EXHIBIT 99.1
Gasco
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Energy
For Release at 8:30 AM EST on Thursday, January 11, 2007
GASCO ENERGY PROVIDES OPERATIONS UPDATE
SETS QUARTERLY AND ANNUAL PRODUCTION RECORDS
EXITS DECEMBER AT 12 MMCFE/D NET
DENVER - (PR Newswire) - January 11, 2007 - Gasco Energy, Inc. (AMEX: GSX) today
provided an interim operations update on its Riverbend Project in Utah's Uinta
Basin and on its Wyoming Projects in the Green River Basin.
Record Quarterly and Annual Production
Estimated cumulative net production for the quarter ended December 31, 2006 was
1,092 million cubic feet equivalent (MMcfe), an increase of 15% over third
quarter 2006 production of 947 MMcfe, and 41% above fourth quarter 2005's
production of 776 MMcfe. Estimated cumulative net production for the year-ended
December 31, 2006 was 3,803 MMcfe, an increase of 122% over full-year 2005
production of 1,713 MMcfe. Gasco's exit rate at year-end 2006 was approximately
12 MMcfe per day net to the Company's interest. The Riverbend Project
constitutes 100% of Gasco's gross and net production.
The Company attributes the rise in sequential production volumes to increased
well completion activity during the fourth quarter and full-year 2006 which more
than off-set normal production declines.
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Three-months Three-months Full-year
Ended Ended Ended
Dec.31* Sept. 30, Dec.31,* Dec. 31, Dec.31,* Dec.31,
2006 2006 % Change 2006 2005 % Change 2006 2005 % Change
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Natural Gas / MMcf 1,048 913 15% 1,048 750 40% 3,670 1,649 123%
Oil / MBbls 7.3 5.7 28% 7.3 4.3 70% 22.1 10.6 108%
Natural Gas Equivalents / MMcfe 1,092 947 15% 1,092 776 41% 3,803 1,713 122%
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*Includes Q406 and FY06 preliminary production estimates. Company estimates may
differ from the actual results to be reported in its forthcoming filing on Form
10-K for the year-ended December 31, 2006.
Drilling Activity
During the fourth quarter of 2006, Gasco spudded eight gross wells (5.0 net) and
reached total depth on nine gross wells (6.2 net). The Company is currently
running three drilling rigs on its Riverbend project and expects to take
delivery of a fourth rig, a Nabors new-build, during March 2007. Year-to-date in
Utah, Gasco has spudded 30 gross wells (18.4 net), and reached total depth on 29
gross wells (18.0 net).
Completion Activity
During the fourth quarter of 2006, Gasco conducted initial completion operations
on 11 wells (7.5 net) and re-entered two wells (1.3 net) to complete behind-pipe
pay zones.
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Gasco Energy Operations Summary
Period
Q406 FY06
Utah
Spudded 8 30
Reached TD 9 29
Completed 11 26
Wyoming
Spudded 0 2
Reached TD 0 0
Suspended 0 1
WIP 1 1
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For the full-year 2006, Gasco conductedinitial completion operations on 26 wells
(16.5 net) and re-entered 16 wells (8.0 net) to complete behind-pipe pay zones.
Gross and net data provided for wells spudded and wells to total depth include
three non-operated wells in which Gasco participated in the third quarter of
2006 with a 25% working interest in each well. Two of the wells spudded during
the third quarter of 2006 were in Gasco's Wyoming Projects.
This is in line with the revised target of 28 to 30 gross wells (15 net) in Utah
that Gasco reiterated at the end of the third quarter after reducing its Utah
drilling fleet to three rigs from four rigs. One rig was dropped due to poor
performance and excessive downtime for maintenance and repairs.
At December 31, 2006, Gasco operated 88 gross wells with two additional wells
awaiting completion activities. The Company currently has an inventory of 16
wells with up-hole recompletions.
