EXHIBIT 99.1
Gasco
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Energy
For Release at 8:30 AM EDT on July 11, 2007
GASCO ENERGY UPDATES UINTA BASIN ACTIVITY
DENVER - (PR Newswire) - July 11, 2007 - Gasco Energy, Inc. (AMEX: GSX) today
provided an interim operations update on its Riverbend Project in Utah's Uinta
Basin.
Record Quarterly Production
Estimated cumulative net production for the quarter ended June 30, 2007 was
1,135 million cubic feet equivalent (MMcfe), an increase of 7.9% over first
quarter 2007 production of 1,051 MMcfe, and 32% above second quarter 2006's
production of 863 MMcfe. Utah operations constitute approximately 100% of
Gasco's net production.
The Company reported an increase in sequential production volumes despite its
decision to delay completion activity on its recently drilled wells due entirely
to seasonally low natural gas prices received in the Rockies. Gasco has elected
to also curtail production from some of its existing gas wells and will bring
this production back online when prices improve. Curtailed and
facilities-constrained net volumes for the quarter are estimated to be
approximately 100 MMcf or 1.1 MMcf/d. Relief from lower regional gas prices is
expected upon additional takeaway capacity exiting Rockies basins, specifically
with the January 2008 anticipated in-service date of Phase I of the Rockies
Express pipeline.
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Gasco Energy Net Production Detail*
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Three-months Three-months Six-months
Ended Ended Ended
June 30, March 31, June 30, June 30, June 30, June 30,
2007 2007 % Change 2007 2006 % Change 2007 2006 % Change
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Natural Gas / MMcf 1,069 1,000 6.9% 1,069 833 28.3% 2,069 1,709 21.0%
Oil / MBbls 10.9 8.4 29.8% 10.9 5.0 118.0% 19.3 9.1 112.0%
Natural Gas
Equivalents / MMcfe 1,135 1,051 7.9% 1,135 863 31.5% 2,186 1,764 23.9%
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*Includes Q207 preliminary production estimates. Company estimates may
differ from the actual results to be reported in its forthcoming filing on
Form 10-Q for the quarter-ended June 30, 2007.
Drilling Activity
During the second quarter of 2007, Gasco spudded eight gross wells (5.6 net) and
reached total depth (TD) on six gross wells (4.4 net) in Utah. The Company is
currently running three drilling rigs on its Riverbend project. Average time to
TD on the last 10 Gasco-operated wells was 18.6 days. The operations team
continues to record excellent results in the ongoing initiative to reducing
drilling days and other project costs that are within its control. Year-to-date,
Gasco spudded 13 gross operated wells (10.1 net) and reached total depth on 13
gross wells (9.4 net). Gasco also participated in one outside-operated well
(0.25 net), and had its second well (Non-op; GSX carried for 20% WI) in Nevada
begin drilling.
Completion Activity
Also during the quarter, Gasco conducted initial completion operations on two
wells (1.5 net), and re-entered no wells to complete behind-pipe pay zones.
There were also no outside-operated wells completed in the quarter. During the
first six months of 2007, Gasco conducted initial completion operations on nine
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operated wells (6.2 net) and re-entered one operated well (1.0 net) to complete
behind-pipe pay zones. The Company also participated in the completion of one
outside operated well (0.25 net). At June 30, 2007, Gasco operated 98 gross
producing wells with eight additional wells awaiting initial completion
activities, including the Mancos test, the Federal #14-31. The Company currently
has an inventory of 24 operated wells with up-hole recompletions. Gasco
continues to build its recompletion inventory in advance of what the Company
believes could be a stronger Rockies commodity price environment.
Mancos Shale Test - Riverbend Project, Utah
Completion operations commenced on Monday, June 25, 2007 on the Gasco-operated
Federal #14-31 (GSX: 100% WI), a deep gas test drilled to total depth of 16,763
feet to evaluate the productive potential of the Wasatch, upper and lower
Mesaverde, Blackhawk, Mancos and Dakota formations. The deeper Dakota interval
had numerous sands that were gas charged but tight, and was determined to be
non-commercial. A cast iron plug was set in the Dakota allowing for completion
activities in the Mancos Shale.
During initial completion work, the lower-most Mancos Shale frac stage, the
first of five stages in the completion design, was successfully hydraulically
fractured. The completed interval flowed back frac fluids and delivered first
gas to sales at an initial turn-on rate of 1.132 million cubic feet of natural
gas per day while continuing to flow back frac fluid.
While attempting to complete the second Mancos Shale stage, a flow-through frac
plug became stuck in the hole at approximately 4,590 feet. While working to
remove the stuck plug, the completion vendor accidentally fired the perforating
guns at about 4,580 feet preventing completing additional stages until well
remediation is successfully concluded. The stuck frac plug has since been
extricated from the hole. Well remediation is underway with plans to cut-off the
4 1/2 inch casing below the perforation damage and pull out of the hole with the
damaged string. The accidentally perforated casing joint will be replaced with
an overshot joint especially designed to maintain 17,000 psi. The well is
currently shut-in while well-bore remediation work is underway.
Upon completion of the remediation process, which is anticipated to take a
month, the Company expects full wellbore integrity to be restored allowing the
completion to proceed as originally planned. The technique being employed has
been successfully utilized previously by industry, and Gasco engineers believe
it to have a high probability of success. In the event that the remediation
design does not fully restore the wellbore, Gasco believes that the vendor
responsible for the damage will ultimately bear full financial responsibility
for the error resulting in this problem, including repairs and remediation.
Mark Erickson, Gasco's President and CEO, said: "We are very encouraged by the
initial flow rates from the lone Mancos Shale interval in the Federal #14-31.
However, the data is inconclusive until we can successfully fracture stimulate
all five Mancos stages. Based on open-hole log analysis, it is our initial
assessment that most of the remaining Mancos zones appear to be of higher
quality than the first completion stage. We believe that results to date confirm
our geologic model for the deeper gas pay and look forward to resuming
completion activities on the well once the remediation work is completed."
Erickson continued: "With respect to shut-in production, given the nature of our
tight-gas reservoirs, we are not forced to give our gas away at these lower
prices when we have wells that can essentially act as storage fields. The
current shut-in volumes can entirely be produced into sales as prices in the
Rockies improve with winter, seasonal demand and improved takeaway capacity in
the Rockies comes on line. We expect to have a large inventory of completion and
recompletion opportunities that will allow us to rapidly increase production
once pipeline issues are resolved."
Q207 Results
Gasco expects to announce its second quarter results on August 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 petroleum exploitation and
development and production company engaged in locating and developing
hydrocarbons resources, primarily in the Rocky Mountain region. To learn more,
visit www.gascoenergy.com.
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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 2006 amended Form 10-K filed with the Securities and
Exchange Commission on April 5, 2007.
Contact for Gasco Energy, Inc.: Investor Relations: 303-483-0044
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