DENVER, Aug. 4 /PRNewswire-FirstCall/ -- Gasco Energy (NYSE Amex: GSX) today reported financial and operating results for the second quarter ended June 30, 2009. Second Quarter 2009 Financial Results For the second quarter 2009, Gasco reported a net loss attributable to common shareholders of $3.9 million, or $0.04 per share, as compared to a net loss of $0.8 million, or $0.01 per share, for the same period in 2008. All per-share figures are basic and diluted. Included in the second quarter 2009 results are derivative losses of $1.2 million attributed to hedge effect, which are comprised of an unrealized loss of $10.1 million partially offset by a realized gain of $8.9 million. Included in the second quarter 2008 results are derivative losses of $5.0 million attributed to hedge effect, of which a loss of $3.6 million is unrealized and a loss of $1.4 million is realized. The Company reported oil and gas sales for the second quarter 2009 of $3.4 million, as compared to $12.6 million for the same period in 2008. The decrease in oil and gas sales during the second quarter 2009, as compared to the prior-year period, is primarily attributed to a 72% decrease in prices received for sales of the Company's natural gas and a 55% decrease in prices received for oil volumes, combined with a 9% decrease in production quarter-over-quarter. Gathering and processing revenues from Gasco's midstream assets were $1.0 million for the second quarter 2009, as compared to $1.1 million in the prior-year period. Total revenues for the second quarter 2009 were $4.4 million, as compared to $14.1 million in the second quarter 2008. Gasco's average realized gas price including the effect of realized derivative gains and losses and excluding proceeds from the monetization of certain hedge contracts was $2.94 per thousand cubic feet of natural gas (Mcf) for the second quarter of 2009 compared to $8.10 per Mcf for the second quarter of 2008. The Company's risk management activities increased its average gas price by $0.34 per Mcf during the second quarter of 2009 and decreased its average gas price by $1.15 during the second quarter of 2008. Prior to the impact of hedges, the Company's average price received for its natural gas production during the second quarter of 2009 was approximately $2.60 per Mcf, as compared to $9.25 per Mcf in the prior-year period. The average realized oil price was $44.34 per barrel for the second quarter of 2009, a 55% decrease from the $98.84 per barrel received during the second quarter of 2008. Gasco does not hedge its crude oil volumes. Unit Cost Comparisons - LOE / DD&A / G&A Lease operating expense (LOE) for the second quarter 2009 was $1.1 million, as compared to $1.9 million in the prior-year period, a 42% decrease. On a per-unit basis, LOE was $0.92 per thousand cubic feet of natural gas equivalent (Mcfe) in the second quarter 2009, as compared to $1.48 per Mcfe in the prior-year period. Lower LOE quarter-over-quarter is attributed to decreased operating expenses ($0.33 per Mcfe lower) and to reduced production taxes ($0.23 per Mcfe lower). The decrease in LOE in the second quarter 2009 is attributed to reduced chemical costs in well treatments, decreased workover expense and to sharply lower commodity prices on which production taxes are based. Depletion, depreciation and amortization (DD&A) was $1.1 million for the second quarter 2009, as compared to $3.2 million for the same period in 2008. On a per-unit basis, DD&A for the second quarter 2009 was $0.92 per Mcfe, as compared to $2.43 in the 2008 period. Lower DD&A is attributed to the decrease in the full cost pool as a result of the first quarter 2009 impairment charge of $41.0 million. The Company reported general and administrative (G&A) expense of $2.0 million in the second quarter 2009, versus $2.5 million in the same period in 2008. On a per-unit basis, total G&A expense for second quarter 2009 was $1.69 per Mcfe, as compared to $1.91 per Mcfe for the same period in 2008. G&A expense for the second quarter 2009 includes $0.5 million of non-cash, stock-based compensation expense, or, on a per-unit basis, $0.39 per Mcfe, as compared to the prior-period total of $0.8 million, or $0.62 per Mcfe. Gathering operations expense decreased to $0.8 million in the second quarter 2009 from $1.0 million in the second quarter 2008. Six-Month Period Gasco reported a net loss attributable to common shareholders for the six-months ended June 30, 2009 of $47.7 million, or $0.44 per share, as compared to a net loss for the first half of 2008 of $5.2 million, or $0.05 per share. Included in the 2009 results are derivative