DENVER, Feb. 5 /PRNewswire-FirstCall/ -- Gasco Energy, Inc. (NYSE
Alternext US: GSX) today announced 2008 year-end total proved
reserves of 53.1 billion cubic feet of natural gas equivalent
(Bcfe), comprised of 50.9 Bcf of natural gas and 361,000 barrels of
liquids. The Company's reserve mix is 96% natural gas and 4% liquid
hydrocarbons, including condensate volumes. At year-end 2008, 100%
of the Company's reserves were classified as proved developed. By
comparison, Gasco's total proved reserves at year-end 2007 were
110.7 Bcfe, approximately 50% of which were classified as proved
developed and 50% were proved undeveloped. Reserves Summary at
December 31, 2008 2007 2008 Proved % of Proved Reserves % Category
Reserves Reserves (Mcfe) (Mcfe) Chg. -------- --------
--------------- ------ ---- Proved Developed Producing 79%
41,940,000 38,709,212 7.7% Proved Developed Non- Producing 21%
11,135,000 16,281,525 (31.6%) Proved Undeveloped 0% 0 55,772,413
(100%) -- - ---------- ------ Total 100% 53,075,000 110,763,150
(52.1%) ==== ========== =========== ======= Reserve Reconciliation
Gas Oil Equivalents Mcf Bbl Mcfe --- --- ---- Balance, December 31,
2007 104,338,338 1,070,802 110,763,150 Extensions and discoveries
2,400,000 17,000 2,502,000 Revisions of previous estimates
(42,740,310) (646,257) (46,617,852) Sales of reserves in place
(8,506,000) (38,000) (8,734,000) Production (4,583,028) (42,545)
(4,838,298) Balance, December 31, 2008 50,909,000 361,000
53,075,000 ========== ======= ========== Proved Developed Reserves
50,909,000 361,000 53,075,000 In accordance with SEC requirements,
Gasco's proved reserves at December 31, 2008 were computed using
unescalated year-end 2008 commodity prices (based on Rocky Mountain
regional prices) of $23.60 per barrel for black wax, $14.33 per
barrel for condensate and $4.63 per million British thermal units
for natural gas including necessary adjustments for quality and
location to arrive at the net price received by the Company as of
December 31, 2008. The average price net to Gasco in the reserve
report is $15.34 per barrel for liquids and $4.63 per Mcf for
natural gas. Based on these prices the estimated discounted net
present value of Gasco's proved reserves, before projected income
taxes, using a 10% per annum discount rate ("PV-10") was $69.5
million at December 31, 2008. For December 31, 2007, the SEC PV-10
number was $161.8 million and used net year-end commodity prices of
$6.53 per Mcf of natural gas and $73.95 per barrel of crude oil.
All of the reserves valued in the report are located in Gasco's
Riverbend Project area in Carbon, Duchesne, and Uintah Counties in
Utah's Uinta Basin. Reserve estimates are engineered by independent
reservoir engineering consultants, Netherland, Sewell &
Associates, Inc. and conform to the definition as set forth in the
SEC Regulation S-X Part 210.4-10 (a) as clarified by subsequent
Commission Staff Accounting bulletins. The proved reserves are also
in accordance with Financial Accounting Standards Board Statement
No. 69 requirements. In accordance with SEC guidelines, reserve
estimates do not include any probable or possible reserves which
may exist for Gasco's properties. While the Company has not
completed its December 31, 2008 financial statements including its
valuation of unproved properties, management does not believe that
the Company will record an impairment charge of the carrying value
of its proved oil and gas properties for the fourth quarter 2008.
Definition - Reserves Important definitions pertaining to oil and
gas reserves may be found in the "Glossary of Natural Gas and Oil
Terms" in the Company's annual Filing on Form 10-K. 2009 Initial
Capital Expenditure Budget Gasco also today announced that its
Board of Directors has approved a revised initial 2009 capital
expenditure budget (CAPEX) of $10 million. From the preliminary
budget presented in a November 4, 2008 news release, the Company
has reduced its CAPEX budget for 2009 by $20 million. The change in
plan is a direct result of further weakening in commodity prices,
high service costs for drilling and completing wells and limited
capital markets. The revised program includes completing the Gate
Canyon State #23-16, the drilling and completion of approximately
two gross (0.84 net) wells and 12 recompletions (4 net) of up-hole
zones on Gasco's Riverbend Project located in the Uinta Basin of
Utah. The wells in the program will be drilled to develop the
natural-gas-bearing upper Mancos shale intervals and associated
up-hole pay zones in each wellbore. The CAPEX budget does not
include possible acquisitions, but may include installation of
pipeline infrastructure, distribution facilities and certain
geophysical operations. The Company intends to fund its budget
entirely through cash flow from operations. Consequently, the
Company will monitor spending and cash flow throughout the year and
may accelerate or delay investment depending on commodity prices
and cash flow expectations. The Company currently operates a single
rig. This rig will be released after it completes drilling
operations on the well it is currently drilling. It is scheduled to
reach total depth (TD) in late February 2009. At rig release, the
Company is obligated to pay the rig contractor approximately $4.6
million for early termination of the drilling contract (as
calculated at $12,000/day from rig release through March 15, 2010,
the expiration date of the contract). Gasco has a $250 million
reserve-based revolving line of credit facility with a borrowing
base of $45 million, of which $31 million was drawn at December 31,
2008. Interim Gate Canyon Area Update The GCS #23-16 (25% working
interest, Gasco operated), a Dakota and full Mancos shale interval
test, reached TD of 16,610 feet on June 13, 2008. As previously
announced, the well was completed in the Morrison and Dakota
formations with four frac stages, where it encountered mechanical
issues. After setting a bridge plug above the Dakota to isolate
production from the lower intervals, completion operations have
subsequently moved up-hole to target Mancos Shale and Blackhawk
