EXHIBIT 99.1
Gasco
- -------
Energy
For Release at 4:45 PM EDT on Wednesday, August 1, 2007
GASCO ENERGY ANNOUNCES SECOND QUARTER 2007
FINANCIAL AND OPERATIONAL RESULTS
DENVER - August 1, 2007 - (PRNewswire) - Gasco Energy (AMEX: GSX) today reported
its financial and operating results for the quarter ended June 30, 2007.
Financial Results
For the second quarter 2007, Gasco reported a net loss of $66.3 million, or
$0.70 per share, as compared to a net loss for the same period in 2006 of $53
million, or $0.62 per share. All per share figures are basic and diluted.
Included in the quarter's operating expenses is a non-cash charge of $64.3
million related to an impairment of the carrying value of oil and gas
properties. Before the impairment charge, Gasco would have posted a net loss of
$2 million or $0.02 per share.
The charge also results in a decrease in total assets. At June 30, 2007 Gasco's
total assets were $118 million, as compared to $165 million at December 31,
2006.
Under the full cost method of accounting, capitalized oil and gas property costs
less accumulated depletion and net of deferred income taxes (full cost pool) may
not exceed an amount equal to the present value, discounted at 10%, of estimated
future net revenues from proved oil and gas reserves less the future cash
outflows associated with the asset retirement obligations that have been accrued
in the balance sheet plus the cost, or estimated fair value, if lower of
unproved properties and the costs of any properties not being amortized, if any.
Should the full cost pool exceed this ceiling, an impairment is recognized. The
present value of estimated future net revenues is computed by applying current
oil and gas prices to estimated future production of proved oil and gas reserves
as of period-end, less estimated future expenditures to be incurred in
developing and producing the proved reserves assuming the continuation of
existing economic conditions. However, subsequent commodity price increases may
be utilized to calculate the ceiling value.
Commenting on the impairment, Gasco CEO and President Mark Erickson said: "This
is an accounting requirement to which we must adhere as a full-cost reporting
company. As of June 30, 2007 oil and natural gas prices were $54.09 per barrel
and $3.90 per thousand cubic feet (Mcf). Included in the charge is $10.2 million
attributed to our Wyoming leasehold. The natural gas price at which we would not
have been required to take a ceiling test impairment is $5.82 per Mcf."
Total revenues were up 6% to $6.1 million, as compared to $5.8 million in the
second quarter 2006. The increase in total revenue is attributed to higher oil
and gas production offset in part by lower commodity prices received and reduced
interest income during the second quarter 2007.
Oil and gas sales for the second quarter 2007 were $5.1 million as compared to
$4.6 million for the same period in 2006, an increase of 11%, attributed to
higher production volumes. Gathering revenues grew to $0.5 million from $0.4
million in 2006. The revenue growth is attributed to increased natural gas
throughput in the system.
Lease operating expense (LOE) for the quarter decreased to $0.8 million from
$0.9 million in the second quarter 2006. The decrease in LOE is attributed to
reduced water hauling charges as a result of a fully operational evaporation pit
to handle water disposal in an environmentally responsible manner. Also, fewer
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workovers in the 2007 period offset in part by modestly higher production taxes
contributed to the reduced LOE for the quarter as compared to the same quarter
in 2006. On a per-unit basis, LOE for the second quarter 2007 was $0.71 per
thousand cubic feet of natural gas equivalent (Mcfe) as compared to $1.00 per
Mcfe for the same period in 2006.
Due to increased throughput volumes, gathering expense increased to $0.5 million
from $0.4 million in the same period in 2006.
The Company also lowered its general and administrative expense (G&A) to $2.2
million in the second quarter of 2007 from $2.6 million in the same period in
2006. The 15% decrease in G&A expense for the quarter is primarily due to lower
consulting and legal expenses partially offset by the hiring of additional
personnel. G&A expense includes $0.9 million in expenses in the 2007 period
related to employee share-based compensation, a non-cash item. On a per-unit
basis, G&A for the second quarter 2007 was $1.97 per Mcfe as compared to $3.00
per Mcfe for the same period in 2006. Exclusive of stock-based compensation
expense, G&A for the second quarter was $1.19 per Mcfe.
Depletion, depreciation and amortization (DD&A) was $3.4 million for the second
quarter of 2007 as compared to $2.9 million for the same period in 2006.
Six-Month Period
Gasco reported a net loss attributable to common shareholders for the six-months
ended June 30, 2007 of $66.5 million, or $0.74 per share, as compared to a net
loss for the second half of 2006 of $53.2 million, or $0.62 per share. Included
in both periods' operating expenses are the non-cash charges of $64 million and
$51 million, respectively, related to the impairment of the carrying value of
oil and gas properties as discussed above.
Total revenues decreased 4% to $12.5 million for the first half of 2007, as
compared to $13 million in the same period in 2006. For the first half of 2007,
gathering system revenues and interest income accounted for $1 million and $0.3
million, respectively.
Oil and gas sales for the first half of 2007 were $11 million, as compared to
$10.5 million for the same period in 2006. Net cash provided by operating
activities for the first half of 2007 was $4.7 million as compared to $4.3
million for the same period in 2006.
