EXHIBIT 99.1
Gasco
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Energy
For Release at 8:30 AM EDT on Wednesday, August 2, 2006
GASCO ENERGY PROVIDES ESTIMATES OF PROVED AND PROBABLE RESERVES
ON PART OF ITS RIVERBEND PROJECT
DENVER - (PR Newswire) - August 2, 2006 - Gasco Energy, Inc. (AMEX: GSX) today
provided results of its recent estimated probable reserve analysis, also known
as 2-P reserve estimates. Gasco is providing these results to provide additional
insight into the future potential of Gasco's Riverbend Project in Utah's Uinta
Basin. In accordance with SEC guidelines, only proved reserves can be included
in documents filed with the SEC. Gasco's previously reported 2005 year-end
proved reserves were 76.7 billion cubic feet equivalent (Bcfe).
Estimates of probable reserves were prepared by independent reservoir
engineering consultants, Netherland Sewell and Associates, the same firm that
engineers Gasco's year-end proved reserves.
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Gasco Energy, Inc. Proved & Probable Comparison
Gasco Net Interest
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MBbls MMcf MMcfe
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Proved + Probable 1,958 269,043 280,789
12/31/2004
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Proved + Probable 2,318 329,787 343,692
6/30/2006
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% Change 18% 23% 22%
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The analysis encompasses approximately 10,000 gross (6,600 net) acres of Gasco's
Riverbend Project representing less that 10% of the company's total leasehold in
this area. At December 31, 2005, Gasco owned or controlled approximately 124,000
gross acres and 74,000 net acres in the Riverbend Project. The analysis does not
include petroleum resource potential over the remaining 90% of Gasco's Riverbend
acreage.
Gasco Energy, Inc. Proved + Probable Reserve Reconciliation
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MMcf MBbl MMcfe
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Beginning Balance (12/31/04) 269,043 1,958 280,789
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Production 3,358 20 3,476
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Additions 196,639 1,379 204,914
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Revisions (139,253) (1,039) (145,487)
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Ending Balance (6/30/06) 329,787 2,318 343,692
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The additions are principally the result of the success we have seen in the
Spring Canyon trend. The negative revisions were seen in West Desert where we
have not drilled since 2004 and have not benefited from our current completion
techniques, and in Wilkin Ridge where we have experienced drilling and
production casing cost overruns, as previously disclosed. Gasco believes that
these problems may be overcome in the future.
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The 2-P analysis was completed using technical certainty of natural gas recovery
of the proved and probable reserves in place.
Management Comment
"We continue to make significant progress in reserve growth and investment
reduction. We have concentrated on close-in drilling in the Riverbend area to
take advantage of historically high commodity prices. In spite of this, we were
able to add 205 Bcfe net proved and probable reserves since December 31, 2004.
The substantial additions and revisions are a result of the limited amount of
drilling and production history we have on this project. We have drilled 51
wells out of a potential 3,000 locations and have production history of less
than five years on wells that are projected to produce for more than 30 years.
We have a very large acreage position with a limited drilling budget for
step-out wells. In 2006, we have dedicated a larger portion of our budget to
step-out drilling in the Wilken Ridge area where we have identified a
high-potential trend."
Definition - Reserves
Reserves are those quantities of crude oil, natural gas, and natural gas liquids
that are anticipated to be commercially recovered from known accumulations from
a given date forward. Reserve estimates involve varying degrees of uncertainty,
depending largely on the amount of reliable geological and engineering data
available at the time of the estimate and the interpretation of the data. The
relative degree of uncertainty can be conveyed by broadly placing reserves into
one of two categories -- proved or unproved.
Two basic methods are commonly used by industry to prepare reserve estimates --
the deterministic and probabilistic methods. The deterministic method yields a
single best estimate of reserves based on known geological, engineering and
economic data. The probabilistic method uses known geological, engineering and
economic data to generate a range of estimated reserve quantities and their
associated probabilities. Each reserve classification gives an indication of the
probability of recovery.
Definition - Proved Reserves
Proved reserves are those quantities of crude oil, natural gas, and natural gas
liquids which geological and engineering data demonstrate with reasonable
certainty to be recoverable in future years from known reservoirs under existing
economic and operating conditions. Proved developed reserves include proved
developed producing reserves and proved developed behind-pipe reserves. Proved
developed producing reserves are only those reserves expected to be recovered
from existing completion intervals in existing wells. Proved developed
behind-pipe reserves are those reserves expected to be recovered from existing
wells where a relatively minor capital expenditure is required for recompletion.
