| Gasco
Energy Announces 2004 Financial and Operational Results
Revenues
Increase 177%, Total Assets Up 255%, Production Growth
99%
DENVER,
March 17 /PRNewswire-FirstCall/ -- Gasco Energy (Amex:
GSX - News) today announced financial and operating
results for the year-ended December 31, 2004.
Financial Results
The company reported a net loss for 2004 of $4.2 million,
or $0.07 per share, as compared to a net loss for
2003 of $2.5 million, or $0.07 per share. All per
share figures are basic and diluted. Total revenues
grew by 177% to a company-record $3.6 million, as
compared to $1.3 million in 2003. The growth in revenue
is attributed to increased natural gas production
and higher prices received for sales of the company's
natural gas. Gasco's total assets rose to a record
$117.4 million at year end, up 255 percent from $33.1
million at year-end 2003. Working capital at year-end
2004 was $52.7 million versus $1.2 million at year-end
2003.
Net cash used in operating activities for 2004 was
a deficit of $0.9 million, down 59% from a deficit
of $2.2 million for 2003. The decreased deficit was
due to the increased component of non-cash items in
the company's net loss for the year and the net change
in operating assets and liabilities as a result of
the company's increased level of operations in 2004
as compared to 2003, offset by the larger net loss
in 2004 as compared to 2003.
Operations
For 2004, Gasco posted record production of 536.4
million cubic feet equivalent (MMcfe) versus 269.0
MMcfe for 2003, an increase of 99%. Average price
received for sales of Gasco's natural gas and liquids
increased to $5.79 per thousand cubic feet of gas
(Mcf) and $38.43 per barrel of liquid hydrocarbons
for 2004. This compares to $4.69 per Mcf and $28.52
per barrel for 2003. Year-end 2004 proved reserves,
as previously announced, were 41.3 billion cubic feet
equivalent (Bcfe) compared to 14.2 Bcfe for year-end
2003.
Management Comment
Commenting on the 2004 results, Gasco CEO and President,
Mark Erickson said: "Gasco accomplished many
things in 2004. We put necessary capital in place
to continue proving up our large Uinta Basin leasehold;
we drilled a record number of wells, we had record
production and total revenue and set the stage for
improving on these numbers in 2005. The operational
metrics posted for 2004 provide the company with a
benchmark going forward. With three rigs currently
running, we continue to learn and improve as we drill
wells. In 2005, we will leverage our experience from
2004 to further define the geologic and productive
characteristics of our position in the Uinta Basin."
Sarbanes-Oxley 404 Compliance
In June 2004, Gasco became an accelerated-filer for
the first time due to its market capitalization as
of June 30, 2004. As a result of reaching this threshold,
the company is required to report its evaluation of
its internal controls over financial reporting in
its annual report for 2004, rather than in its 2005
annual report. The company therefore effectively had
only nine months to complete its evaluation of internal
controls. Companies that were accelerated filers as
of the implementation of the rules effectively had
more than 18 months to complete this evaluation. A
change in auditors in the third quarter of 2004 further
complicated the company's efforts to complete its
evaluation in a timely manner. In November 2004 the
SEC issued an order granting accelerated filers with
market capitalization of less than $700 million as
of June 30, 2004 an additional 45 days to include
the required report and attestation in their annual
reports on Form 10-K. The SEC recognized the hardship
that small cap filers faced in their race to meet
the requirements of Sarbanes-Oxley.
Due to the factors discussed above, Gasco's annual
report for the year ended December 31, 2004 filed
today with the SEC on Form 10-K did not include management's
annual report on internal control over financial reporting
and the related attestation report of its registered
public accounting firm. Gasco anticipates no difficulty
in completing its evaluation of the internal controls
within the 45-day period following March 16, 2005,
and will file an amended 10-K that will include management's
report on internal control over financial reporting
required by Item 308(a) of Regulation S-K, and the
related attestation report of the registered public
accounting firm required by Item 308(b) of Regulation
S-K.
Teleconference Call
Management anticipates scheduling its quarterly teleconference
call and Internet broadcast of the call to discuss
financial and operational results upon completion
of the first quarter 2005. Investors and analysts
will be invited to join management on the call at
that time. There is no conference call scheduled to
discuss 2004 results.
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 March 16, 2005.
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 8.01 of the Company's Current Report on Form
8-K filed with the Securities and Exchange Commission
on October 14, 2004.
GASCO ENERGY, INC.