pay. Gasco has now successfully completed two additional frac
stages, the fifth and sixth stages in the wellbore. The initial two
lower Mancos stages (five and six) were initially tested at
combined rates of up to 4.2 million cubic feet of natural gas per
day (MMcf/d), with a flowing casing pressure of 7,700 psi on a
12/64" choke. During a 12-hour test, the well averaged a combined
flow-rate of 2.5 MMcf/d on a 12/64" choke with a flowing casing
pressure of 4,900 psi. All production rates were observed while the
well was cleaning up and flowing back frac fluid. Gasco is
currently moving up-hole to complete seven additional Mancos /
Blackhawk frac stages. At that point, production testing will
resume before completing and testing additional Blackhawk,
Mesaverde and Wasatch pay zones located further up-hole. Management
Comment Gasco's President and CEO Mark Erickson said: "The high
flow rates observed during the early stages of our Gate Canyon well
are encouraging initial signs of the GCS #23-16 productive
potential. There remains additional up-hole pay to complete in the
well, which should allow us to learn more from the completions and
further production testing. The results are early, but indicate a
gas-charged system at least in this part of Gate Canyon. We have
focused the majority of our historical drilling program and CAPEX
in the eastern part of the Riverbend project and have limited
drilling and completion data and results to-date from the Gate
Canyon Unit located to the extreme west of our leasehold. The well
should give us a good look at reservoir characteristics and other
important data to help us better understand the Gate Canyon area.
With respect to reserves, the drop in commodity prices along with
high services costs did not allow us to clearly demonstrate the
critical improvements we continue to achieve on our Riverbend
Project. Our revisions of 46.6 Bcfe are attributed to lower prices
received and higher well costs during 2008 which resulted in the
booking of no proved undeveloped (PUD) locations. We also
experienced a write down of 290,000 barrels, or 88% of our Black
Wax production, attributed again to the sharply lower price at
December 31, 2008. It is interesting to note that during 2008 the
Company drilled and completed six wells that were previously booked
as PUD locations in 2007. The proved developed producing reserves
resulting from this drilling yielded an average of 2.52 Bcfe per
well versus the previously PUD assigned reserves averaging 1.75
Bcfe, or a 44% increase over the PUD estimates." Erickson
concluded: "Now, in 2009, we are experiencing softening of services
costs which should benefit our planned 2009 program. During 2008,
all wells drilled penetrated the Mancos which expanded our core
producing area to nearly one full township. We continued to work
diligently to reduce drilling days while constantly improving tight
gas sands and shale completion techniques. Production analysis
indicates that we are often draining less than an estimated five
acres within the Mancos. We are greatly benefitted by our thick
Mancos section and additional up-hole pay zones that can be
commingled with the Mancos. The play is clearly ready for the
implementation of new technology, including horizontal drilling
which has proven successful in other shale plays in North America."
About Gasco Energy Denver-based Gasco Energy, Inc. is a natural gas
and petroleum exploitation, development and production company
engaged in locating and developing hydrocarbon resources, primarily
in the Rocky Mountain region. Gasco's principal business is the
acquisition of leasehold interests in petroleum and natural gas
rights, either directly or indirectly, and the exploitation and
development of properties subject to these leases. Gasco currently
focuses its drilling efforts in the Riverbend Project located in
the Uinta Basin of northeastern Utah, targeting the Wasatch,
Mesaverde, Blackhawk, Mancos, Dakota and Morrison formations. To
learn more, visit http://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 forwardlooking 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
Gasco'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, forwardlooking 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 Gasco, 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 Gasco'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 Gasco 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; fluctuations in
natural gas and oil prices; pipeline constraints; overall demand
for natural gas and oil in the United States; changes in general
economic conditions in the United States; our ability to manage
interest rate and commodity price exposure; changes in the
Company's borrowing arrangements; the condition of credit and
capital markets in the United States; and other risks described
under "Risk Factors" in each of Item 1 of the Company's Annual
Report on Form 10-K for the year ended December 31, 2007 filed with
the Securities and Exchange Commission on March 4, 2008 and in Item
1A of the Company's Quarterly Reports on Form 10-Q for the quarters
ended June 30, 2008 and September 30, 2008 filed with the
Securities and Exchange Commission on August 4, 2008 and November
4, 2008, respectively. Any of these factors could cause our actual
results to differ materially from the results implied by these or
any other forward-looking statements made by us or on our behalf.
We cannot assure you that our future results will meet our
expectations. When you consider these forward-looking statements,
you should keep in mind these factors. All subsequent written and
oral forward-looking statements attributable to the Company, or
persons acting on its behalf, are expressly qualified in their
entirety by these factors. Our forward-looking statements speak
only as of the date made. The Company assumes no duty to update or
revise its forward-looking statements based on changes in internal
estimates or expectations or otherwise. DATASOURCE: Gasco Energy,
Inc. CONTACT: Investor Relations for Gasco Energy, Inc.,
+1-303-483-0044 Web Site: http://www.gascoenergy.com/
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