At June 30, 2007, cash and investments were $9 million as compared to $23
million at December 31, 2006.
Long-term debt was $12 million at June 30, 2007 as compared to zero at December
31, 2006. The Company currently has a $250 million credit facility with
JPMorgan, of which $37 million is available for borrowing capacity and $12.0
million is drawn.
Record Production Volumes
For the second quarter of 2007, Gasco posted production of 1,124 million cubic
feet of natural gas equivalent (MMcfe), versus 863 MMcfe for the second quarter
2006, an increase of 30%. The average price received for sales of Gasco's
natural gas and liquids was $4.31 per Mcf and $49.34 per barrel of liquid
hydrocarbons for the second quarter 2007. This compares to $5.18 per Mcf and
$59.40 per barrel for the same period in 2006.
In the first half of 2007, Gasco posted record first-half production of 2,175
MMcfe versus 1,764 MMcfe for the first half of 2006, a 23% increase. For the
first-half 2007, the average price received for sales of Gasco's natural gas and
liquids was $4.88 per Mcf of gas and $47.71 per barrel of liquid hydrocarbons.
This compares to $5.86 per Mcf and $58.36 per barrel for the same first half
period in 2006. The Company has no hedges in place.
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Subsequent Events
- Mancos Well Update. All five of the Mancos frac stages have now been
completed. The composite frac plugs are currently being drilled out.
The Federal 14-31 had an initial sales rate of 3,473 Mcf/d, with
associated frac fluid, after the remaining four Mancos stages were
completed The initial Mancos stage flowed at 1,132 Mcf/d, and is
currently below a bridge plug which allowed for the repairs to the
well bore. More detailed flow rates and pressures will be obtained
once all of the plugs are drilled out.
- Drilling Partner. In a separate news release today, Gasco announced
that a subsidiary of NFR Energy, LLC has agreed to participate in a
30-well drilling program operated by Gasco. NFR will earn 67% of
Gasco's interest in each well by paying NFR's proportionate share of
the cost of the well plus certain fees and thereby earning a
proportionate interest in the 40-acre drilling location.
- Seismic update. Approximately 100 linear miles of high resolution 2-D
seismic have been shot by CGG Veritas in the eastern portion of the
Riverbend Project area, and are currently being processed.
Additionally, about 90 linear miles are expected to be shot by the end
of the third quarter. Seismic is expected to help delineate structural
features and provide further definition of the Blackhawk marine
trends.
Teleconference
A conference call with investors, analysts and other interested parties is
scheduled for 10:30 a.m. EDT on Thursday, August 2, 2007 to discuss second
quarter 2007 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: Thursday, August 2, 2007
Time: 10:30 a.m. EDT
9:30 a.m. CDT
8:30 a.m. MDT
7:30 a.m. PDT
Call: (866) 392-4171 (US/Canada) and (706) 634-6345 (International),
passcode 6997672
Internet: Live and rebroadcast over the Internet: log on to
www.gascoenergy.com
Replay: Available through Saturday, August 4, 2007 at (800) 642-1687
(US/Canada) and(706) 645-9291 (International) using passcode
6997672 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-Q dated August 1, 2007.
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.
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
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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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GASCO ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
2007 2006
ASSETS
CURRENT ASSETS
Cash and cash equivalents $4,797,465 $12,876,879
Restricted investment 1,787,500 3,575,000
Short-term investments 2,000,000 6,000,000
Accounts receivable
Joint interest billings 3,674,287 5,955,186
Revenue 1,863,191 3,081,850
Inventory 1,175,491 1,297,498
Prepaid expenses 477,357 644,490
----------- -----------
Total 15,775,291 33,430,903
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PROPERTY, PLANT AND EQUIPMENT, at cost
Oil and gas properties (full cost method)
Proved mineral interests 205,192,954 159,407,481
Unproved mineral interests 9,200,692 12,538,067
Wells in progress 1,248,697 5,215,252
Gathering assets 13,812,061 12,703,346
Facilities and equipment 9,137,623 8,492,632
Furniture, fixtures and other 264,773 241,009
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Total 238,856,800 198,597,787
Less accumulated depletion, depreciation, amortization
and impairment (139,054,631) (68,945,779)
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Total 99,802,169 129,652,008
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OTHER ASSETS
Deferred financing costs 2,112,390 2,371,507
------------ -----------
TOTAL ASSETS $ 117,689,850 $ 165,454,418
============= =============
The notes contained in Form 10-Q filed on August 1, 2007 are an
integral part of the consolidated financial statements.
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GASCO ENERGY, INC.
