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GASCO
ENERGY PROVIDES ESTIMATES OF PROVED AND PROBABLE
RESERVES
ON PART OF ITS RIVERBEND PROJECT
DENVER – (PR Newswire) – August 2, 2006 – Gasco
Energy, Inc. (AMEX: GSX) today provided results
of its recent estimated probable reserve analysis,
also known as 2-P reserve estimates. Gasco is providing
these results to provide additional insight into the
future potential of Gasco’s Riverbend Project
in Utah’s Uinta Basin. In accordance with
SEC guidelines, only proved reserves can be included
in documents filed with the SEC. Gasco’s
previously reported 2005 year-end proved reserves were
76.7 billion cubic feet equivalent (Bcfe).
Estimates of probable reserves
were prepared by independent reservoir engineering
consultants, Netherland Sewell and Associates, the
same firm that engineers Gasco’s
year-end proved reserves.
The analysis encompasses approximately 10,000 gross
(6,600 net) acres of Gasco’s Riverbend Project
representing less that 10% of the company’s total
leasehold in this area. At December 31, 2005,
Gasco owned or controlled approximately 124,000 gross
acres and 74,000 net acres in the Riverbend Project. The
analysis does not include petroleum resource potential
over the remaining 90% of Gasco’s Riverbend acreage.
The additions are principally the result of the success
we have seen in the Spring Canyon trend. The
negative revisions were seen in West Desert where we
have not drilled since 2004 and have not benefited
from our current completion techniques, and in Wilkin
Ridge where we have experienced drilling and production
casing cost overruns, as previously disclosed. Gasco
believes that these problems may be overcome in the
future.
The 2-P analysis was completed using technical certainty
of natural gas recovery of the proved and probable
reserves in place.
Management Comment
“We continue to make significant progress in reserve growth and investment
reduction. We have concentrated on close-in drilling in the Riverbend area
to take advantage of historically high commodity prices. In spite of this,
we were able to add 205 Bcfe net proved and probable reserves since December
31, 2004. The substantial additions and revisions are a result of the
limited amount of drilling and production history we have on this project. We
have drilled 51 wells out of a potential 3,000 locations and have production
history of less than five years on wells that are projected to produce for
more than 30 years. We have a very large acreage position with a limited
drilling budget for step-out wells. In 2006, we have dedicated a larger portion
of our budget to step-out drilling in the Wilken Ridge area where we have identified
a high-potential trend.”
Definition - Reserves
Reserves are those quantities of crude oil, natural
gas, and natural gas liquids that are anticipated
to be commercially recovered from known accumulations
from a given date forward. Reserve estimates involve
varying degrees of uncertainty, depending largely
on the amount of reliable geological and engineering
data available at the time of the estimate and the
interpretation of the data. The relative degree of
uncertainty can be conveyed by broadly placing reserves
into one of two categories -- proved or unproved.
Two basic methods are commonly used by industry to
prepare reserve estimates -- the deterministic and
probabilistic methods. The deterministic method yields
a single best estimate of reserves based on known geological,
engineering and economic data. The probabilistic method
uses known geological, engineering and economic data
to generate a range of estimated reserve quantities
and their associated probabilities. Each reserve classification
gives an indication of the probability of recovery.
Definition - Proved Reserves
Proved reserves are those quantities of crude oil,
natural gas, and natural gas liquids which geological
and engineering data demonstrate with reasonable
certainty to be recoverable in future years from
known reservoirs under existing economic and operating
conditions. Proved developed reserves include proved
developed producing reserves and proved developed
behind-pipe reserves. Proved developed producing
reserves are only those reserves expected to be recovered
from existing completion intervals in existing wells.
Proved developed behind-pipe reserves are those reserves
expected to be recovered from existing wells where
a relatively minor capital expenditure is required
for recompletion. Proved undeveloped reserves are
those reserves expected to be recovered from new
wells on undrilled acreage or from existing wells
where a relatively major expenditure is required
for recompletion.
