Galaxy Energy Provides Financial and Operational Update
July 11 2006 - 8:00AM
PR Newswire (US)
DENVER, July 11 /PRNewswire-FirstCall/ -- Galaxy Energy Corporation
(AMEX:GAX) announced today that it has negotiated modifications in
the terms of its credit agreements with one of its lending groups,
among other things to defer cash payments due in August and
September of 2006 to October 1, 2006. The Company also announced
that, pursuant to its business plan as submitted to the American
Stock Exchange, it has engaged Meagher Oil & Gas Properties,
Inc. to assist the Company with the sale of certain non-core assets
consisting primarily of undeveloped properties in the Powder River
Basin of Montana and Wyoming, and its properties in East Texas. The
Company is also discussing with other entities, including
affiliated companies, additional options related to the
rationalization of its asset base, incremental financings and
possible business combinations. As of this date, however, no
agreements or understandings have been reached as a result of these
discussions. The Company also provided an update on its activities
in the Piceance Basin in Colorado. Waiver and Agreement with Senior
Secured Convertible Note Holders On July 7, 2006, the Company and
the holders of its senior secured convertible notes issued in 2004
and 2005 entered into a Waiver and Agreement. Galaxy had notified
the holders of the 2004 Notes of an Equity Liquidity Test Failure
on July 3, 2006, as defined in its agreements with the holders,
triggering the holders' right to make an early repayment election
in the aggregate amount of $1,217,929. In the Waiver and Agreement,
Galaxy and the holders agreed to the following: * The waiver of the
holders' right to make an early repayment election as a result of
the July 2006 Equity Liquidity Test Failure and any Equity
Liquidity Test Failure as of August 1, 2006 and/or September 1,
2006; * The deferral of the August 2006 and September 2006
installment payments on the 2004 Notes until October 2, 2006,
unless earlier converted by the holders; * The ability of the
holders to convert up to $5,000,000 in principal amount of the 2004
Notes, plus related interest, at their option as a "Company
Alternative Conversion" under the Notes through September 30, 2006,
with the amounts converted to be applied first to the August 2006
installment payment, second to the September 2006 installment
payment, and then to those installments nearest to the maturity
date of the 2004 Notes; and * The waiver of Galaxy's right to
prepay any part of the 2004 or 2005 Notes. The Piceance Basin The
Company controls approximately 6,000 (1,500 net) undeveloped acres
in the Piceance Basin through its wholly owned subsidiary, Dolphin
Energy Corporation and in partnership with Exxel Energy Corp. The
Company currently has drilling or completion activities underway on
four of its operated wells in the basin. In the Biscuit Ranch
10-31D well, all completed zones within the overall interval from
7294' to 8462' have now been commingled, 2 3/8" production tubing
has been installed, and fracture treatment fluids have been
partially recovered while flaring gas coming from the well. Flow
periods to recover additional remaining treatment fluids
(approximately 2500 barrels) are continuing. The Company is
currently preparing to move in a completion rig to lower the tubing
string, check for sand fill across perforated and treated intervals
and continue flowing the well to complete clean up. The Company has
a 25% working interest in this well. Completion activities are
underway in the Mulvihill 15-32D well, with the fracture treatment
design having been completed for the initial perforated zones
within the overall interval from 8514' to 8818'. Breakdown of each
zone with acid utilizing packer and tubing is underway in
preparation for the first fracture stimulation to be performed down
4 1/2" production casing. The Company will have an 18.75 to 25%
working interest in this well, depending upon a participation
election by an unrelated working interest owner. The Purkey Ranch
13-31B well has reached a total depth of 9373'. The Company is
currently preparing to run open hole wireline electric logs and
then 4 1/2" production casing. The Company has a 25% working
interest in this well. The Company is currently drilling the BR
03-03B Biscuit Ranch directional well. 8 5/8" surface casing has
been set and cemented to a depth of 1150' and this well is
currently drilling ahead below 2600'. The Company has a 25% working
interest in this well. At this time, Galaxy reports that it is too
early to know what flow rates to expect with respect to any of
these wells. In addition, the Company through Dolphin has varying
working interests in several non-operated wells. These non-operated
wells currently include one producing well operated by Williams
Production RMT Company, two wells operated by Bill Barrett
Corporation which are in the completion phase, as well as one well
in the completion and evaluation phase, which is operated by Antero
Resources Company. About Galaxy Energy Galaxy Energy Corporation, a
development stage oil and gas exploration and production company,
is focusing on acquiring and developing coalbed methane in the
Powder River Basin of Wyoming and other unconventional natural gas
properties in the Piceance Basin of Colorado, in addition to
exploration activities in Germany and Romania. The Company conducts
its exploration activities through two wholly owned subsidiaries,
Dolphin Energy Corporation and Pannonian International, Ltd.
Forward Looking Statement This press release consists of
forward-looking statements regarding the intent, belief or current
expectations of the Company and its management. Prospective
investors are cautioned that any such forward-looking statements
are not guarantees of future performance and involve a number of
risks and uncertainties, and actual results could differ materially
from those indicated by such forward looking statements. The
Company assumes no obligation to update the information contained
in this press release, whether as a result of new information,
future events or otherwise. Please refer to the Company's filings
with the United States Securities and Exchange Commission for
discussions of risks and uncertainties found in Forms 10-K (annual
report), 10-Q (quarterly report) and other filings. Additional
information may be found at the Galaxy Energy Corporation Web site,
http://www.galaxyenergy.com/ or by calling Brad Long, Investor
Relations/Galaxy Energy at (800) 574-4294, Bevo Beaven or Warren
Laird of CTA Public Relations at (303) 665-4200, Tina Cameron,
Renmark Financial Communications at (514) 939-3989 or Kathleen
Heaney (203) 803-3585 of Integrated Corporate Relations.
DATASOURCE: Galaxy Energy Corporation CONTACT: Brad Long, Investor
Relations of Galaxy Energy Corporation, +1-800-574-4294; or Bevo
Beaven, or Warren Laird, both of CTA Public Relations,
+1-303-665-4200; or Tina Cameron of Renmark Financial
Communications, +1-514-939-3989; or Kathleen Heaney of Integrated
Corporate Relations, +1-203-803-3585, all for Galaxy Energy
Corporation Web site: http://www.galaxyenergy.com/
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