EXHIBIT 99.1
Gasco
- -----
Energy
For Immediate Release on February 27, 2006
GASCO ENERGY ANNOUNCES PRELIMINARY 2005
FINANCIAL AND OPERATIONAL RESULTS
- RECORD REVENUE GROWTH OF 369%
- TOTAL ASSETS UP 71%
- RECORD OPERATING CASH FLOW OF $2.1 MILLION
- PRODUCTION GROWTH OF 220%
- RESERVES INCREASE BY 86 % TO 76.7 BCFE
DENVER - February 27, 2006 - (PRNewswire) - Gasco Energy (AMEX: GSX) today
announced preliminary financial and operating results for the fourth quarter and
full-year ended December 31, 2005. The company expects to file its filing on
Form 10-K with the Securities and Exchange Commission this week.
Full-year 2005 Financial Results
For the year-ended December 31, 2005, Gasco reported a net loss attributable to
common shareholders of $71,000, or breakeven results of $0.00 per share, as
compared to a net loss for 2004 of $4.3 million, or $0.07 per share. All per
share figures are basic and diluted. Total revenues grew by 369% to a
company-record $16.9 million, as compared to $3.6 million in 2004. The growth in
total revenue is attributed to increased natural gas production and higher
prices received for sales of the company's natural gas.
Oil and gas sales for 2005 were a company-record $14.1 million as compared to
$3.1 million for the same period in 2004. The $10.9 million increase in oil and
gas sales during 2005 is comprised of $9.6 million related to the production
increase and $1.3 million related to the increase in commodity prices. Gathering
revenues from the company's pipeline constructed in 2004 grew to $1.4 million
from $0.1 million in 2004. The revenue growth is attributed to increased
throughput as well to a full-year of operations in 2005.
Gasco's total assets rose to a record $201.2 million at year end, up 71 percent
from $117.4 million at year-end 2004. Working capital at year-end 2005 was $86.0
million versus $52.7 million at year-end 2004.
Net cash provided by operating activities for 2005 was a record $2.1 million as
compared to a deficit of $0.9 million in 2004.
Fourth Quarter 2005 Financial Results
For the quarter-ended December 31, 2005, Gasco reported net income of $2.0
million, or $0.03 per share, as compared to a net loss for 2004 of $2.4 million,
or $0.03 per share. Total revenues grew by 621% to a company-record $8.3
million, as compared to $1.2 million in 2004. The growth in total revenue is
attributed to increased natural gas production and higher prices received for
sales of the company's natural gas. Oil and gas sales for the fourth quarter
2005 were a company-record $7.4 million as compared to $0.8 million for the same
period in 2004.
Record Quarterly and Annual Production
Estimated cumulative net production for the year-ended December 31, 2005 was
1,713 million cubic feet of natural gas equivalent (MMcfe), an increase of 220%
over full-year 2004 production of 536.0 MMcfe.
1
For the full year, the average prices received for Gasco's natural gas and
liquids increased to $8.16 per thousand cubic feet of gas (Mcf) and $56.91 per
barrel of liquid hydrocarbons. This compares to $5.79 per Mcf and $38.43 per
barrel for 2004. The company has no hedges in place.
Estimated cumulative net production for the quarter ended December 31, 2005 was
776.1 MMcfe, an increase of 59% over third quarter 2005 production of 489.3
MMcfe, and 488% above fourth quarter 2004's production of 132.0 MMcfe. Net
production increases are attributed to the completion of new wells and to a
higher average working interest in those wells partially offset by normal
production declines in existing wells.
For the fourth quarter of 2005, the average price received for sales of Gasco's
natural gas and liquids was $9.58 per Mcf and $58.37 per barrel of liquid
hydrocarbons. This compares to $5.82 per Mcf and $45.00 per barrel for the same
period in 2004.
Proved Reserves up 86% over 2004
Gasco's year-end, estimated total proved reserves were approximately 76.7
billion cubic feet of natural gas equivalent (Bcfe), comprised of 74.4 Bcf of
natural gas and 377,288 barrels of liquids. Gasco's total proved reserves grew
by 86% over year-end 2004's estimated total of 41.3 Bcfe. The company's reserve
mix is 97% natural gas and 3% liquid hydrocarbons. Liquids reserves include
condensate. Approximately 26% of total reserves are categorized as proved
developed, 74% were proved undeveloped. In accordance with SEC guidelines,
reserve estimates do not include any probable or possible reserves which may
exist for Gasco's properties.
