DENVER, Nov. 5 /PRNewswire-FirstCall/ -- Gasco Energy,
Inc. (OTC Bulletin Board: GASE -News) today provided
an interim oil and gas activities and operational
update on its Riverbend Project in Utah's Uinta Basin
and on its Wyoming properties.
JVEA Partnership
The service parties to Gasco's Joint Value Enhancement
Agreement (JVEA) have agreed to proceed with the development
of the second bundle of 10 wells contemplated under
the agreement. The drilling of the second bundle of
wells will commence upon completion of the first bundle
of 10 wells. The final two wells of the first bundle
are currently being drilled. The second bundle of
wells will target a combination of Wasatch, Upper
and Lower Mesaverde and Blackhawk formations
.
The JVEA is an agreement among a subsidiary of Gasco
and a group of industry service providers that contemplates
the development of up to 50 wells in Gasco's Riverbend
Project located in Utah's Uinta Basin. The wells are
expected to be developed in 10-well bundles to be
approved by the parties on an ongoing basis. Pursuant
to the terms of the JVEA, Gasco is expected to fund
30% of the development costs of each well drilled,
a third party capital provider is expected to fund
25% of such costs and the service providers are expected
to provide the remainder of required costs in the
form of drilling and completion services, up to a
maximum of $13.5 million in services for a given bundle.
Gasco's interest in the production from each 10-well
bundle of wells, net of royalties, taxes and lease
operating expenses, is estimated to equal the proportion
of the total well costs that it funds.
Drilling Activity
Gasco is currently drilling its ninth and tenth wells
of the fiscal year. At the end of October, the Company
was nearing total depth on the Federal 21-6, drilled
to test the Wasatch, Mesaverde and Blackhawk formations.
In addition, Gasco continues drilling operations on
the Federal 22-30, a Mesaverde and Blackhawk test.
Both the 21-6 and the 22-30 are components of the
first service parties' 10-well bundle and are approximately
30% working interest to Gasco
.
Completion Activity
During the last half of October, Gasco completed three
wells. Two wells were completed in the over-pressured
section of the Mesaverde Formation. The third well
was completed in the Blackhawk formation. All three
wells have been connected to the recently expanded
Riverbend gathering system. Two of these wells are
flowing to sales and the third is flowing back frac
fluid and is anticipated to begin flowing to sales
this week. There are currently no wells awaiting completion.
Riverbend Gas Gathering System
Gasco completed the new 10-mile extension of its Riverbend
Area gathering system which now gathers 100% of the
gas across Gasco's Riverbend Project. Gasco is also
bringing compression on-line in the Wilkin Ridge Area
and additional compression in the Riverbend Area.
Wyoming
After completing pipeline construction, Gasco re-entered
the Piney 10-16 (100% WI) well in the Muddy Creek
Project in Wyoming's Greater Green River Basin. The
well is flowing to sales out of one zone, in the Lance
Formation. To potentially boost production, engineers
have scheduled a multi-stage fracture stimulation
program for the remaining pay sands in December.
Production
Cumulative monthly production for October 2004 was
132.3 million cubic feet equivalent (MMcfe) gross,
or 35.2 MMcfe net. This is a 12.1% decrease from September's
cumulative gross production of 150.6 MMcfe and a 13.3%
decrease from September's net production of 40.6 MMcfe.
The decline in production was the result of workovers
on three wells that were each shut-in approximately
two weeks or longer. Well shut-ins across the Riverbend
Area as the new extension of the Riverbend gathering
system was being completed are also attributed to
production declines. As a result, approximately 34.2
MMcfe gross or 8.5 MMcfe net was shut-in during October.
Presently, one well continues to have workover activity.
There is no remaining scheduled workover activity
during the fourth quarter of 2004.
Management Comment
Commenting on the Riverbend Project, Gasco CEO and
President, Mark Erickson said: "With the completion
of three wells in late October, the return to production
of wells undergoing workover, and the additional transportation
capacity provided by our new gathering line, we expect
to show a month-over-month increase in production
for November as compared to October. We are currently
seeking an additional rig for our Utah operations.
This rig would be the third rig drilling for Gasco
in our Riverbend project. High commodity prices received
and low workover and completion costs are the impetus
for turning the Piney well to sales. Finally, the
service parties' election on the next 10-well bundle
allows Gasco to continue developing its net asset
value growth model. The service parties' agreement
has been instrumental in our 2004 drilling success
by allowing us to increase our pace of drilling activity."
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.
