UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 20, 2004
GASCO ENERGY, INC.
(Exact name of registrant as specified in its charter)
Nevada 0-26321 98-0204105
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
14 Inverness Drive East, Building H, Suite 236, Englewood, Colorado 80112
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 483-0044
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Item 2.01. Completion of Acquisition or Disposition of Assets.
On September 20, 2004, Gasco Energy, Inc. (the "Company") completed the
second and final part of a disposition of a net profits interest of between
18.75% and 25% in a total of 8 oil and gas wells in the Company's Riverbend
exploitation area in Utah. The purchasers in this transaction were Red Oak
Capital Management, LLC, MBG, LLC and MBGV Partition, LLC, ("Red Oak Investors")
each of which is unrelated to the Company.
The closing of the second portion of this transaction resulted in the sale
by the Company of a net profits interest of between 18.75% and 25% in each of
the following Company-operated wells: Wilkin Ridge State 12-32-10-17, Federal
44-20-9-19 and Federal 24-20-9-19. The Company received cash in the amount of
$1,390,960 which represented the purchase price for the second portion of the
transaction less adjustments of $96,123 for net revenue minus lease operating
expense for the properties from June 2004 and $49,953, representing a commission
to Red Oak Capital Management, the purchasers' financial advisor, which the
Company agreed to pay. The total consideration received by the Company for both
portions of this transaction was cash in amount of $4,314,984, net of
adjustments and commissions.
As previously announced, the completion of the first portion of this
transaction resulted in the sale by the Company of a net profits interest of
between 18.75% and 25% in each of the following Company-operated wells: Gate
Canyon State 31-21-11-15, Federal 11-21-9-19, Federal 11-22-9-19, Lytham
22-22-9-19 and Federal 32-31-9-19.
We are the operator for each of the 8 wells in this transaction and maintain
a working interest in these properties of between 75% and 100%. Our economic net
revenue interest in these wells, which has been reduced by other net profits
interests, prior to this transaction, was between 36% and 49% in the properties
associated with these wells prior to this transaction. As of August 31, 2004,
seven of the eight wells were producing with aggregate gross and net daily
production of approximately 2,800 Mcf and 1,100 Mcf, respectively.
Item 9.01. Financial Statements and Exhibits
(a) None.
(b) Pro Forma Condensed Consolidated Balance Sheet as of June 30,
2004 and Pro Forma Condensed Consolidated Statements of
Operations for the Six Months Ended June 30, 2004 and for the
year ended December 31, 2004.
(c) Exhibits:
2.1 Net Profits Purchase Agreement between Gasco Production
Company, Red Oak Capital Management, LLC, MBG, LLC and MBGV
Partition, LLC, dated August 6, 2004. Incorporated by
reference to Exhibit 2.1 of the Company's current report on
Form 8-K filed September 7, 2004.
2.2 Purchase Supplement to Net Profits Purchase Agreement
between Gasco Production Company, Red Oak Capital
Management, LLC, MBG, LLC and MBGV Partition, LLC, dated
August 20, 2004. Incorporated by reference to Exhibit 2.2 of
the Company's current report on Form 8-K filed September 7,
2004.
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GASCO ENERGY, INC.
October 13, 2004 By: /s/ W. King Grant
-----------------
W. King Grant
Chief Financial Officer
3
GASCO ENERGY, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2004
(Unaudited)
Disposition
As Reported Adjustments Pro Forma
ASSETS
Current Assets $16,629,790 4,314,984 a $ 20,944,774
Property, Plant and Equipment, net 35,593,693 (4,314,984) a 31,278,709
Other Assets 122,593 122,593
------------ ------------- -----------
TOTAL ASSETS $ 52,346,076 $ - $ 52,346,076
============ =========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities $ 3,491,796 $ 3,491,796
Noncurrent Liabilities 2,563,627 2,563,627
Stockholders' Equity
Series B Convertible Preferred Stock 5 5
Common Stock 6,463 6,463
Additional Paid In Capital 73,808,707 73,808,707
Deferred Compensation (837,399) (837,399)
Accumulated Deficit (26,556,828) (26,556,828)
Treasury Stock (130,295) (130,295)
------------ ---------- ------------
Total Stockholders' Equity 46,290,653 46,290,653
------------ ---------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $52,346,076 $ $52,346,076
=========== =========== ===========
See accompanying pro forma notes to the condensed
financial information.
