DENVER, Nov. 3 /PRNewswire-FirstCall/ -- Gasco Energy (NYSE Amex:
GSX) today reported financial and operating results for the quarter
ended September 30, 2009. Third Quarter Financial Results For the
third quarter 2009, Gasco reported a net loss attributable to
common shareholders of $2.9 million, or $0.03 per diluted share, as
compared to net income attributable to common shareholders of $21.0
million, or $0.17 per diluted share, for the same period in 2008.
Included in the third quarter 2009 results are derivative losses of
$1.6 million attributed to hedge effect, which are comprised of an
unrealized loss of $2.6 million partially offset by a realized gain
of $1.0 million. Included in the third quarter 2008 results are
derivative gains of $17.1 million attributed to hedge effect. The
Company reported oil and gas sales for the third quarter 2009 of
$3.6 million, as compared to $9.7 million for the same period in
2008. The 63% quarter-over-quarter decrease in oil and gas sales is
primarily attributed to a 59% decrease in prices received for sales
of the Company's natural gas and a 42% decrease in prices received
for oil volumes, combined with a 14% decrease in production
quarter-over-quarter. Gathering and processing revenues from
Gasco's midstream assets were $0.9 million for the third quarter
2009, as compared to $1.2 million in the prior-year period. Total
revenues for the third quarter 2009 were $4.4 million, as compared
to $11.2 million in the prior-year period. Gasco's average realized
gas price including the effect of realized derivative gains and
losses was $4.06 per thousand cubic feet of natural gas (Mcf) for
the third quarter of 2009, as compared to $7.74 per Mcf for the
third quarter of 2008. The Company's risk management activities
increased its average gas price by $1.05 per Mcf during the third
quarter of 2009, and by $0.36 per Mcf during the 2008 period. Prior
to the impact of hedges, the Company's average price received for
its natural gas production during the third quarter of 2009 was
approximately $3.01 per Mcf, as compared to $7.38 per Mcf in the
prior-year period. The average realized oil price was $57.53 per
barrel for the third quarter of 2009, a 42% decrease from the
$98.43 per barrel received during the third 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 third
quarter 2009 decreased to $0.9 million from $1.2 million in the
same period in 2008. On a per-unit basis, LOE was $0.85 per
thousand cubic feet of natural gas equivalent (Mcfe) in the third
quarter 2009, as compared to $1.00 per Mcfe in the prior-year
period. The decrease in per-unit LOE quarter-over-quarter is
attributed to reduced production taxes ($0.23 per Mcfe lower)
offset by increased operating expenses ($0.08 per Mcfe higher). The
28% decrease in total LOE in the third 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 $1.0 million for the third quarter 2009, as compared
to $1.7 million for the same period in 2008. On a per-unit basis,
DD&A for the third quarter 2009 was $0.94 per Mcfe, as compared
to $1.40 in the 2008 period. The 42% lower third quarter 2009
DD&A is attributed to a decrease in the depletable base during
2009 due to impairment charges incurred by the Company in 2009. The
Company reported general and administrative (G&A) expense of
$1.9 million in the third quarter 2009, versus $2.1 million in the
same period in 2008, a 12% decline quarter-over-quarter. On a
per-unit basis, total G&A expense for third quarter 2009 was
$1.78 per Mcfe, as compared to $1.73 per Mcfe for the same period
in 2008. G&A expense for the third quarter 2009 includes $0.5
million of non-cash, stock-based compensation expense, or, on a
per-unit basis, $0.48 per Mcfe, as compared to the prior-period
total of $0.7 million, or $0.58 per Mcfe. Gathering operations
expense in the third quarter 2009 decreased to $0.5 million from
$1.0 million in the 2008 reporting period. Nine-Month Period Gasco
reported a net loss attributable to common shareholders for the
nine-months ended September 30, 2009 of $50.6 million, or $0.47 per
diluted share, as compared to net income attributable to common
shareholders of $15.8 million, or $0.14 per diluted share for the
prior-year period. Included in the nine-month 2009 results are
derivative gains of $0.7 million attributed to hedge effect, which
are comprised of an unrealized gain of $12.8 million partially
offset by a realized loss of $12.1 million. Included in the 2009
period's operating expenses are non-cash charges of $41.0 million
related to the impairment of the carrying value of oil and gas
properties. Included in the 2008 results are net derivative gains
of $5.7 million, attributed to hedge effect. Oil and gas sales for
the first nine months of 2009 were $11.2 million, as compared to
$30.7 million for the same period in 2008, a decrease of 64%. The
decrease in oil and gas sales during the first nine months of 2009
as compared to the prior-year period is primarily attributed to a
63% decrease in prices received for sales of the Company's natural
gas and a 54% decrease in prices received for oil volumes. For the
first nine months of 2009, total revenues were $14.3 million, as
compared to $35.1 million in the same period in 2008, a decrease of
59%. For the first nine months of 2009, gathering system revenues
accounted for $2.7 million as compared to $3.2 million during 2008.