Gasco's estimated, pre-tax future net cash flows discounted at 10% (commonly
known as the SEC PV-10 figure) for proved reserves at year end was $107.8
million The 2005 PV-10 calculation used net year-end commodity prices of $8.01
per Mcf of natural gas and $59.87 per barrel of crude oil. Reserve estimates are
engineered by independent reservoir engineering consultants, NSAI and conform to
the definition as set forth in the SEC Regulation S-X Part 210.4-10 (a) as
clarified by subsequent Commission Staff Accounting bulletins. The proved
reserves are also in accordance with Financial Accounting Standards Board
Statement No. 69 requirements.
Reserve Quantities Gas Oil Equivalents
Mcf Bbl Mcfe
Balance, December 31, 2004 39,700,156 274,074 41,344,600
Extensions and discoveries 49,217,928 222,943 50,555,586
Revisions of previous estimates (12,814,086) (109,093) (13,468,644)
Sales of reserves in place - - -
Purchases of reserves in place - - -
Production (1,648,870) (10,636) (1,712,686)
----------- -------- -----------
Balance 74,455,128 377,288 76,718,856
========== ======= ==========
Proved Developed Reserves
18,974,697 111,655 19,644,627
========== ======= ==========
Management Outlook
Commenting on the 2005 results, Gasco CEO and President, Mark Erickson said: "In
2005, we set records in production, revenue, reserves, wells drilled and other
metrics, but we look to 2006 as an even more important year for Gasco. Our
strong Uinta Basin net leasehold position continues to benefit Gasco and its
shareholders in a number of ways. We have much to keep us busy. Our initial $80
million 2006 capital budget, which we intend to fund through cash flow and our
existing cash position, targets 32 gross and 15 net wells in the Uinta, three
wells in Wyoming and also strategic infrastructure. One of the key opportunities
presented to Gasco is that we have created a project of size and substance that
we can exploit. A project of such magnitude requires talented people, services,
rigs and capital, all of which we have. With quality onshore oil and gas
properties in short supply, our ability to work in the Uinta for several years
going forward is truly a company-strength that I believe should be appreciated
by the Street and by industry. We also deliver investors potential upside in our
Wyoming projects. Should we prove commerciality in Wyoming, each of the
Riverbend benefits I described above can be applied to Wyoming."
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Teleconference Call
A conference call with investors, analysts and other interested parties is
scheduled for 10:30 a.m. EST on Tuesday, February 28, 2006 to discuss 2005
financial and operating results. You are invited to listen to the call which
will be broadcast live over the Internet at www.gascoenergy.com.
Date: Tuesday, February 28, 2006
Time: 10:30 a.m. EST
9:30 a.m. CST
8:30 a.m. MST
7:30 a.m. PST
Call:(866) 392-4171(US/Canada)and(706)634-6345(International),
passcode 5682033
Internet: Live and rebroadcast over the Internet: log on to
www.gascoenergy.com
Replay: Available through Thursday, March 2 at (800) 642-1687 (US/Canada)
and (706) 645-9291 (International) using passcode 5682033 and for 30
days at www.gascoenergy.com -------------------
[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-K to be filed this week.
About Gasco Energy
Gasco Energy, Inc. is a Denver-based natural gas and oil exploitation and
development company that focuses on natural-gas-rich prospects in the Rocky
Mountain area of the United States. The Company currently is active in the Uinta
Basin in Utah and controls acreage in the Greater Green River Basin of Wyoming.
To learn more, visit 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 the Company'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 the Company, 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 the Company'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 the
Company 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; and other risks described under "Risk Factors" in
Item 1. of the Company's 2004 filing on Form 10-K filed with the Securities and
Exchange Commission on March 16, 2005.