4
GASCO ENERGY, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2004
(Unaudited)
Disposition
As Reported Adjustments Pro Forma
Total Revenues $1,577,078 (343,756) b $ 1,233,322
Total Costs and Expenses 2,842,145 (62,220) b 2,884,927
105,002 c
Net Loss (1,265,067) (386,538) (1,651,605)
Preferred stock dividends (112,886) (112,886)
---------- ----------- ------------
Net Loss Attributable to Common Stockholders $ (1,377,953) $ (386,538) $ (1,764,491)
============= =========== =============
Net Loss per Common Share - Basic and Diluted $ (0.02) $ (0.01) $ (0.03)
========= ========= =========
Weighted Average Common Shares
Outstanding - Basic and Diluted 59,271,942 59,271,942
========== ==========
See accompanying pro forma notes to the condensed
financial information.
5
GASCO ENERGY, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2003
(Unaudited)
Disposition
As Reported Adjustments Pro Forma
Total Revenues $1,275,430 (52,582) b $1,222,848
Total Costs and Expenses 3,792,268 (6,891) b 3,828,551
43,174 c
Loss Before Cumulative Effect of Change in
Accounting Principle (2,516,838) (88,865) (2,605,703)
Cumulative Effect of Change in Accounting Principle (9,687) - (9,687)
----------- --------- ----------
Net Loss (2,526,525) (88,865) (2,615,390)
Preferred stock dividends (304,172) (304,172)
----------- -------- -----------
Net Loss Attributable to Common Stockholders $ (2,830,697) $ (88,865) $ (2,919,562)
============= =========== =============
Per Common Share Data - Basic and Diluted Loss
before cumulative effect ofchange in accounting
Principle $ (0.07) $ - $ (0.07)
Cumulative effect of change in accounting principle - - -
---------- ------- ---------
Net Loss per Common Share - Basic and Diluted $ (0.07) $ - $ (0.07)
========= ======= =========
Weighted Average Common Shares
Outstanding - Basic and Diluted 41,262,778 41,262,778
========== ==========
See accompanying pro forma notes to the condensed
financial information.
6
GASCO ENERGY, INC.
PRO FORMA NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
(Unaudited)
NOTE 1 - PRO FORMA ADJUSTMENTS
On September 20, 2004, Gasco Energy, Inc. (the "Company") completed the second
and final part of a disposition of a net profits interest of between 18.75% and
25% in a total of 8 oil and gas wells in the Company's Riverbend exploitation
area in Utah (the "Disposition"). The first part of the Disposition was
completed on August 20, 2004. The total cash consideration received by the
Company for both portions of this transaction was cash in the amount of
$4,314,984. The purchase price for the Disposition was based on an effective
date of November 2003. Under generally accepted accounting principles, the
transaction was recorded based on the closing dates. Therefore, revenue of
$396,338 and lease operating expense of $69,111 attributable to the interests in
the properties sold between the effective date and the closing date are
recognized by the Company. The purchase price was accordingly reduced by the
amount of the revenues and increased by the amount of the lease operating
expenses. In connection with the Disposition, the Company agreed to pay a 3.25%
financing fee to Red Oak Investors for all amounts invested by Red Oak
Investors. At the closing of the Disposition $148,176 was paid to Red Oak
Investors by the Company. The Company is recording these costs as financing fees
and will expense such amounts as future investments are made by Red Oak
Investors. As such, total consideration received was:
Purchase price $4,790,387
Revenue (396,338)
Lease operating expense 69,111
Financing costs (148,176)
-----------
Cash received $4,314,984
==========
Under the agreement, Red Oak Investors are to reimburse the Company for the
costs incurred (excluding leasehold costs, which are the sole responsibility of
the Company) by the Company in the future development of the properties in
proportion to the Red Oak Investors' interest in the properties. Depletion
incurred to date on the property interests sold has been insignificant.
The accompanying unaudited condensed pro forma consolidated balance sheet as of
June 30, 2004 sets forth the pro forma adjustments as if the Disposition had
occurred on June 30, 2004. The accompanying unaudited condensed pro forma
consolidated statement of operations for the six months ended June 30, 2004 and
for the twelve months ended December 31, 2003 presents the results of operations
of the Company as if the Disposition had occurred at the beginning of the period
presented. These statements are not necessarily indicative of future operations
or the actual results that would have occurred if the Disposition had been
consummated at the beginning of the period indicated. The pro forma financial
statements should be read in conjunction with the historical consolidated
financial statements of the Company.
7
The accompanying unaudited pro forma condensed consolidated financial
information reflects the following adjustments:
(a) To reflect the disposition of net profits interest of between 18.75% and
25% in a total of 8 oil and gas wells in the Company's Riverbend
exploitation area in Utah and the payment of the cash purchase price.
(b) To reflect the revenue and lease operating expense related to the
Disposition.
(c) To reflect the payment of financing costs associated with the Disposition.