Gathering income was $0.8 million for 2009's nine-month period, as
compared to $0.5 million in the same period in 2008. Gasco's
average realized gas price for the nine-month period 2009,
including the effect of realized derivative gains and losses, was
$6.86 per Mcf, as compared to $7.70 per Mcf in 2008. The Company's
risk management activities increased its average gas price by $3.89
per Mcf during the first nine months of 2009 and decreased its
average gas price by $0.42 during the 2008 period. Prior to the
impact of hedges, the Company's average price received for its
natural gas production during the nine-month period 2009 was
approximately $2.97 per Mcf, as compared to $8.12 per Mcf in the
prior-year period. The average realized oil price was $42.67 per
barrel for the nine-month period 2009, a 54% decrease from the
$92.97 per barrel received in 2008. Gasco does not hedge its crude
oil volumes. At September 30, 2009, cash and cash equivalents were
$12.3 million. Long-term debt was $34.5 million at September 30,
2009, as compared to $31.0 million at December 31, 2008. The
Company currently has a $250 million credit facility with JPMorgan,
of which $35.0 million is available for borrowing capacity and
$34.5 million is drawn in borrowing and $0.5 million is drawn in
letters of credit. Gasco's total assets at September 30, 2009 were
$104.3 million, as compared to $153.9 million at year-end 2008. Net
cash provided by operating activities for the first nine months of
2009 was $16.5 million as compared to $19.4 million for the same
period in 2008. Production Volumes Cumulative net production for
the quarter ended September 30, 2009 was 1,044 MMcfe, as compared
to the prior-year net production of 1,220 MMcfe. For the nine-month
period, Gasco produced 3,485 MMcfe, as compared to 3,610 MMcfe in
2008's nine-month period. Risk Management Gasco's swap agreements
for 2009 through March 2011 are included below. At recent
production levels, approximately 50% of Gasco's net production
volumes were hedged through the following instruments: Gasco 2009 -
March 2011 Swap Agreements Fixed Price Floating Agreement Remaining
Counterparty Price Gasco Type Term Quantity Payer Payer (a) ----
---- -------- ----- -------- Swap (b) 10/09 - 12/09 6,500 MMBtu per
day $4.418 / MMBtu NW Rockies Swap (b) 1/10 - 12/10 3,500 MMBtu per
day $4.418 / MMBtu NW Rockies Swap 1/10 - 3/11 3,000 MMBtu per day
$4.825 / MMBtu NW Rockies Swap (b) 1/11 - 3/11 2,000 MMBtu per day
$4.418 / MMBtu NW Rockies (a) Northwest Pipeline Rocky Mountains -
Inside FERC first-of-month index price (b) Weighted average price
for the entire period from June 2009 through March 2011 Other News
Gasco is in discussions with prospective buyers to sell its Utah
gathering system and related processing assets. The system gathers
all of Gasco's Utah natural gas production as well as some
third-party volumes. Simultaneous with any sale of these assets,
Gasco will enter into a multi-year agreement with the new
owner/operator to continue to gather all current and future
production from the Company's acreage west of the Green River in
the Uinta Basin. For the first nine months of 2009, gathering
operations contributed operating income (gathering revenue less
gathering expense) of $0.8 million. A further announcement is
expected if and when a final agreement is reached, although there
can be no assurance that the Company will reach agreement with any
potential buyers. Seventh Amendment to Credit Agreement On October
30, 2009, the Company and certain of its subsidiaries as
guarantors, the lenders party thereto (the "Lenders") and JPMorgan
Chase Bank, N.A., as administrative agent, entered into the Seventh
Amendment to Credit Agreement (the "Seventh Amendment"), amending
that certain Credit Agreement, dated as of March 29, 2006 (as
amended by the First, Second, Third, Fourth, Fifth and Sixth
Amendments thereto, and as further amended by this Seventh
Amendment, the "Credit Agreement"). Pursuant to the Seventh
Amendment, the Credit Agreement was amended, among other things, to
revise the definition of "Redetermination Date" with respect to
scheduled redeterminations for the year ended December 31, 2009 to
be on or about May 1 and November 30 of such year thereby delaying
the scheduled mid-year redetermination originally scheduled to
occur on or about November 1, 2009. Therefore, the scheduled
mid-year redetermination of the borrowing base pursuant to Section
3.02 of the Credit Agreement will occur on or about November 30,
2009. With respect to any Scheduled Redeterminations in subsequent
years, however, the Redetermination Date continues to be on or
about May 1 and November 1 of each such year. Under the terms of
the Credit Agreement, in addition to the scheduled
redeterminations, the Company is permitted to request a special
redetermination of the borrowing base once between each scheduled
redetermination and the Lenders are permitted to request a special
redetermination of the borrowing base once between each scheduled
redetermination. Pursuant to the Seventh Amendment, should there be
a borrowing base deficiency after the scheduled redetermination on
or about November 30, 2009, the Company will have 30 days to
eliminate such deficiency. The foregoing description of the Seventh
Amendment does not purport to be complete and is qualified in its
entirety by reference to the complete text of such agreement, a
copy of which is filed as Exhibit 4.5 to the Company's filing on
Form 10-Q dated November 3, 2009 and is incorporated herein by
reference. Q309 Results Conference Call A conference call with
investors, analysts and other interested parties is scheduled for
11:00 a.m. EST on Wednesday, November 4, 2009 to discuss third
quarter 2009 financial and operating results. You are invited to
listen to the call which will be broadcast live over the Internet.