Contact for Gasco Energy, Inc.: Investor Relations: 303-483-0044
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GASCO ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
December 31,
-------------------------------------
2005 2004
ASSETS
CURRENT ASSETS
Cash and cash equivalents $62,661,368 $25,717,081
Restricted investment 10,139,000 3,535,055
Short-term investments 15,000,000 27,000,000
Accounts receivable
Joint interest billings 1,792,038 429,779
Revenue 3,115,154 615,265
Inventory 1,182,982 1,009,914
Prepaid expenses 645,554 458,555
----------- -----------
Total 94,536,096 58,765,649
----------- ----------
PROPERTY, PLANT AND EQUIPMENT, at cost
Oil and gas properties (full cost method)
Proved mineral interests 83,972,300 29,811,483
Unproved mineral interests 13,323,712 18,449,330
Gathering assets 4,831,050 2,469,580
Equipment 5,148,388 89,900
Furniture, fixtures and other 175,607 158,590
----------- ----------
Total 107,451,057 50,978,883
----------- ----------
Less accumulated depreciation, depletion and amortization (6,986,662) (2,247,032)
----------- -----------
Total 100,464,395 48,731,851
------------ ----------
NON-CURRENT ASSETS
Restricted investment 3,565,020 6,778,040
Deferred financing costs 2,634,461 3,092,628
----------- -----------
6,199,481 9,870,668
----------- -----------
TOTAL ASSETS $ 201,199,972 $ 117,368,168
============= =============
The accompanying notes are an integral part of the
consolidated financial statements.
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GASCO ENERGY, INC.
CONSOLIDATED BALANCE SHEETS (continued)
December 31,
--------------------------------------
2005 2004
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 907,772 $ 1,447,149
Revenue payable 1,658,141 334,765
Advances from joint interest owners 2,476,080 891,999
Accrued interest 844,098 695,139
Accrued expenses 2,571,047 2,677,352
---------- ----------
Total 8,457,138 6,046,404
---------- ---------
NONCURRENT LIABILITIES
5.5% Convertible Senior Notes 65,000,000 65,000,000
Asset retirement obligation 223,947 108,566
Deferred rent expense 78,727 -
---------- ----------
Total 65,302,674 65,108,566
---------- ----------
COMMITMENTS AND CONTINGENCIES (NOTES 5, 13, 14)
STOCKHOLDERS' EQUITY
Series B Convertible Preferred stock - $.001 par value; 20,000 shares
authorized; 763 shares issued and outstanding with a liquidation preference
of $335,720 in 2005 and 2,255 shares issued and
outstanding with a liquidation preference of $992,200 in 2004 1 2
Common stock - $.0001 par value; 300,000,000 shares authorized;
85,041,492 shares issued and 84,967,792 outstanding in 2005;
70,590,909 shares issued and 70,517,209 shares outstanding in 2004 8,504 7,059
Additional paid in capital 157,540,755 76,346,463
Deferred compensation (443,579) (512,440)
Accumulated deficit (29,535,226) (29,497,591)
Less cost of treasury stock of 73,700 common shares (130,295) (130,295)
------------ -----------
Total 127,440,160 46,213,198
------------ -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 201,199,972 $ 117,368,168
=============- =============
The accompanying notes are an integral part of the
consolidated financial statements.
5
GASCO ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Year Ended December 31,
-------------------------------------------------
2005 2004 2003
REVENUES
Gas $ 13,462,977 $ 2,928,689 $ 1,206,741
Oil 605,330 195,199 56,702
Gathering 1,411,259 143,326 -
Interest income 1,383,859 325,001 11,987
---------- --------- ---------
Total 16,863,425 3,592,215 1,275,430
---------- --------- ---------
OPERATING EXPENSES
Lease operating 870,593 638,267 337,278
Gathering operations 1,166,841 267,450 -
Depletion, depreciation, amortization and asset retirement
liability accretion 4,843,439 1,102,575 552,923
General and administrative 5,987,019 4,191,978 2,819,675
Interest expense 4,033,168 1,597,775 82,392
--------- --------- ---------
Total 16,901,060 7,798,045 3,792,268
---------- --------- ---------
LOSS BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE (37,635) (4,205,830) (2,516,838)
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE - - (9,687)
---------- ----------- -----------
NET LOSS (37,635) (4,205,830) (2,526,525)
Preferred stock dividends (33,347) (140,853) (304,172)
--------- ----------- -----------
NET LOSS ATTRIBUTABLE TO COMMON
STOCKHOLDERS $(70,982) $ (4,346,683) $ (2,830,697)
========= ============= =============
PER COMMON SHARE DATA - BASIC AND DILUTED:
Loss before cumulative effect of change in accounting principle $ (0.00) $ (0.07) $ (0.07)
Cumulative effect of change in accounting principle - - -
-------- ------- ------
NET LOSS PER COMMON SHARE - BASIC AND DILUTED $ (0.00) $ (0.07) $ (0.07)
========= ========= =========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING - BASIC AND DILUTED 72,152,977 63,194,223 41,262,778
============= ============= ==========
The accompanying notes are an integral part of the
consolidated financial statements.
