Gasco Energy Announces Amended Credit Agreement
February 02 2010 - 4:15PM
PR Newswire (US)
- Borrowing Base to be Reduced to $16 million at April 1, 2010 from
Proceeds of Midstream Sale - Requirement for Special
Re-determination Eliminated - Company Immediately Commences Its
2010 Utah Well Completion Program DENVER, Feb. 2
/PRNewswire-FirstCall/ -- Gasco Energy (NYSE Amex: GSX) today
announced an amendment to its Credit Agreement led by JPMorgan.
Amended Credit Agreement On February 1, 2010 Gasco entered into the
Ninth Amendment to the Company's Credit Agreement with the lenders
(the "Lenders") thereunder pursuant to which the Credit Agreement
was amended, among other things, to no longer require special
redeterminations of the Company's borrowing base. Borrowing base
redeterminations will now revert to the regular redetermination
schedule of every six months on or about May 1 and November 1 each
year. Additionally, the interest rate margin (as more fully
described below) was increased by 0.25% effective February 1, 2010.
Furthermore, the Ninth Amendment includes a reduction of the
Company's borrowing base to $16 million from $35 million to be
effective April 1, 2010. The Company anticipates using a portion of
the expected $23 million in gross cash proceeds from its recently
announced asset sales (expected to close in the first quarter of
2010) to repay the outstanding loans in an amount sufficient to
conform to the reduced borrowing base. As of January 31, 2010, the
Company had cash on hand of approximately $11 million and had
outstanding borrowings under its credit facility of approximately
$35 million. 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 2.75% (for periods in which the Company has
utilized less than 50% of the borrowing base) to 3.75% (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
1.75% (for periods in which the Company has utilized less than 50%
of the borrowing base) to 2.75% (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. Management Comment
Commenting on Gasco's Amended Credit Agreement, Gasco's president
and chief financial officer King Grant said: "The sale of our
midstream asset will provide us with the financial flexibility to
pay down a portion of our credit facility and return to the normal
twice-yearly redetermination schedule. We are carrying a cash and
equivalents balance of $11 million and, after applying a portion of
the cash on hand and the anticipated proceeds from asset sales,
expect to have approximately $10 million in borrowing availability
under our credit facility at the end of the first quarter, allowing
for continued development of our Riverbend project assets. Stronger
natural gas prices in the Rockies, which we expect to continue
through the winter heating season, provide attractive economics for
us to begin re-completion operations in Utah immediately. We expect
that flush natural gas production from these up-hole zones will
boost production and cash flow. Gasco has an inventory of 34
operated wells with up-hole recompletion opportunities and also
have two Upper Mancos wells awaiting initial completion activities.
We expect to have final Board approval for our 2010 capital budget
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/. 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 the consummation
of recently announced asset sales on a timely basis; 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 of Gasco Energy, Inc.,
+1-303-483-0044 Web Site: http://www.gascoenergy.com/
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