Date: Wednesday, November 4, 2009 Time: 11:00 a.m. EST 10:00 a.m.
CST 9:00 a.m. MST 8:00 a.m. PST Call: (866) 392-4171 (US/Canada)
and (706) 634-6345 (International), Passcode / Conference ID #:
37293242 Internet: Live and rebroadcast over the Internet: log on
to http://www.videonewswire.com/event.asp?id=63332 or to
http://www.gascoenergy.com/ Replay: Available through Tuesday,
November 10, 2009 at (800) 642-1687 (US/Canada) and (706) 645-9291
(International) using passcode 37293242 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; our ability to
complete a sale of our gas gathering system and related assets; 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
September 30, 2009 dated November 3, 2009. GASCO ENERGY, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited) September 30, December 31,
2009 2008 ASSETS CURRENT ASSETS Cash and cash equivalents
$12,341,405 $1,053,216 Accounts receivable Joint interest billings
375,932 5,436,636 Revenue 2,159,440 3,827,950 Inventory 1,074,587
4,177,967 Derivative instruments - 8,855,947 Prepaid expenses 8,748
188,810 ----- ------- Total 15,960,112 23,540,526 ----------
---------- PROPERTY, PLANT AND EQUIPMENT, at cost Oil and gas
properties (full cost method) Proved properties 253,443,888
247,976,854 Unproved properties 39,329,656 39,314,406 Wells in
progress - 644,688 Gathering assets 17,784,520 17,440,680
Facilities and equipment 6,377,952 8,549,928 Furniture, fixtures
and other 371,674 371,605 ------- ------- Total 317,307,690
314,298,161 Less accumulated depletion, depreciation, amortization
and impairment (230,612,237) (185,585,582) ------------
------------ Total 86,695,453 128,712,579 ---------- -----------
OTHER ASSETS Deposit 139,500 139,500 Note receivable 500,000 -
Deferred financing costs 1,025,127 1,492,903 --------- ---------
Total 1,664,627 1,632,403 --------- --------- TOTAL ASSETS
$104,320,192 $153,885,508 ============ ============ GASCO ENERGY,
INC. CONSOLIDATED BALANCE SHEETS (continued) (Unaudited) September
30, December 31, 2009 2008 LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT) CURRENT LIABILITIES Accounts payable $548,861 $5,879,150
Revenue payable 2,279,605 3,840,985 Advances from joint interest
owners - 612,222 Derivative instruments 1,543,019 - Accrued
interest 1,747,144 1,187,495 Accrued expenses 848,000 1,126,000
------- --------- Total 6,966,629 12,645,852 --------- ----------
NONCURRENT LIABILITIES 5.5% Convertible Senior Notes 65,000,000
65,000,000 Long-term debt 34,544,969 31,000,000 Derivative
instruments 1,671,059 - Asset retirement obligation 1,231,899
1,150,179 Deferred rent expense 27,063 46,589 ------ ------ Total
102,474,990 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 September 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
220,842,666 219,375,369 Accumulated deficit (225,844,578)
(175,212,969) Less cost of treasury stock of 73,700 common shares
(130,295) (130,295) -------- -------- Total (5,121,427) 44,042,888
---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT) $104,320,192 $153,885,508 ============ ============ GASCO
ENERGY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended September 30, ------------- 2009 2008 REVENUES
Gas $2,952,924 $8,457,980 Oil 602,737 1,210,047 Gathering 882,195
1,248,483 Rental income - 312,344 --- ------- Total 4,437,856
11,228,854 --------- ---------- OPERATING EXPENSES Lease operating
887,594 1,224,416 Gathering operations 479,668 1,004,061 Depletion,
depreciation, amortization and accretion 982,182 1,702,682 Loss on
sale of assets, net 155,536 - General and administrative 1,861,101
2,113,675 --------- --------- Total 4,366,081 6,044,834 ---------
--------- OTHER INCOME (EXPENSE) Interest expense (1,420,025)
(1,248,702) Derivative gains (losses) (1,571,682) 17,099,899
