Gasco Energy Announces Agreement to Sell Its Riverbend Project Midstream Assets
February 01 2010 - 8:01AM
PR Newswire (US)
-- Non-core Assets Monetized for $23 Million in Cash Proceeds --
Proceeds Used for Debt Reduction and Improved Liquidity DENVER,
Feb. 1 /PRNewswire-FirstCall/ -- Gasco Energy (NYSE Amex: GSX)
today announced that it has entered into an asset purchase
agreement with Monarch Natural Gas, LLC, a portfolio company of
Metalmark Capital Partners, in which Gasco has agreed to sell
substantially all of its Riverbend midstream assets, and its salt
water evaporative facilities, for total cash consideration of $23
million subject to certain adjustments. The closing of the
transactions is subject to the satisfaction of a number of
conditions. Gasco expects closing to occur during the first quarter
of 2010. J.P. Morgan Securities acted as financial advisor to Gasco
in connection with the sale. Included in the transaction is the
Company's 100% interest in its wholly owned gathering system and
related assets in the Uinta Basin of Utah. The asset purchase
agreement includes 105 miles of large-diameter mainline gathering
lines, related compression equipment, a 55,000 MMBtu natural gas
processing plant, dehydrators and other above-ground facilities in
addition to the salt water evaporative facilities. As part of the
asset purchase agreements, Gasco will enter into a transition
services agreement whereby Gasco will provide certain services
relating to the operation of the midstream assets to Monarch for a
six-month term commencing at the time of closing. Also at closing,
Gasco and Monarch will enter into separate gas gathering and salt
water disposal services agreements with Monarch which in the case
of the gas gathering agreement provides for an initial gathering
rate of $0.435 per MMBtu, plus 5% of the proceeds from the sale of
natural gas and natural gas liquids. Commenting on the midstream
asset sale, King Grant, Gasco's President & Chief Financial
Officer said: "The proceeds of this transaction with Monarch will
allow us to strengthen our balance sheet through using the proceeds
to repay a portion of our outstandings under our $35 million
reserve-based revolving line of credit. At the same time the gas
gathering agreement that we are entering into as part of this
transaction will assure us that our natural gas will be able to
move to market. After closing, Monarch, whose management team
consists of skilled and veteran operators, will process and move
our gas to market at what we believe to be competitive rates. Our
Board of Directors is currently evaluating our 2010 capital
expenditure budget for Riverbend Mancos shale completions and
recompletions, which we expect to announce, along with 2009 proved
reserves, in the coming weeks." 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/. About Monarch Natural Gas LLC Monarch
Natural Gas LLC, with offices in Austin, Dallas, TX , Denver, CO,
and Houston, TX, is a private energy company focused on making
investments in the midstream sector including gathering,
processing, treating, transportation, storage and marketing of
natural gas, natural gas liquids (NGLs), oil and related
hydrocarbons. The principals of Monarch have worked together since
the early 1990s in a number of operating companies the experience
from which it will draw upon to identify, execute, provide
strategic direction to and if needed operate new investments in
midstream companies and assets. Monarch's management team will be
responsible for sourcing and executing investments in acquisitions
and development projects, in which their experience and knowledge
will provide strategic guidance and will, where necessary, take
charge of day-to-day operations. About Metalmark Capital Metalmark
Capital is a leading private equity firm whose principals have a
long track record of successful investing in targeted sectors, with
particular focus and competence in energy and natural resources,
industrials and healthcare. Metalmark Capital seeks to build
long-term value through active and supportive partnerships with the
companies and management teams in which they invest. Metalmark
Capital is an investment center of Citi Capital Advisors. For more
information, please visit http://www.metalmarkcapital.com/. This
press release does not constitute an offering of interests in any
fund or partnership managed by Metalmark Capital. If and when an
investment opportunity is structured, all investors must obtain and
carefully read the related confidential offering memorandum and any
amendments or supplements thereto. 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. DATASOURCE: Gasco
Energy, Inc. CONTACT: Investor Relations for Gasco Energy, Inc.:
+1-303-483-0044; or Greg Sales for Monarch Natural Gas LLC,
+1-512-732-2306 Web Site: http://www.gascoenergy.com/
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