to vary
from
those the Company expects include inherent uncertainties
in interpreting engineering and reserve or production
data; operating hazards; delays or cancellations of
drilling operations because of weather and other natural
and
economic forces; fluctuations in oil and natural gas
prices in response to changes in supply; competition
from other companies with greater resources; environmental
and other government regulations; defects in title
to
properties; increases in the Company’s cost of
borrowing or inability or unavailability of capital
resources to fund
capital expenditures; and other risks described under “Risk
Factors” in Item 1. of the Company's 2006 filing
on
Form 10-K filed with the Securities and
Exchange Commission on February 28, 2007.
Contact for
Gasco Energy, Inc.: Investor Relations: 303-483-0044
[Financial
and Operational Tables Accompany this News Release]
The
notes accompanying the financial statements are an
integral part of the consolidated financial
statements and can be found in Gasco’s filing
on Form 10-K dated February 28, 2007.
GASCO ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
December 31,
2006 2005
ASSETS
CURRENT ASSETS
Cash and cash equivalents $12,876,879 $62,661,368
Restricted investment 3,575,000 10,139,000
Short-term investments 6,000,000 15,000,000
Accounts receivable
Joint interest billings 5,955,186 1,792,038
Revenue 3,081,850 3,115,154
Inventory 1,297,498 1,182,982
Prepaid expenses 644,490 645,554
Total 33,430,903 94,536,096
PROPERTY, PLANT AND EQUIPMENT, at cost
Oil and gas properties (full cost method)
Proved properties 159,407,481 83,972,300
Unproved properties 12,538,067 13,323,712
Wells in progress 5,215,252 --
Gathering assets 12,703,346 4,831,050
Facilities and equipment 8,492,632 5,148,388
Furniture, fixtures and other 241,009 175,607
Total 198,597,787 107,451,057
Less accumulated depletion,
depreciation, amortization
and impairment (68,945,779) (6,986,662)
Total 129,652,008 100,464,395
NON-CURRENT ASSETS
Restricted investment -- 3,565,020
Deferred financing costs 2,371,507 2,634,461
2,371,507 6,199,481
TOTAL ASSETS $165,454,418 $201,199,972
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 16,228,056 $3,095,819
Revenue payable 1,678,427 1,658,141
Advances from joint interest owners 2,955,376 2,476,080
Accrued interest 844,102 844,098
Accrued expenses 595,000 383,000
Total 22,300,961 8,457,138
NONCURRENT LIABILITIES
5.5% Convertible Senior Notes 65,000,000 65,000,000
Asset retirement obligation 908,543 223,947
Deferred rent expense 72,993 78,727
Total 65,981,536 65,302,674
COMMITMENTS AND CONTINGENCIES
(NOTES 5, 12, 13)
STOCKHOLDERS' EQUITY
Series B Convertible Preferred stock -
$.001 par value; 20,000 shares
authorized; 763 shares issued
and outstanding with a liquidation
preference of $335,720 as of
December 31, 2005 -- 1
Common stock - $.0001 par value;
300,000,000 shares authorized;
86,173,715 shares issued and
86,100,015 outstanding as of
December 31, 2006; 85,041,492
shares issued and 84,967,792 shares
outstanding as of December 31, 2005 8,617 8,504
Additional paid-in-capital 162,646,592 157,540,755
Deferred compensation -- (443,579)
Accumulated deficit (85,352,993) (29,535,226)
Less cost of treasury stock of
73,700 common shares (130,295) (130,295)
Total 77,171,921 127,440,160
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $165,454,418 $201,199,972
The accompanying notes are an integral
part of the consolidated financial statements.
GASCO ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Year Ended December 31,
2006 2005 2004
REVENUES
Gas $19,851,663 $13,462,977 $2,928,689
Oil 1,187,509 605,330 195,199
Gathering 1,941,059 1,411,259 143,326
Interest income 2,694,719 1,383,859 325,001
Total 25,674,950 16,863,425 3,592,215
OPERATING EXPENSES
Lease operating 3,513,568 870,593 638,267
Gathering operations 2,718,357 1,166,841 267,450
Depletion, depreciation
and amortization 10,885,697 4,843,439 1,102,575
Impairment 51,000,000 -- --
General and
administrative 9,415,787 5,987,019 4,191,978
Interest expense 3,959,308 4,033,168 1,597,775
Total 81,492,717 16,901,060 7,798,045
NET LOSS (55,817,767) (37,635) (4,205,830)
Preferred stock dividends (1,393) (33,347) (140,853)
NET LOSS ATTRIBUTABLE TO
COMMON STOCKHOLDERS $(55,819,160) $(70,982) $(4,346,683)
NET LOSS PER COMMON
SHARE - BASIC AND DILUTED $(0.65) $(0.00) $(0.07)
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING -
BASIC AND DILUTED 85,383,306 72,152,977 63,194,223
The accompanying notes are an integral part of the consolidated financial statements.