Definition - Unproved Reserves
Unproved reserves are considered less certain to be
recovered than proved reserves. Estimates of unproved
reserves are based on geologic and/or engineering
data similar to that used to estimate proved reserves,
but technical, contractual, economic considerations
and/or SEC, state or other regulations preclude such
reserves from being classified as proved. Unproved
reserves may be further sub-classified as probable
and possible to denote progressively increasing uncertainty
of recoverability.
Importantly, estimation of unproved reserves may assume
future economic conditions different than those prevailing
at the time of the estimate. The effect of possible
future improvements in economic conditions and technological
developments can be expressed by allocating appropriate
quantities of reserves to the probable and possible
classifications.
Definition - Probable Reserves
Probable reserves are estimates of unproved reserves
which analysis of geological and engineering data
suggests are more likely than not to be recoverable.
For estimates of probable reserves based on probabilistic
methods, there should be at least a 50% probability
that the quantities of reserves actually recoverable
will equal or exceed the sum of the estimated proved
plus probable reserves.
Probable reserves may include:
1. reserves in formations known to be
productive where SEC regulations
limit recognition of
proved reserves to direct-offset locations one
legal spacing-unit away
from a producing well;
2. reserves anticipated to be proved by
normal step-out drilling where
subsurface control is
currently inadequate to classify these
reserves as proved;
3. reserves in formations that appear
to be productive based on
well-log characteristics
but lack core data or other definitive
tests to indicate productive
potential and which are not analogous
to producing or proved
reserves in the area;
4. incremental reserves attributable to
infill drilling that could have
been classified as proved
if closer statutory spacing had been
approved at the time
of the estimate;
5. reserves attributable to improved recovery
methods that have been
established by repeated
commercially successful applications where:
a. a project
or pilot is planned but not in operation; and
b. rock,
fluid and reservoir characteristics appear favorable
for
commercial
application;
6. reserves in an area of the formation
that appears to be separated
from the proved area
by faulting and where geologic interpretation
indicates that the area
is structurally higher than the proved area;
7. reserves attributable to future workover,
treatment, re-treatment,
change of equipment,
or other mechanical procedures, where such
mechanical procedure
has not been proved successful in wells which
exhibit similar behavior
in analogous reservoirs; and/or
8. incremental reserves in proved reservoirs
where an alternative
interpretation of performance
or volumetric data indicates more
reserves are present
than can be classified as proved.
Definition - Possible Reserves
Possible reserves are estimates of unproved reserves
which analysis of geological and engineering data
suggests are less likely to be recovered than probable
reserves. For estimates of possible reserves based
on probabilistic methods, there should be at least
a 10% probability that the quantities of reserves
actually recovered will equal or exceed the sum of
the estimated proved plus probable plus possible
reserves.
Possible reserves may include:
1. reserves which, based on geological
interpretations, could possibly
extend beyond areas
classified as probable;
2. reserves in formations that appear
to be petroleum bearing based on
log and core analysis
but may not be productive at commercial rates;
3. incremental reserves attributed to
infill drilling that are subject
to technical uncertainty;
4. reserves attributed to improved recovery
methods where:
a. a project
or pilot is planned but not in operation; and
b. rock,
fluid and reservoir characteristics are such that there
is
a reasonable doubt that the project will be commercial;
and/or
5. reserves in an area of the formation
that appears to be separated
from the proved area
by faulting and where geological interpretation
indicates the area is
structurally lower than the proved area.
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
The SEC has generally permitted
oil and gas companies, in filings made with the SEC,
to disclose only proved reserves that a company has
demonstrated by actual production or conclusive formation
tests to be economically and legally producible under
existing economic and operating conditions. We use
the terms "probable" and "possible" reserves
or other descriptions of volumes of reserves potentially
recoverable through additional drilling or recovery
techniques that the SEC's guidelines may prohibit us
from including in filings with the SEC. These estimates
are by their nature more speculative than estimates
of proved reserves and accordingly are subject to substantially
greater risk of being actually realized by the company.
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
the Company’s Annual Report on Form 10-K filed
with the Securities and Exchange Commission on March
3, 2006.
Contact for Gasco Energy, Inc.:
Investor Relations: 303-483-0044 |
