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GASCO
ENERGY ANNOUNCES THIRD QUARTER 2006
FINANCIAL AND
OPERATIONAL RESULTS
DENVER, Nov. 7 /PRNewswire-FirstCall/
-- Gasco Energy (Amex: GSX - News) today reported its
financial and operating results for the quarter and
nine-month period ended September 30, 2006.
Financial Results
For the third quarter 2006, Gasco reported a net loss
attributable to common shareholders of $0.8 million,
or $0.01 per share, as compared to net income for the
same period in 2005 of $0.6 million, or $0.01 per share.
All per share figures are basic and diluted.
Total revenues grew by 30% to $6.1 million, as compared
to $4.7 million in the third quarter 2005. The growth
in total revenue is attributed to increased natural
gas production offset in part by a lower natural gas
price deck.
Oil and gas sales for the third quarter 2006 were
$4.9 million as compared to $4.0 million for the same
period in 2005, an increase of 22.5%. Gathering revenues
were unchanged at $0.5 million.
Lease operating expense for the quarter increased
to $0.7 million, or $0.79 per thousand cubic feet of
natural gas equivalents (Mcfe), from $0.2 million,
or $0.48 per Mcfe. The increase is attributed to higher
water hauling and disposal costs and to five workovers
that occurred during the third quarter of 2006. Depletion
and impairment expense decreased to $2.33 per Mcfe
from $2.47 per Mcfe in the year-ago period. Gathering
expense increased to $1.1 million from $0.3 million
in the same period in 2005 due to the cost of installing
additional compression to the system and the revision
of the methodology in calculating charges for compressor
fuel. General and administrative expense increased
to $1.8 million from $1.3 million in the same period
in 2005 which is attributed to expenses incurred in
the quarter for stock-based compensation due to the
adoption of FAS 123R.
At September 30, 2006, cash and investments were $41.0
million as compared to $22.7 million at September 30,
2005. Working capital at September 30, 2006 was $39.0
million versus $21.6 million at September 30, 2005.
Nine-month Period
The company reported a net loss for the nine-months
ended September 30, 2006 of $54.0 million, or $0.63
per share, as compared to a net loss for the first
nine months of 2005 of $2.1 million, or $0.03 per share.
Included in the nine-month period's operating expenses
is non-cash charge of $51.0 million related to an impairment
of the carrying value of oil and gas properties incurred
in the second quarter of 2006. Before the impairment
charge, Gasco would have posted a net loss of $3.0
million or $0.04 per share. The charge also results
in a decrease in total assets. At September 30, 2006,
total assets were $160.0 million as compared to total
assets of $201.2 million at December 31, 2005.
Total revenues grew by 125% to
$19.1 million, as compared to $8.5 million in the same
period in 2005. The growth in revenue is attributed
in part to increased natural gas production partially
offset by lower gas realized gas prices. In addition,
improved gathering system revenues and an increase
in interest income, accounted for $1.4 million and
$2.3 million in respective total revenues.
Lease operating expense for the nine-month period
increased to $2.1 million, or $0.79 per Mcfe, from
$0.6 million, or $0.64 per Mcfe. The increase is attributed
to higher water hauling and disposal costs and to 10
workovers that occurred during the first nine months
of 2006. Depletion and impairment expense increased
to $21.76 per Mcfe from $2.51 per Mcfe in the year-ago
period.
Oil and gas sales for the first nine months of 2006
increased 133% to $15.4 million as compared to $6.6
million for the same period in 2005. Net cash provided
by operating activities for the nine-month period was
a record $9.1 million as compared to $2.2 million in
the year-ago period.
Operations
Production
Gasco posted record quarterly production of 946.8
million cubic feet of natural gas equivalents (MMcfe)
versus 489.3 MMcfe for the third quarter 2005, a 94%
increase. The average price received for sales of Gasco's
natural gas and liquids was $5.00 per Mcf and $59.36
per barrel of liquid hydrocarbons for the third quarter
2006. This compares to $8.02 per Mcf and $62.40 per
barrel for the same period in 2005. Net production
increases are attributed to the completion of new wells
and behind-pipe recompletions partially offset by normal
production declines in existing wells.
Gasco posted record production of 2,711 MMcfe for
the first nine months of 2006 versus 936.6 MMcfe for
the same period in 2005, an increase of 189.4%. For
the nine months ended September 30, 2006, the average
price received for sales of Gasco's natural gas and
liquids was $5.56 per Mcf and $58.74 per barrel of
liquid hydrocarbons. This compares to $6.98 per Mcf
and $55.93 per barrel for the same period in 2005.
The company has no hedges in place.
Drilling and Completion
The Company's initial 2006 capital expenditure budget
is set at $80 million for the drilling, completion
and pipeline connection of 28 to 30 gross, or approximately
15 net wells. During the third quarter of 2006, Gasco
spudded 12 gross wells (7.7 net), including three non-operated
wells (.75 net), and reached total depth on nine gross
wells (5.0 net). The Company is currently running four
drilling rigs on its Riverbend project, having taken
delivery of an additional rig in August 2006. Year-to-date
in Utah, Gasco has spudded 22 gross wells (13.4 net)
and reached total depth on 20 gross wells (11.7 net).