GASCO ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
2006 2005 2004
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss $(55,817,767) $(37,635) $(4,205,830)
Adjustment to
reconcile net loss
to net cash provided
by (used in) Operating
activities
Depletion, depreciation,
amortization and
impairment expense 61,816,513 4,829,403 1,085,912
Accretion of asset
retirement obligation 69,184 14,036 16,663
Stock compensation 4,151,509 744,235 415,483
Amortization of
deferred rent expense (5,734) 48,727 --
Landlord incentive
payment -- 30,000 --
Amortization of
beneficial conversion
feature -- -- 161,514
Amortization of
deferred financing
costs 503,216 458,167 294,993
Changes in operating
assets and liabilities:
Accounts receivable (4,129,844) (3,862,148) (545,681)
Inventory (114,516) (173,068) (1,009,914)
Prepaid expenses 1,064 (186,999) 59,992
Accounts payable 2,376,327 (3,109,102) 1,113,109
Revenue payable 20,286 1,323,376 91,252
Advances from joint
interest owners 479,296 1,584,081 891,999
Accrued interest 4 148,959 695,139
Accrued expenses 12,713 323,000 30,000
Net cash provided
by (used in)
operating activities 9,362,251 2,135,032 (905,369)
CASH FLOWS FROM
INVESTING ACTIVITIES
Cash paid for acquisitions,
development and
exploration (79,557,785) (55,181,9144) (25,736,066)
Cash paid for furniture,
fixtures and other (67,994) (106,790) (64,053)
Proceeds from property
sales -- 828,102 4,463,161
Investment in short-term
investments -- -- (27,000,000)
Proceeds from the sale of
short-term investments 9,000,000 12,000,000 --
Cash designated as
restricted (9,980) (6,816,967) (10,313,095)
Cash undesignated as
restricted 10,139,000 3,426,042 250,000
Net cash used in
investing activities (60,496,759) (45,851,527) (58,400,053)
CASH FLOWS FROM FINANCING
ACTIVITIES
Exercise of options to
purchase common stock 1,591,674 1,275,743 33,336
Cash paid for debt
issuance costs (240,262) (275,378) (4,636,828)
Preferred dividends (1,393) (33,347) (61,793)
Proceeds from sale
of common stock -- 79,693,764 21,500,001
Issuance of convertible
notes -- -- 65,000,000
Proceeds from 16b
violation -- -- 106,858
Net cash provided by
financing activities 1,350,019 80,660,782 81,941,394
NET INCREASE (DECREASE)
IN CASH AND CASH
EQUIVALENTS (49,784,489) 36,944,287 22,635,972
CASH AND CASH EQUIVALENTS:
BEGINNING OF PERIOD 62,661,368 25,717,081 3,081,109
END OF PERIOD $12,876,879 $62,661,368 $25,717,081
The accompanying notes are an integral part of the consolidated financial statements.
GASCO ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended December 31,
2006 2005
PRODUCTION INFORMATION
Gas production 1,064,567 mcf 750,392 mcf
Gas price $4.96 per mcf $9.58 per mcf
Oil production 6,892 bbl 4,289 bbl
Oil price $46.55 per bbl $58.37 per bbl
REVENUES
Gas $5,278,067 $7,194,049
Oil 320,817 250,367
Gathering 577,304 483,884
Interest income 396,179 404,151
Total 6,572,367 8,332,451
OPERATING EXPENSES
Lease operating 1,367,590 272,478
Gathering operations 893,323 482,521
Depletion, depreciation and amortization 2,909,296 2,492,183
General and administrative 2,373,956 2,064,922
Interest expense 845,970 1,008,290
Total 8,390,135 6,320,394
NET INCOME (LOSS) (1,817,768) 2,012,057
Preferred stock dividends -- (5,914)
NET INCOME (LOSS) ATTRIBUTABLE TO
COMMON STOCKHOLDERS $(1,817,768) $2,006,143
NET INCOME (LOSS) PER COMMON SHARE -
BASIC AND DILUTED $(0.02) $0.03
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
BASIC 85,669,255 76,656,206
DILUTED 85,669,255 82,415,452
The accompanying notes are an integral part of the consolidated financial statements.
Reconciliation of Net Income Before Impairment Charge(1) from Net Income (Unaudited)
Year Ended December 31,
2006 2005 2004
Net Income (Loss) $(55,819,160) $(70,982) $(4,346,683)
Adjustments to reconcile
Net Income before
Impairment Charge
Impairment 51,000,000 -- --
Net Income Before
Impairment Charge (1) (4,819,160) $(70,982) $(4,346,683)
Weighted Average
Common Shares
Outstanding -
Basic and Diluted 85,383,306 72,152,977 63,194,223
Net Income (Loss)
before Impairment
Charge per share $(0.06) $(0.00) $(0.07)
(1) Net Income Before Impairment Charge is calculated as Net Income plus Impairment.
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