CONSOLIDATED BALANCE SHEETS December 31,
2004 2003
ASSETS CURRENT ASSETS
Cash and cash equivalents $25,717,081 $3,081,109
Restricted investment 3,535,055 250,000
Short-term investments 27,000,000 --
Accounts receivable 1,045,044 499,363
Inventory 1,009,914 --
Prepaid expenses 458,555 555,786
Total 58,765,649 4,386,258 PROPERTY, PLANT AND EQUIPMENT, at cost
Oil and gas properties (full cost
method)
Proved mineral interests 29,811,483 16,386,252
Unproved mineral interests 18,449,330 13,212,039
Gathering assets 2,469,580 --
Equipment 89,900 --
Furniture, fixtures and other 158,590 166,051
Total 50,978,883 29,764,342
Less accumulated depreciation,
depletion and amortization (2,247,032) (1,232,634)
Total 48,731,851 28,531,708 NON-CURRENT ASSETS
Restricted investment 6,778,040 --
Deferred financing costs 3,092,628 141,213
9,870,668 141,213 TOTAL ASSETS $117,368,168 $33,059,179 December 31,
2004 2003 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES
Accounts payable $1,447,149 $2,016,979
Revenue payable 334,765 243,513
Advances from joint interest owners 891,999 --
Accrued interest 695,139 --
Accrued expenses 2,677,352 933,520
Total 6,046,404 3,194,012 NONCURRENT LIABILITIES
5.5% Convertible Senior Notes 65,000,000 --
8% Convertible Debentures, net of
unamortized discount of $159,722 -- 2,340,278
Asset retirement obligation 108,566 142,806
Total 65,108,566 2,483,084 COMMITMENTS AND CONTINGENCIES
(NOTES 5, 13, 16) STOCKHOLDERS' EQUITY
Series B Convertible Preferred stock
- $.001 par value; 20,000 shares
authorized; 2,255 shares issued and
outstanding with a liquidation
preference of $992,200 in 2004 and
11,734 shares issued and outstanding
with a liquidation preference of
$5,162,960 in 2003 2 12
Common stock - $.0001 par value;
100,000,000 shares authorized;
70,590,909 shares issued and
70,517,209 outstanding in 2004;
45,675,936 shares issued and
45,602,236 shares outstanding in 2003 7,059 4,568
Additional paid in capital 76,346,463 52,979,325
Deferred compensation (512,440) (179,766)
Accumulated deficit (29,497,591) (25,291,761)
Less cost of treasury stock of
73,700 common shares (130,295) (130,295)
Total 46,213,198 27,382,083 TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $117,368,168 $33,059,179
GASCO ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS For the Year Ended December 31,
2004 2003 2002 REVENUES
Gas $2,928,689 $1,206,741 $164,508
Oil 195,199 56,702 --
Gathering 143,326 -- --
Interest income 325,001 11,987 76,140
Total 3,592,215 1,275,430 240,648 OPERATING EXPENSES
General and administrative 4,191,978 2,819,675 5,080,287
Lease operating 638,267 337,278 119,809
Gathering operations 267,450 -- --
Depletion, depreciation,
amortization and
asset retirement
liability accretion 1,102,575 552,923 149,109
Impairment -- -- 541,125
Interest expense 1,597,775 82,392 --
Total 7,798,045 3,792,268 5,890,330 LOSS BEFORE CUMULATIVE
EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE (4,205,830) (2,516,838) (5,649,682) CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING
PRINCIPLE -- (9,687) -- NET LOSS (4,205,830) (2,526,525) (5,649,682) Preferred stock dividends (140,853) (304,172) -- NET LOSS ATTRIBUTABLE
TO COMMON STOCKHOLDERS $(4,346,683) $(2,830,697) $(5,649,682) PER COMMON SHARE DATA
- BASIC AND DILUTED:
Loss before cumulative
effect of change in
accounting principle $(0.07) $(0.07) $(0.16)
Cumulative effect of
change in
accounting principle -- -- -- NET LOSS PER COMMON
SHARE - BASIC AND DILUTED $(0.07) $(0.07) $(0.16) WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING -
BASIC AND DILUTED 63,194,223 41,262,778 36,439,074 GASCO ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended December 31,
2004 2003 2002
CASH FLOWS FROM OPERATING
ACTIVITIES
Net loss $(4,205,830) $(2,526,525) $(5,649,682)
Adjustment to
reconcile net loss
to net cash used in
operating activities
Depreciation,
depletion and
impairment expense 1,085,912 541,128 690,234
Accretion of asset
retirement obligation 16,663 11,795 --
Amortization of
deferred compensation 415,483 94,317 208,542
Amortization of
beneficial conversion
feature 161,514 6,945 --
Amortization of
offering costs 294,993 7,758 --
Cumulative effect
of change in
accounting principle -- 9,687 --
Changes in operating
assets and
liabilities:
Accounts receivable (545,681) (403,219) (63,397)
Inventory (1,009,914) -- --
Prepaid expenses 59,992 (320,059) (74,139)
Accounts payable (600,723) 164,303 1,303,823
Revenue payable 91,252 185,215 58,298
Advances from
joint interest
owners 891,999 -- --
Accrued interest 695,139 -- --
Accrued expenses 1,743,832 36,741 2,136,015
Net cash used
in operating
activities (905,369) (2,191,914) (1,390,306) CASH FLOWS FROM
INVESTING ACTIVITIES
Cash paid for
furniture, fixtures
and other (64,053) (3,264) (103,342)
Cash paid for
acquisitions,
development and
exploration (25,736,066) (5,283,426) (14,437,855)
Proceeds from
property sales 4,463,161 -- --
Investment in
short-term
investments (27,000,000) -- --
Net cash
used in
investing
activities (48,336,958) (5,286,690) (14,541,197) CASH FLOWS FROM
FINANCING ACTIVITIES
Issuance of
convertible notes 65,000,000 -- --
Cash designated as
restricted (10,313,095) (250,000) (250,000)
Cash undesignated as
restricted 250,000 250,000 --
Preferred dividends (61,973) (4,092) --
Exercise of options
to purchase
common stock 33,336 -- --
Proceeds from sale
of preferred stock -- 4,862,840 --
Proceeds from sale
of common stock 21,500,001 2,777,292 6,500,000
Proceeds from sale
of convertible
debentures -- 2,500,000 --
Cash paid for
offering costs (4,636,828) (266,721) (526,020)
Repayment of note
payable -- (1,400,000) --
Proceeds from 16b
violation 106,858 1,332 --
Net cash
provided by
financing
activities 71,878,299 8,470,651 5,723,980 NET INCREASE
(DECREASE) IN
CASH AND CASH
EQUIVALENTS 22,635,972 992,047 (10,207,523) CASH AND CASH
EQUIVALENTS:
BEGINNING OF PERIOD 3,081,109 2,089,062 12,296,585
END OF PERIOD $25,717,081 $3,081,109 $2
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