Interest income 13,203 4,681 ------ ----- Total (2,978,504)
15,855,878 ---------- ---------- NET INCOME (LOSS) $(2,906,729)
$21,039,898 =========== =========== NET INCOME (LOSS) PER COMMON
SHARE BASIC $(0.03) $0.20 ====== ===== DILUTED $(0.03) $0.17 ======
===== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC
107,546,398 107,499,883 =========== =========== DILUTED 107,546,398
125,992,710 =========== =========== GASCO ENERGY, INC. CONSOLIDATED
STATEMENTS OF OPERATIONS (Unaudited) Nine Months Ended September
30, ------------- 2009 2008 REVENUES Gas $9,759,682 $27,760,412 Oil
1,414,385 2,985,582 Gathering 2,723,325 3,236,040 Rental income
366,399 1,095,469 ------- --------- Total 14,263,791 35,077,503
---------- ---------- OPERATING EXPENSES Lease operating 2,667,580
4,426,517 Gathering operations 1,962,364 2,701,404 Depletion,
depreciation, amortization and accretion 4,659,283 7,323,481
Impairment 41,000,000 - Contract termination fee 4,701,000 - Loss
on sale of assets, net 834,725 - General and administrative
5,731,145 6,788,301 --------- --------- Total 61,556,097 21,239,703
---------- ---------- OTHER INCOME (EXPENSE) Interest expense
(4,080,213) (3,727,513) Derivative gains 721,885 5,705,394 Interest
income 19,025 25,492 ------ ------ Total (3,339,303) 2,003,373
---------- --------- NET INCOME (LOSS) $(50,631,609) $15,841,173
============ =========== NET INCOME (LOSS) PER COMMON SHARE BASIC
$(0.47) $0.15 ====== ===== DILUTED $(0.47) $0.14 ====== =====
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC 107,559,351
107,195,454 =========== =========== DILUTED 107,559,351 109,561,398
=========== =========== GASCO ENERGY, INC. CONSOLIDATED STATEMENTS
OF CASH FLOWS (Unaudited) Nine Months Ended September 30,
------------- 2009 2008 CASH FLOWS FROM OPERATING ACTIVITIES Net
income (loss) $(50,631,609) $15,841,173 Adjustment to reconcile net
income (loss) to net cash provided by operating activities
Depletion, depreciation, amortization and impairment expense
45,577,788 7,251,087 Accretion of asset retirement obligation
81,495 72,394 Stock-based compensation 1,462,110 2,236,022 Change
in fair value of derivative instruments, net 12,070,025 (7,153,561)
Amortization of deferred rent expense (19,526) (7,496) Amortization
of deferred financing costs 467,776 388,675 Loss on sale of assets,
net 834,725 - Changes in operating assets and liabilities: Accounts
receivable 6,729,214 (6,962) Inventory 3,174,505 (1,686,240)
Prepaid expenses 180,062 242,370 Accounts payable (2,122,789)
(3,415,980) Revenue payable (1,561,380) 4,314,571 Accrued interest
559,649 949,351 Accrued expenses (278,000) 407,000 -------- -------
Net cash provided by operating activities 16,524,045 19,432,404
---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES Cash
paid for furniture, fixtures and other (2,297) (73,814) Cash paid
for acquisitions, development and exploration (8,666,306)
(29,465,037) Proceeds from sale of assets 500,000 7,500,000
Decrease in advances from joint interest owners (612,222)
(1,348,908) -------- ---------- Net cash used in investing
activities (8,780,825) (23,387,759) ---------- ----------- CASH
FLOWS FROM FINANCING ACTIVITIES Borrowings under line of credit
13,000,000 19,000,000 Repayment of borrowings (9,455,031)
(16,000,000) Exercise of options to purchase common stock -
1,161,284 --- --------- Net cash provided by financing activities
3,544,969 4,161,284 --------- --------- NET INCREASE IN CASH AND
CASH EQUIVALENTS 11,288,189 205,929 CASH AND CASH EQUIVALENTS:
BEGINNING OF PERIOD 1,053,216 1,843,425 --------- --------- END OF
PERIOD $12,341,405 $2,049,354 =========== ========== DATASOURCE:
Gasco Energy, Inc. CONTACT: Gasco Energy, Inc., Investor Relations,
+1-303-483-0044 Web Site: http://www.gascoenergy.com/
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