CONSOLIDATED BALANCE SHEETS (continued)
(Unaudited)
June 30, December 31,
2007 2006
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $4,174,366 $16,228,056
Revenue payable 1,596,503 1,678,427
Advances from joint interest owners 1,126,241 2,955,376
Accrued interest 869,312 844,102
Accrued expenses 290,000 595,000
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Total 8,056,422 22,300,961
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NONCURRENT LIABILITIES
5.5% Convertible Senior Notes 65,000,000 65,000,000
Long-term debt 12,000,000 -
Asset retirement obligation 1,027,652 908,543
Deferred rent expense 68,103 72,993
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Total 78,095,755 65,981,536
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STOCKHOLDERS' EQUITY
Common stock - $.0001 par value; 300,000,000 shares
authorized; 96,150,959 shares issued and 96,077,259
outstanding as of June 30, 2007 and 86,173,715 shares
issued and 86,100,015 outstanding as of December 31, 2006 9,615 8,617
Additional paid-in capital 183,482,162 162,646,592
Accumulated deficit (151,823,809) (85,352,993)
Less cost of treasury stock of 73,700 common shares (130,295) (130,295)
----------- ----------
Total 31,537,673 77,171,921
----------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 117,689,850 $ 165,454,418
=============- =============
The notes contained in Form 10-Q filed on August 1, 2007 are an
integral part of the consolidated financial statements.
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GASCO ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
June 30,
-----------------------------------------
2007 2006
REVENUES
Gas $ 4,535,627 $ 4,312,905
Oil 588,580 297,167
Gathering 472,381 369,256
Rental income 343,875 -
Interest income 171,007 805,000
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Total 6,111,470 5,784,328
--------- ---------
OPERATING EXPENSES
Lease operating 802,712 866,749
Gathering operations 552,231 371,583
Depletion, depreciation and amortization 3,367,397 2,943,531
Impairment 64,300,000 51,000,000
General and administrative 2,220,578 2,589,007
Interest expense 1,163,194 1,049,541
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Total 72,406,112 58,820,411
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NET LOSS $ (66,294,642) $(53,036,083)
============== =============
NET LOSS PER COMMON SHARE - BASIC AND DILUTED $ (0.70) $ (0.62)
========== ==========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING-
BASIC AND DILUTED 94,468,912 85,267,977
========== ==========
The notes contained in Form 10-Q filed on August 1, 2007 are an integral
part of the consolidated financial statements.
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GASCO ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Six Months Ended
June 30,
------------------------------------------
2007 2006
REVENUES
Gas $ 10,007,565 $ 10,010,020
Oil 969,347 529,729
Gathering 959,047 852,395
Rental income 343,875 -
Interest income 271,367 1,651,706
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Total 12,551,201 13,043,850
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OPERATING EXPENSES
Lease operating 1,398,974 1,396,764
Gathering operations 906,951 759,376
Depletion, depreciation and amortization 5,703,515 5,770,073
Impairment 64,300,000 51,000,000
General and administrative 4,546,655 5,273,043
Interest expense 2,165,922 2,057,834
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Total 79,022,017 66,257,090
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NET LOSS (66,470,816) (53,213,240)
Preferred stock dividends - (1,393)
------------ ------------
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS $ (66,470,816) $ (53,214,633)
============== ==============
NET LOSS PER COMMON SHARE - BASIC AND DILUTED $ (0.74) $ (0.62)
========== ==========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING - BASIC AND DILUTED 90,210,121 85,630,039
========== ==========
The notes contained in Form 10-Q filed on August 1, 2007 are an integral
part of the consolidated financial statements.
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GASCO ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
------------------------------------
2007 2006
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(66,470,816) $ (53,213,240)
Adjustment to reconcile net loss to net cash used in
operating activities
Depletion, depreciation, amortization and impairment expense 69,959,073 56,756,570
Accretion of asset retirement obligation 44,442 13,503
Stock-based compensation 1,835,766 2,276,065
Amortization of deferred rent (4,890) (1,368)
Amortization of deferred financing costs 259,117 241,048
Changes in operating assets and liabilities:
Accounts receivable 3,499,558 (436,722)
Inventory 122,007 (2,606,071)
Prepaid expenses 167,133 158,071
Accounts payable (2,522,430) 1,160,286
Revenue payable (81,924) (446,064)
Advances from joint interest owners (1,829,135) 488,297
Accrued interest 25,210 -
Accrued expenses (305,000) (47,702)
--------- ---------
Net cash provided by operating activities 4,698,111 4,342,673
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for furniture, fixtures and other (23,764) (59,071)
Cash paid for acquisitions, development and exploration (49,735,532) (33,692,479)
Increase in short-term investments - (15,000,000)
Proceeds from sale of short-term investments 4,000,000 -
Cash designated as restricted - (71,436)
Cash undesignated as restricted 1,787,500 8,351,500
------------ ------------
Net cash used in investing activities (43,971,796) (40,471,486)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 19,300,000 -
Borrowings under line of credit 12,000,000 -
Cash paid for stock offering costs (105,729) -
Preferred dividends - (1,393)
Exercise of options to purchase common stock - 1,275,985
Cash paid for debt issuance costs - (240,262)
---------- ----------
Net cash provided by financing activities 31,194,271 1,034,330
---------- ----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (8,079,414) (35,094,483)
CASH AND CASH EQUIVALENTS:
BEGINNING OF PERIOD 12,876,879 62,661,368
---------- ----------
END OF PERIOD $4,797,465 $ 27,566,885
========== ============
The notes contained in Form 10-Q filed on August 1, 2007 are an integral
part of the consolidated financial statements.
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