6
GASCO ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
---------------------------------------------------
-------------- ---------------- --- ---------------
2005 2004 2003
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (37,635) $(4,205,830) $(2,526,525)
Adjustment to reconcile net loss to net cash used in operating activities
Depreciation, depletion and impairment expense 4,829,403 1,085,912 541,128
Accretion of asset retirement obligation 14,036 16,663 11,795
Stock compensation 744,235 415,483 94,317
Non-cash rent expense 48,727
Landlord incentive payment 30,000
Amortization of beneficial conversion feature - 161,514 6,945
Amortization of deferred financing costs 458,167 294,993 7,758
Cumulative effect of change in accounting principle - - 9,687
Changes in operating assets and liabilities:
Accounts receivable (3,862,148) (545,681) (403,219)
Inventory (173,068) (1,009,914) -
Prepaid expenses (186,999) 59,992 (320,059)
Accounts payable (679,797) (600,723) 164,303
Revenue payable 1,323,376 91,252 185,215
Advances from joint interest owners 1,584,081 891,999 -
Accrued interest 148,959 695,139 -
Accrued expenses (2,106,305) 1,743,832 36,741
----------- --------- -----------
Net cash provided by (used in) operating activities 2,135,032 (905,369) (2,191,914)
----------- --------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for acquisitions, development and exploration (55,181,914) (25,736,066) (5,283,426)
Cash paid for furniture, fixtures and other (106,790) (64,053) (3,264)
Proceeds from property sales 828,102 4,463,161 -
Investment in short-term investments - (27,000,000) -
Proceeds from the sale of short term investments 12,000,000 - -
Cash designated as restricted (6,816,967) (10,313,095) (250,000)
Cash undesignated as restricted 3,426,042 250,000 250,000
------------- ----------- -----------
Net cash used in investing activities (45,851,527) (58,400,053) (5,286,690)
------------ --------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of common stock 79,693,764 21,500,001 2,777,292
Issuance of convertible notes - 65,000,000 -
Exercise of options to purchase common stock 1,275,743 33,336 -
Cash paid for offering costs (275,378) (4,636,828) (266,721)
Preferred dividends (33,347) (61,973) (4,092)
Proceeds from sale of preferred stock - - 4,862,840
Proceeds from sale of convertible debentures - - 2,500,000
Repayment of note payable - - (1,400,000)
Proceeds from 16b violation - 106,858 1,332
----------- --------- ----------
Net cash provided by financing activities 80,660,782 81,941,394 8,470,651
---------- ---------- ----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 36,944,287 22,635,972 992,047
CASH AND CASH EQUIVALENTS:
BEGINNING OF PERIOD 25,717,081 3,081,109 2,089,062
---------- ----------- ----------
END OF PERIOD $62,661,368 $25,717,081 $ 3,081,109
=========== =========== ===========
The accompanying notes are an integral part of the
consolidated financial statements.
7
GASCO ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended December 31,
2005 2004
PRODUCTION INFORMATION
Gas production 750,392 mcf 126,860 mcf
Gas price $9.58 per mcf $5.82 per mcf
Oil production 4,289 bbl 868 bbl
Oil price $58.37 per bbl $45.00 per bbl
REVENUES
Gas $ 7,194,049 $738,829
Oil 250,367 39,061
Gathering 483,884 143,326
Interest income 404,151 233,531
--------- ---------
Total 8,332,451 1,154,747
--------- ---------
OPERATING EXPENSES
Lease operating 272,478 42,214
Gathering operations 482,521 267,450
Depletion, depreciation and amortization 2,492,183 317,714
General and administrative 2,064,922 1,558,762
Interest expense 1,008,290 1,368,959
--------- ---------
Total 6,320,394 3,555,099
--------- ---------
NET INCOME 2,012,057 (2,400,352)
Preferred stock dividends (5,914) (17,506)
---------- -----------
NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS $ 2,006,143 $(2,417,858)
=========== ============
NET INCOME PER COMMON SHARE - BASIC AND DILUTED $ 0.03 $ (0.03)
======= ========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
BASIC 76,656,206 70,517,209
========== ----------
DILUTED 77,135,806 70,517,209
========== ----------
8