Gasco will release one of the rigs after it completes
operations on its current well and will await delivery
of its new-build rig from Nabors scheduled to be delivered
by the end of January 2007, at which time it will again
have four rigs operating in Riverbend. A rig is drilling
ahead on a one-well contract in Wyoming.
During the first nine months of 2006, Gasco conducted
initial completion operations on 15 wells (8.9 net)
and re-entered 14 wells (7.3 net) to complete behind-pipe
pay zones. At September 30, 2006, Gasco operated 72
gross wells with five additional wells awaiting completion
activities. Gross and net data provided for wells spudded
and wells to total depth include three non-operated
wells in Utah in which Gasco participated with a 25%
working interest. Two of the wells spudded during the
third quarter were in Gasco's Wyoming Projects.
Wyoming Update
Daniel Anticline Prospect
Gasco also today provided additional details on its
previously announced Cottonwood Ranch 24-21 (25% WI
-- GSX operates). The well is permitted to test natural
gas potential in the Lance, Mesaverde, Ericson, Rock
Springs and Hilliard Shale formations to a proposed
total depth of 16,500 feet. The well, drilled on fee
land, is drilling through 10,300 feet and is not subject
to winter stipulations for oil and gas activity in
Wyoming.
Muddy Creek Prospect
Due to winter stipulations restricting oil and gas
activity on federal lands, Gasco elected to suspend
drilling on the Billy Canyon 2-11 (100% WI). The well
is permitted to test natural gas potential in the Lance,
Mesaverde and Hilliard / Blair formations to a revised
proposed total depth of 14,400 feet. Intermediate casing
was set at 9,600 feet. Drilling operations on this
well are expected to resume in July 2007.
Subsequent Events
Subsequent to the end of the third quarter 2006, Gasco
increased its reserve-based revolving line of credit
borrowing base to $25 million. The facility with JPMorgan
is currently un-drawn and may be used to supplement
available cash and cash flow from operations in order
to fund the 2007 capital expenditure program which
has yet to be announced.
Conference Call
A conference call with investors, analysts and other
interested parties is scheduled for 8:30 a.m. EST on
Wednesday, November 8, 2006 to discuss third quarter
2006 financial and operating results. You are invited
to listen to the call which will be broadcast live
over the Internet at www.gascoenergy.com.
Date: Wednesday, November 8, 2006
Time: 10:30 a.m. EST
9:30 a.m. CST
8:30 a.m. MST
7:30 a.m. PST
Call: (866) 392-4171 (US/Canada) and (706) 634-6345 (International),
passcode 9292973
Internet: Live and rebroadcast over the Internet: log on to
www.gascoenergy.com
Replay: Available through Friday, November 10, 2006 at (800) 642-1687
(US/Canada) and (706) 645-9291 (International) using passcode
9292973 and for 30 days at www.gascoenergy.com
[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-Q dated November 7, 2006.
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
the Company's Annual Report on Form 10-K filed with
the Securities and Exchange Commission on March 3,
2006.
GASCO ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
2006 2005
ASSETS
CURRENT ASSETS
Cash and cash equivalents $19,998,698 $62,661,368
Restricted investment 3,575,000 10,139,000
Short-term investments 21,000,000 15,000,000
Accounts receivable
Joint interest billings 5,356,925 1,792,038
Revenue 1,924,849 3,115,154
Inventory 3,265,841 1,182,982
Prepaid expenses 324,766 645,554
Total 55,446,079 94,536,096
PROPERTY, PLANT AND EQUIPMENT, at cost
Oil and gas properties (full cost method)
Proved mineral interests 132,694,399 83,972,300
Unproved mineral interests 10,747,706 13,323,712
Wells in progress 3,631,845 --
Gathering assets 11,688,160 4,831,050
Facilities and equipment 7,069,119 5,148,388
Furniture, fixtures and other 235,880 175,607
Total 166,067,109 107,451,057
Less accumulated depletion, depreciation,
amortization and impairment (65,925,502) (6,986,662)
Total 100,141,607 100,464,395
OTHER ASSETS
Restricted investment 1,878,132 3,565,020
Deferred financing costs 2,501,065 2,634,461
Total 4,379,197 6,199,481
TOTAL ASSETS $159,966,883 $201,199,972
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $3,027,442 $907,772
Revenue payable 1,599,767 1,658,141
Advances from joint interest owners 3,813,799 2,476,080
Accrued interest 1,737,851 844,098
Accrued expenses 6,238,520 2,571,047
Total 16,417,379 8,457,138
NONCURRENT LIABILITIES
5.5% Convertible Senior Notes 65,000,000 65,000,000
Asset retirement obligation 650,788 223,947
Deferred rent expense 75,176 78,727
Total 65,725,964 65,302,674
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 in 2005 -- 1
Common stock - $.0001 par value;
300,000,000 shares authorized;
85,941,965 shares issued and
85,868,265 outstanding in 2006 and
85,041,492 shares issued and
84,967,792 shares outstanding in 2005 8,594 8,504
Additional paid-in capital 161,480,466 157,540,755
Deferred compensation -- (443,579)
Accumulated deficit (83,535,225) (29,535,226)
Less cost of treasury stock of 73,700
common shares (130,295) (130,295)
Total 77,823,540 127,440,160
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $159,966,883 $201,199,972
The notes contained in Form 10-Q to be filed on November 7, 2006
are an integral part of the consolidated financial statements.