gains of $2.3 million attributed to hedge effect. Also included in the first half 2009's operating expenses is a non-cash charge of $41.0 million related to an impairment of the carrying value of oil and gas properties during the first quarter and a $4.7 million cash payment to the Company's rig contractor for early termination of a rig contract. Before the impairment charge and the early termination payment, and excluding the effect of unrealized derivative gains, a non-GAAP measure, Gasco would have posted a net loss of $2.0 million or $0.02 per share. Oil and gas sales for the first half of 2009 were $7.6 million, as compared to $21.1 million for the same period in 2008. The decrease in oil and gas sales during the first half 2009 as compared to the prior-year period is primarily attributed to a 65% decrease in prices received for sales of the Company's natural gas and a 60% decrease in prices received for oil volumes, partially offset by a 2% increase in oil and gas production. Total revenue for the first six months of 2009 was $9.8 million, as compared to $23.8 million in the same period in 2008. For the first half of 2009, gathering system revenues accounted for $1.8 million as compared $2.0 million during 2008. At June 30, 2009, cash and equivalents were $9.6 million as compared to $1.1 million at December 31, 2008. Long-term debt was $34.9 million at June 30, 2009 as compared to $31.0 million at December 31, 2007. The Company currently has a $250 million credit facility with JPMorgan, of which $35 million is available for borrowing capacity and $34.9 million is drawn. Gasco's total assets at June 30, 2009 were $103.5 million, as compared to $153.9 million at year-end 2008. Net cash provided by operating activities for the first half of 2009 was $13.0 million as compared to $13.1 million for the same period in 2008. Quarterly Production Cumulative net production for the quarter ended June 30, 2009 was 1,186 MMcfe, a decrease of 9% from the prior-year net production of 1,305 MMcfe. For the first half of 2009, Gasco produced a Company-record 2,441 MMcfe, as compared to 2,390 MMcfe in the year-ago six-month period, representing a 2% increase for comparable six-month periods. Subsequent Events On July 22, 2009, a large oil and gas company announced a significant discovery of oil and gas reserves estimated to range from 150 million to 250 million barrels of oil equivalent in Kern County, Calif. The discovery is located approximately 10 miles from certain of Gasco's San Joaquin Basin leasehold. Gasco owns or controls approximately 18,655 gross acres and 14,750 net mineral acres Kern and San Luis Obispo Counties. Company geologists are currently evaluating the productive potential of its leasehold due to heightened interest in leasing activity and in potential farm-outs, drilling partners or other possible joint venture opportunities in the area proximate to the significant discovery. Notice from the NYSE Amex LLC On June 25, 2009, Gasco received a notice from the NYSE Amex informing the Company that it is non-compliant with certain NYSE Amex continued listing standards. The Company was informed that it did not meet minimum shareholders' equity requirements of $2.0 million and that it had net losses in two of the last three fiscal years. It is also not compliant in meeting minimum stockholders' equity requirements of $4.0 million and it posted net losses in three out its last four fiscal years. As per the NYSE Amex instructions, and within the allotted time, Gasco submitted its plan of compliance to the NYSE Amex that addresses how Gasco intends to regain compliance with the deficient listing regulations by December 27, 2010. Gasco prepared and submitted a plan within the required time frame. However, there can be no assurance that NYSE Amex will accept the plan, or if the plan is accepted, that the Company will be able to achieve compliance with Sections 1003(a)(i) and 1003(a)(ii) of the NYSE Amex Company Guide within the required time frame. If the plan is not accepted by NYSE Amex, or if the Company is not able to achieve compliance with Sections 1003(a)(i) and 1003(a)(ii) of the NYSE Amex Company Guide by December 27, 2010, the Company will be subject to delisting procedures as set forth in the NYSE Amex Company Guide. For additional information regarding the risks currently facing Gasco's business, please see the information set forth 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 (the "SEC") on March 4, 2009 and under "Risk Factors" in Item 1A of the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2009 filed with the SEC on August 4, 2009. Through the