Mancos Shale Test - Riverbend Project, Utah
Gasco also today announced that it will spud a deep shale-gas well to test the
productive potential of the Wasatch, upper and lower Mesaverde and Blackhawk
formations, the Mancos Shale, Juana Lopez and Dakota / Morrison sandstones. The
Company permitted the Federal 14-31-9-19 (75% WI - GSX operates) to a proposed
total depth of 16,650 feet and expects to spud this well before the end of
January 2007. The preliminary well cost estimate to drill and complete the well
is $7.3 million ($5.5 million net to Gasco). Estimated time to reach total depth
is 75 days from spud.
The Federal 14-31-9-19 is located in the core Riverbend Blackhawk Spring Canyon
marine trend where Gasco has the most geological control and continues to have
consistent and favorable results. Gasco's geological and engineering team
expects to encounter numerous stacked over-pressure natural gas pay zones
throughout the wellbore. Increased activity by industry targeting deeper pay
zones is ongoing in the Uinta Basin with encouraging preliminary results.
Geological modeling indicates that the Mancos Shale and associated sandstone
members are prevalent under much of Gasco's Uinta Basin leasehold where the
natural gas resource can be more efficiently recovered using the proven, modern
drilling and completion technologies currently benefiting Rockies operators.
Riverbend Gas Gathering - Riverbend Project, Utah
Gasco recently completed the linking of the Wilkin Ridge and West Desert
gathering systems to its existing 50 MMcfd gas processing facility which began
operations in June 2006. Now, up to 95% of produced volumes are processed in the
plant, ensuring that production will meet pipeline specifications reducing the
likelihood of any future curtailments. The Company currently operates nearly 100
miles of gathering system along with the processing facility.
Riverbend Environmental Assessment Approved - Riverbend Project, Utah
Gasco recently received approval of its Riverbend Environmental Assessment (EA).
The approved EA includes 45 proposed wells within the Spring Canyon marine trend
of the Blackhawk Formation. The EA should provide for accelerated permitting
approvals from the Bureau of Land Management as the environmental and cultural
studies of the 45 proposed well sites have already been completed.
Daniel Anticline Prospect - Sublette County, Wyoming
Gasco and its partner Hunt Petroleum are currently drilling through 14,800 feet
on the Cottonwood Ranch 24-21 (25% WI; Gasco operates), which is permitted to
test natural gas potential in the Lance, Mesaverde, Ericson, Rock Springs and
Hilliard Shale formations to a proposed total depth of 16,500 feet. The Company
expects to reach total depth on the well sometime in the first quarter of 2007.
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Management Comment
Mark Erickson, Gasco's CEO and President said: "The strength and viability of
the Company are excellent both on financial and operational fronts. We have a
strong cash position along with existing cash flows from operations. We enter
2007 with momentum generated by what we expect will have been the best
operational quarter in Gasco's history. Substantial contributions and
improvements continue to be implemented by our technical and operational staff.
Their efforts are helping to lower drilling costs by reducing drilling days, and
by lowering completion costs through aggressive bidding of services.
"During the quarter: we reached total depth on a Blackhawk well in a
Company-record 17 days, and we now average 25 days based on recent wells;
reduced fracturing and open hole logging costs on average by $350,000; increased
sequential net production by 15%; and grew gas production to an exit rate of 12
MMcfe/d. These significant achievements are exactly what we would have
anticipated in the field lifecycle at Riverbend. By consistently lowering
per-well investment, we can confidently say we are moving into the development
stage of the Riverbend project. The operations team continues to work diligently
to further drive costs out of the system, ultimately improving per-well
economics in our plays.
"Additionally, we are well positioned to continue production growth in 2007 with
our large inventory of low-cost up-hole recompletion opportunities. The addition
of a new fourth rig along with improving the quality and performance of our
existing rig fleet should also contribute to helping grow production."
2006 Results
Gasco expects to announce its full-year 2006 results on March 1, 2007. The
Company will schedule a conference call to discuss financial and operational
results, which will be announced at a later date.
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 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 2005 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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