Proved undeveloped reserves are those reserves expected to be recovered from new
wells on undrilled acreage or from existing wells where a relatively major
expenditure is required for recompletion.
Definition - Unproved Reserves
Unproved reserves are considered less certain to be recovered than proved
reserves. Estimates of unproved reserves are based on geologic and/or
engineering data similar to that used to estimate proved reserves, but
technical, contractual, economic considerations and/or SEC, state or other
regulations preclude such reserves from being classified as proved. Unproved
reserves may be further sub-classified as probable and possible to denote
progressively increasing uncertainty of recoverability. Importantly, estimation
of unproved reserves may assume future economic conditions different than those
prevailing at the time of the estimate. The effect of possible future
improvements in economic conditions and technological developments can be
expressed by allocating appropriate quantities of reserves to the probable and
possible classifications.
Definition - Probable Reserves
Probable reserves are estimates of unproved reserves which analysis of
geological and engineering data suggests are more likely than not to be
recoverable. For estimates of probable reserves based on probabilistic methods,
there should be at least a 50% probability that the quantities of reserves
actually recoverable will equal or exceed the sum of the estimated proved plus
probable reserves.
Probable reserves may include:
1. reserves in formations known to be productive where SEC regulations
limit recognition of proved reserves to direct-offset locations one
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legal spacing-unit away from a producing well;
2. reserves anticipated to be proved by normal step-out drilling where
subsurface control is currently inadequate to classify these
reserves as proved;
3. reserves in formations that appear to be productive based on
well-log characteristics but lack core data or other definitive
tests to indicate productive potential and which are not analogous
to producing or proved reserves in the area;
4. incremental reserves attributable to infill drilling that could have
been classified as proved if closer statutory spacing had been
approved at the time of the estimate;
5. reserves attributable to improved recovery methods that have been
established by repeated commercially successful applications where:
a. a project or pilot is planned but not in operation; and
b. rock, fluid and reservoir characteristics appear favorable for
commercial application;
6. reserves in an area of the formation that appears to be separated
from the proved area by faulting and where geologic interpretation
indicates that the area is structurally higher than the proved area;
7. reserves attributable to future workover, treatment, re-treatment,
change of equipment, or other mechanical procedures, where such
mechanical procedure has not been proved successful in wells which
exhibit similar behavior in analogous reservoirs; and/or
8. incremental reserves in proved reservoirs where an alternative
interpretation of performance or volumetric data indicates more
reserves are present than can be classified as proved.
Definition - Possible Reserves
Possible reserves are estimates of unproved reserves which analysis of
geological and engineering data suggests are less likely to be recovered than
probable reserves. For estimates of possible reserves based on probabilistic
methods, there should be at least a 10% probability that the quantities of
reserves actually recovered will equal or exceed the sum of the estimated proved
plus probable plus possible reserves.
Possible reserves may include:
1. reserves which, based on geological interpretations, could possibly
extend beyond areas classified as probable;
2. reserves in formations that appear to be petroleum bearing based on
log and core analysis but may not be productive at commercial rates;
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3. incremental reserves attributed to infill drilling that are subject
to technical uncertainty;
4. reserves attributed to improved recovery methods where:
a. a project or pilot is planned but not in operation; and
b. rock, fluid and reservoir characteristics are such that there
is a reasonable doubt that the project will be commercial;
and/or
5. reserves in an area of the formation that appears to be separated
from the proved area by faulting and where geological interpretation
indicates the area is structurally lower than the proved area.
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
The SEC has generally permitted oil and gas companies, in filings made with the
SEC, to disclose only proved reserves that a company has demonstrated by actual
production or conclusive formation tests to be economically and legally
producible under existing economic and operating conditions. We use the terms
"probable" and "possible" reserves or other descriptions of volumes of reserves
potentially recoverable through additional drilling or recovery techniques that
the SEC's guidelines may prohibit us from including in filings with the SEC.
These estimates are by their nature more speculative than estimates of proved
reserves and accordingly are subject to substantially greater risk of being
actually realized by the company.
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
the Company's Annual Report on Form 10-K filed with the Securities and Exchange
Commission on March 3, 2006.
Contact for Gasco Energy, Inc.: Investor Relations: 303-483-0044
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