beginning of June 2009, the Company owned a drilling rig that it leased to an operator for the drilling of wells that Gasco did not operate. During June 2009 the Company sold the drilling rig for proceeds of $1,000,000 which consisted of a cash payment of $500,000 and a promissory note of $500,000, with a maturity date of June 30, 2012. The Company recognized a loss of $905,850 on the sale. If the Company needs additional liquidity for future activities, including paying amounts owed in connection with a borrowing base reduction, if any, the Company may be required to consider several options for raising additional funds, such as selling securities, selling assets or farm-outs or similar arrangements, but it may be unable to complete any of these transactions on terms acceptable to the Company or at all. Any financing obtained through the sale of Gasco's equity will likely result in substantial dilution to the Company's stockholders. Conference Call A conference call with investors, analysts and other interested parties is scheduled for 11:00 a.m. EDT on Wednesday, August 5, 2009 to discuss second quarter 2009 financial and operating results. You are invited to listen to the call which will be broadcast live over the Internet. Date: Wednesday, August 5, 2009 Time: 11:00 a.m. EDT 10:00 a.m. CDT 9:00 a.m. MDT 8:00 a.m. PDT Call: (866) 392-4171 (US/Canada) and (706) 634-6345 (International), Passcode / Conference ID #: 18972905 Internet: Live and rebroadcast over the Internet: log on to http://www.gascoenergy.com/ or to http://www.videonewswire.com/event.asp?id=60257 Replay: Available through Monday, August 10, 2009 at (800) 642-1687 (US/Canada) and (706) 645-9291 (International) using Passcode 18972905 and for 30 days at http://www.gascoenergy.com/ 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 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 Item 1 of the Company's Annual Report on Form 10-K for the year ended December 31, 2008 filed with the SEC on March 4, 2009 and under "Risk Factors" in Item 1A of the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2009 filed with the SEC on August 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. [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 for the quarterly period ended June 30, 2009 dated August 4, 2009. GASCO ENERGY, INC. CONSOLIDATED BALANCE SHEETS (Unaudited) June 30, December 31, 2009 2008 ASSETS CURRENT ASSETS Cash and cash equivalents $9,606,802 $1,053,216 Accounts receivable Joint interest billings 609,196 5,436,636 Revenue 2,306,036 3,827,950 Inventory 1,251,828 4,177,967 Derivative instruments 968,844 8,855,947 Prepaid expenses 42,803 188,810 ------ ------- Total 14,785,509 23,540,526 ---------- ---------- PROPERTY, PLANT AND EQUIPMENT, at cost Oil and gas properties (full cost method) Proved properties 252,386,533 247,976,854 Unproved properties 39,832,456 39,314,406 Wells in progress - 644,688 Gathering assets 17,693,815 17,440,680 Facilities and equipment 6,190,062 8,549,928 Furniture, fixtures and other 371,673 371,605 ------- ------- Total 316,474,539 314,298,161 Less accumulated depletion, depreciation, amortization and impairment (229,578,890) (185,585,582) ----------- ----------- Total 86,895,649 128,712,579 ---------- ----------- OTHER ASSETS Deposit 139,500 139,500 Note receivable 500,000 - Deferred financing costs 1,165,973 1,492,903 --------- --------- Total 1,805,473 1,632,403 --------- --------- TOTAL ASSETS $103,486,631 $153,885,508 ============ ============ GASCO ENERGY, INC. CONSOLIDATED BALANCE SHEETS (continued) (Unaudited) June 30, December 31, 2009 2008 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES Accounts payable $660,006 $5,879,150 Revenue payable 1,218,404 3,840,985 Advances from joint interest owners - 612,222 Accrued interest 861,854 1,187,495 Accrued expenses 793,000 1,126,000 ------- --------- Total 3,533,264 12,645,852 --------- ---------- NONCURRENT LIABILITIES 5.5% Convertible Senior Notes 65,000,000 65,000,000 Long-term debt 34,856,269 31,000,000 Derivative instruments 1,579,781 - Asset retirement obligation 1,204,100 1,150,179 Deferred rent expense 33,572 46,589 ------ ------ Total 102,673,722 97,196,768 ----------- ---------- STOCKHOLDERS' EQUITY (DEFICIT) Series B Convertible Preferred stock - $0.001 par value; 20,000 shares authorized; zero shares outstanding - - Common stock - $.0001 par value; 300,000,000 shares authorized; 107,802,498 shares issued and 107,728,798 outstanding as of June 30, 2009 and 107,825,998 shares issued and 107,752,298 outstanding as of December 31, 2008 10,780 10,783 Additional paid-in capital 220,337,009 219,375,369 