Gasco Energy Announces Amended Credit Agreement
May 15 2009 - 4:36PM
PR Newswire (US)
DENVER, May 15 /PRNewswire-FirstCall/ -- Gasco Energy (NYSE Amex:
GSX) today announced an amendment to its Credit Agreement led by
JPMorgan. Amended Credit Facility On May 14, 2009 Gasco and the
lenders entered into the Third Amendment to the Company's Credit
Agreement. Pursuant to the Third Amendment, the Credit Agreement
was amended to, among other things: (i) increase the interest rate
pricing grid; (ii) amend the definition of LIBO Rate to include a
floor of 2.00%; (iii) increase the required collateral coverage and
related title requirements; (iv) require the Company to engage a
financial consultant by May 29, 2009 and (v) permit the Company to
monetize its commodity hedges as described below and use the
proceeds to pay down outstanding borrowings under the Credit
Agreement. The Third Amendment also added a special redetermination
of the Company's borrowing base on or around June 30, 2009, in
addition to the regular redeterminations and special
redeterminations available at the request of the Company or the
Lenders. Furthermore, the Third Amendment involved a
redetermination of the Company's borrowing base, which was lowered
to $35 million from $45 million. Because the amount borrowed
exceeded the revised borrowing base by approximately $9 million,
the Company was required to prepay the Credit Agreement by an
amount equal to the deficiency. On May 7, 2009, the Company
monetized selected oil and natural gas hedge contracts and the net
proceeds of $8.5 million were used to repay a portion of the
deficiency and the remainder was repaid with cash on hand.
Concurrent with the monetization of the hedges, the Company
re-hedged a portion of its production for the period June 2009
through March 2011 as further detailed below. Interest on
borrowings under the Amended Credit Agreement accrues at variable
interest rates at either, at Gasco's election, a Eurodollar rate or
an alternate base rate. The Eurodollar rate is calculated as LIBOR
plus an applicable margin that varies from 2.50% (for periods in
which the Company has utilized less than 50% of the borrowing base)
to 3.25% (for periods in which the Company has utilized greater
than 90% of the borrowing base). The alternate base rate is
calculated as (1) the greater of (a) the Prime Rate, (b) the
Federal Funds Effective Rate plus 2.00% or (c) the Adjusted LIBO
Rate for a one month interest period on such day plus 1%, plus (2)
an applicable margin that varies from 1.50% (for periods in which
the Company has utilized less than 50% of the borrowing base) to
2.25% (for periods in which the Company has utilized greater than
90% of the borrowing base). Gasco elects the basis of the interest
rate at the time of each borrowing; however, under certain
circumstances, Gasco's lender may require it to use the non-elected
basis in the event the elected basis does not adequately and fairly
reflect the cost of making such loans. In addition, Gasco is
obligated to pay a commitment fee of 0.50% under the Credit
Agreement quarterly in arrears based on a percentage multiplied by
the daily amount that the aggregate commitments exceed borrowings
under the agreement. Risk Management The Company provides a revised
schedule showing the Company's derivative contracts after giving
effect to the monetization of hedges and re-hedging, as described
above, in the table below. The new derivative contracts were
entered into at a weighted average price over the contract periods.
The Company elected for a weighted average pricing scenario for a
portion of its natural gas volumes in an effort to secure the best
prices for the 2009 contract period. Gasco 2009-2011 Swap
Agreements Agreement Remaining Floating Price Type Term Quantity
Fixed Price (a) Gasco Payer (a) Swap* 6/09 - 12/09 6,500 MMBtu
$4.418 / MMBtu* NW Rockies per day Swap* 1/10 - 12/10 3,500 MMBtu
$4.418 / MMBtu* NW Rockies per day Swap 1/10 - 3/11 3,000 MMBtu
$4.825 / MMBtu NW Rockies per day Swap* 1/11 - 3/11 2,000 MMBtu
$4.418 / MMBtu* NW Rockies per day (a) Northwest Pipeline Rocky
Mountains - Inside FERC first-of-month index price (*) Each noted
row includes information pertaining to a portion of a single
natural gas derivative contract with declining volumes. The fixed
price represents the volume weighted average price for the entire
period June 2009 through March 2011. About Gasco Energy
Denver-based Gasco Energy, Inc. is 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 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
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, 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 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 Item 1 of the Company's Annual Report on
Form 10-K for the year ended December 31, 2008 filed with the
Securities and Exchange Commission on March 4, 2009. 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 of Gasco Energy, Inc., +1-303-483-0044 Web Site:
http://www.gascoenergy.com/
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