GASCO ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
September 30,
2006 2005
REVENUES
Gas $4,563,576 $3,793,771
Oil 336,963 166,727
Gathering 511,360 471,478
Interest income 646,834 264,751
Total 6,058,733 4,696,727
OPERATING EXPENSES
Lease operating 749,214 236,413
Gathering operations 1,065,658 267,792
Depletion, depreciation and amortization 2,206,328 1,211,550
General and administrative 1,768,788 1,323,376
Interest expense 1,055,504 1,008,293
Total 6,845,492 4,047,424
NET INCOME (LOSS) (786,759) 649,303
Preferred stock dividends -- (6,212)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON
STOCKHOLDERS $(786,759) $643,091
NET INCOME (LOSS) PER COMMON SHARE
BASIC $(0.01) $0.01
DILUTED $(0.01) $0.01
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
BASIC 85,609,137 70,991,812
DILUTED 85,609,137 75,838,798
The notes contained in Form 10-Q to be filed on November 7, 2006
are an integral part of the consolidated financial statements.
GASCO ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Nine Months Ended
September 30,
2006 2005
REVENUES
Gas $14,573,596 $6,268,928
Oil 866,692 354,963
Gathering 1,363,755 927,375
Interest income 2,298,540 979,708
Total 19,102,583 8,530,974
OPERATING EXPENSES
Lease operating 2,145,978 598,115
Gathering operations 1,825,034 684,320
Depletion, depreciation and amortization 7,976,401 2,351,256
Impairment 51,000,000 --
General and administrative 7,041,831 3,922,097
Interest expense 3,113,338 3,024,878
Total 73,102,582 10,580,666
NET LOSS (53,999,999) (2,049,692)
Preferred stock dividends (1,393) (27,433)
NET LOSS ATTRIBUTABLE TO COMMON
STOCKHOLDERS $(54,001,392) $(2,077,125)
NET LOSS PER COMMON SHARE - BASIC
AND DILUTED $(0.63) $(0.03)
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING - BASIC AND DILUTED 85,384,515 70,661,070
The notes contained in Form 10-Q to be filed on November 7, 2006
are an integral part of the consolidated financial statements.
GASCO ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30,
2006 2005
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(53,999,999) $(2,049,692)
Adjustment to reconcile net loss to
net cash provided by (used in)
operating activities
Depletion, depreciation, amortization
and impairment expense 58,941,433 2,341,819
Accretion of asset retirement obligation 34,968 9,437
Stock compensation 3,198,834 539,378
Amortization of deferred rent (3,551) 39,897
Amortization of deferred financing costs 373,658 343,626
Landlord incentive payment -- 30,000
Changes in operating assets and
liabilities:
Accounts receivable (2,374,582) (1,414,058)
Inventory (2,082,859) (826,140)
Prepaid expenses 320,788 207,136
Accounts payable 2,119,670 (988,953)
Revenue payable (58,374) 1,006,120
Advances from joint interest owners 1,337,719 343,306
Accrued interest 893,753 1,042,710
Accrued expenses 428,742 1,545,737
Net cash provided by operating
activities 9,130,200 2,170,323
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for furniture, fixtures
and other (62,866) (85,388)
Cash paid for acquisitions, development
and exploration (55,109,912) (35,356,065)
Proceeds from property sales -- 828,102
Increase in short-term investments (6,000,000) --
Proceeds from sale of short-term
investments -- 17,000,000
Cash designated as restricted (100,612) (208,331)
Cash undesignated as restricted 8,351,500 1,638,542
Net cash used in investing
activities (52,921,890) (16,183,140)
CASH FLOWS FROM FINANCING ACTIVITIES
Preferred dividends (1,393) (21,501)
Exercise of options to purchase
common stock 1,370,675 968,239
Cash paid for debt issuance costs (240,262) --
Net cash provided by financing
activities 1,129,020 946,738
NET DECREASE IN CASH AND CASH
EQUIVALENTS (42,662,670) (13,066,079)
CASH AND CASH EQUIVALENTS:
BEGINNING OF PERIOD 62,661,368 25,717,081
END OF PERIOD $19,998,698 $12,651,002
The notes contained in Form 10-Q to be filed on November 7, 2006
are an integral part of the consolidated financial statements.
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Source: Gasco Energy
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