Accumulated deficit (222,937,849) (175,212,969) Less cost of treasury stock of 73,700 common shares (130,295) (130,295) ------- ------- Total (2,720,355) 44,042,888 --------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $103,486,631 $153,885,508 ============ ============ GASCO ENERGY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended June 30, ---------------------- 2009 2008 REVENUES Gas $2,895,707 $11,404,952 Oil 550,677 1,187,898 Gathering 965,929 1,079,201 Rental income - 420,875 --- ------- Total 4,412,313 14,092,926 --------- ---------- OPERATING EXPENSES Lease operating 1,088,049 1,935,374 Gathering operations 775,182 1,040,844 Depletion, depreciation, amortization and accretion 1,094,131 3,170,997 Loss on sale of assets, net 558,189 - General and administrative 2,009,998 2,486,593 --------- --------- Total 5,525,549 8,633,808 --------- --------- OTHER INCOME (EXPENSE) Interest expense (1,501,459) (1,231,262) Derivative losses (1,249,059) (5,022,053) Interest income 4,120 5,589 ----- ----- Total (2,746,398) (6,247,726) --------- --------- NET LOSS $(3,859,634) $(788,068) =========== ========= NET LOSS PER COMMON SHARE - BASIC AND DILUTED $(0.04) $(0.01) ====== ====== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING BASIC AND DILUTED 107,539,679 107,018,242 =========== =========== GASCO ENERGY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Six Months Ended June 30, ---------------------- 2009 2008 REVENUES Gas $6,806,758 $19,302,432 Oil 811,648 1,775,535 Gathering 1,841,130 1,987,557 Rental income 366,399 783,125 ------- ------- Total 9,825,935 23,848,649 --------- ---------- OPERATING EXPENSES Lease operating 1,779,986 3,202,101 Gathering operations 1,482,696 1,697,343 Depletion, depreciation, amortization and accretion 3,677,101 5,620,799 Impairment 41,000,000 - Contract termination fee 4,701,000 - Loss on sale of assets, net 679,189 - General and administrative 3,870,044 4,674,626 --------- --------- Total 57,190,016 15,194,869 ---------- ---------- OTHER INCOME (EXPENSE) Interest expense (2,660,188) (2,478,811) Derivative gains (losses) 2,293,567 (11,394,505) Interest income 5,822 20,811 ----- ------ Total (360,799) (13,852,505) ------- ---------- NET LOSS $(47,724,880) $(5,198,725) ============ =========== NET LOSS PER COMMON SHARE - BASIC AND DILUTED $(0.44) $(0.05) ====== ====== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING BASIC AND DILUTED 107,548,336 107,011,167 =========== =========== GASCO ENERGY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended June 30, ----------------------- 2009 2008 CASH FLOWS FROM OPERATING ACTIVITIES Net loss $(47,724,880) $(5,198,725) Adjustment to reconcile net loss to net cash provided by operating activities Depletion, depreciation, amortization and impairment expense 44,623,405 5,573,235 Accretion of asset retirement obligation 53,696 47,564 Stock-based compensation 964,091 1,529,078 Change in derivative instruments, net 9,466,884 9,532,345 Amortization of deferred rent expense (13,017) (8,185) Amortization of deferred financing costs 326,930 259,116 Loss on sale of assets, net 679,189 - Changes in operating assets and liabilities: Accounts receivable 6,349,354 (2,841,850) Inventory 3,152,800 (1,018,105) Prepaid expenses 146,007 133,246 Accounts payable (1,762,384) 1,278,041 Revenue payable (2,622,581) 3,496,671 Accrued interest (325,641) 58,447 Accrued expenses (333,000) 233,000 ------- ------- Net cash provided by operating activities 12,980,853 13,073,878 ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES Cash paid for furniture, fixtures and other (2,297) (36,046) Cash paid for acquisitions, development and exploration (8,169,017) (19,435,759) Proceeds from sale of assets 500,000 - Advances from (refunded to) joint interest owners (612,222) 2,808,909 ------- --------- Net cash used in investing activities (8,283,536) (16,662,896) --------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES Borrowings under line of credit 13,000,000 14,000,000 Repayment of borrowings (9,143,731) (9,000,000) Exercise of options to purchase common stock - 1,156,284 --- --------- Net cash provided by financing activities 3,856,269 6,156,284 --------- --------- NET INCREASE IN CASH AND CASH EQUIVALENTS 8,553,586 2,567,266 CASH AND CASH EQUIVALENTS: BEGINNING OF PERIOD 1,053,216 1,843,425 --------- --------- END OF PERIOD $9,606,802 $4,410,691 ========== ========== http://www.videonewswire.com/event.asp?id=60257DATASOURCE: Gasco Energy, Inc. CONTACT: Investor Relations of Gasco Energy, Inc., +1-303-483-0044 Web Site: http://www.gascoenergy.com/

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