EXHIBIT 99.1
Gasco
- ------
Energy
For Release at 5:30 PM EDT on Thursday, November 1, 2007
GASCO ENERGY ANNOUNCES THIRD QUARTER 2007
FINANCIAL AND OPERATING RESULTS
DENVER - November 1, 2007 - (PRNewswire) - Gasco Energy (AMEX: GSX) today
reported its financial and operating results for the quarter ended September 30,
2007.
For the third quarter 2007, Gasco reported a net loss of $35.1 million, or $0.37
per share, as compared to a net loss for the same period in 2006 of $0.8
million, or $0.01 per share. All per share figures are basic and diluted.
Included in the quarter's operating expenses is a non-cash charge of $32.8
million related to an impairment of the carrying value of oil and gas
properties. Excluding the impairment, Gasco would have posted a net loss of $2.4
million or $0.03 per share.
Commenting on the quarter, Gasco CEO and President Mark Erickson said: "The
quarter was difficult as natural gas prices at the Wyoming Pool were as low as
$0.15 per million British Thermal Units (MMBtu). Gasco and other companies in
the region are having drilling success which has created more supply than the
pipelines can handle, forcing prices down. As previously indicated, we have
delayed some initial completions and uphole recompletions in anticipation of
stronger prices. We've accumulated an inventory of more than 38 completion
projects which will allow us to accelerate our production, as prices improve. At
the same time, we've continued our three rig drilling program, continued to
improve the economics on our wells by drilling faster and prepared for what we
believe will be an improved commodity market in 2008 when the Rockies Express
pipeline is expected to be in service. We are already seeing stronger prices
with recent Wyoming Pool spot prices above $3.00 per MMBtu and we expect higher
prices as we move into the winter heating season. Consequently, we have
scheduled continuous completion operations through the end of the year."
Third Quarter Results
Total revenues for the quarter were $4.0 million, as compared to $6.1 million in
the third quarter 2006. Gas sales revenue declined 42% to $2.6 million as the
average price dropped to $2.89 per Mcf from $5.00 per Mcf in the third quarter
of 2006. Natural gas volumes were up slightly compared to the same period in
2006, although Gasco voluntarily shut-in an average of approximately 1.4 MMcf
per day of production during the third quarter of 2007 due to the low prices.
Oil sales revenue was up 64% on a 72% increase in oil sales volumes and
gathering revenue declined 26%, to $0.4 million, primarily due to a decrease in
the volume of non-equity gas resulting from curtailed production during the
quarter. Gasco also recorded $0.4 million in rental income on its drilling rig
which is contracted to a third party through April 2008.
Lease operating expense (LOE) for the quarter increased to $1.0 million from
$0.8 million in the third quarter 2006 as the number of wells grew from 72 to
103. On a per unit basis LOE increased to $1.05 per Mcfe from $0.79 per Mcfe in
the third quarter of 2006. The per unit increase may be partially attributed to
the aforementioned curtailment of production, which spreads the fixed component
of LOE over a smaller number of units. We also saw an increase in repairs and
operating costs associated with returning our oil wells to production, increased
charges on our outside operated wells and a substantial increase in the cost of
contract pumpers. In an effort to control LOE as our well count grows, Gasco
replaced contract pumpers with company pumpers at the beginning of October 2007.
Gathering operations expense declined $0.6 million compared to the third quarter
2006 as a result of a change in the methodology for calculating the cost of
compressor fuel implemented in the third quarter of 2006.
Depletion, depreciation and amortization (DD&A) was $2.1 million for the third
quarter of 2007 as compared to $2.2 million for the same period in 2006. Gasco
also recorded a non-cash impairment of its oil and gas properties of $32.8
million for the quarter. Under the full cost method of accounting the full cost
pool, which consists of net capitalized oil and gas property costs, cannot
exceed the ceiling value of the reserves, which is the present value discounted
at 10%. Prices in effect at the end of the period are used to calculate the
impairment; however, subsequent price increases, prior to the filing of the
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10-Q, may be used to reduce the total impairment. The price on September 30,
2007 was $0.345 per Mcf. Had the price not improved subsequent to September 30,
2007 Gasco would have recorded an impairment of $65.6 million.
The Company reported general and administrative expense (G&A) of $1.9 million in
the third quarter of 2007 versus $1.8 million in the same period in 2006. G&A
expense includes $0.6 million of non-cash, stock-based compensation expense. On
a per-unit basis, G&A for the third quarter 2007 was $1.91 per Mcfe as compared
to $1.87 per Mcfe for the same period in 2006.
Nine-Month Period
Gasco reported a net loss attributable to common shareholders for the
nine-months ended September 30, 2007 of $101.6 million, or $1.11 per share, as
compared to a net loss for the first nine months of 2006 of $54.0 million, or
$0.63 per share. Included in both periods' operating expenses are the non-cash
charges of $97.1 million and $51.0 million, respectively, related to the
impairment of the carrying value of oil and gas properties.
Total revenues decreased 13% to $12.6 million for the first nine months of 2007,
as compared to $14.6 million in the same period in 2006. Year-to-date gathering
system revenues and rental income accounted for $1.3 million and $0.7 million,
respectively. Interest income was $0.4 million for the nine months.
Natural gas sales for the nine months were $12.6 million with an average sales
price of $4.26 per Mcf versus sales of $14.6 million and an average price of
$5.56 per Mcf during the same period in 2006. Oil sales for the first nine
months were $1.5 million at an average price of $50.67 per barrel compared to
$0.9 million and $58.74 per barrel during the same period last year. LOE for the
first nine months of 2007 was $2.4 million ($0.77 per Mcfe) compared to $2.1
million ($0.79 per Mcfe) for the same period in 2006. G&A expense was $6.4
million ($2.03 per Mcfe) compared to $7.0 million ($2.60 per Mcfe) in the first
nine months of 2006. Net cash provided by operating activities for the first
nine months of 2007 was $17.6 million as compared to $9.1 million for the same
period in 2006.
At September 30, 2007, cash and investments were $9.2 million as compared to
$22.5 million at December 31, 2006.
Long-term debt, exclusive of convertible notes, was $3 million at September 30,
2007 as compared to zero at December 31, 2006. The Company currently has a $250
million credit facility with JPMorgan, of which $40 million is available for
borrowing capacity and $3.0 million is drawn.
Production Volumes
For the third quarter of 2007, Gasco produced 975 million cubic feet of natural
gas equivalents (MMcfe) and curtailed an estimated 130 MMcfe. This compares to
947 MMcfe produced during the third quarter 2006 when the Company was not
curtailing any production. For the nine months ended September 30, 2007 Gasco
produced 3,149 MMcfe versus 2,711 MMcfe for the comparable period in 2006, a 16%
increase. Curtailed volumes were approximately 230 MMcfe during the first nine
months in 2007 and zero during 2006.
Subsequent Events
- Mancos Update. Since the end of the quarter, Gasco completed two
Mancos wells. The Federal 32-20-9-19 was completed in the upper 300
feet of the Mancos and the Federal 21-19-9-19 was completed in the
upper 1,950 feet of the Mancos. Both wells are cleaning up and flowing
gas. Based on preliminary results, the flowrates and pressures are
similar to the Company's first Mancos test, the Federal 14-31. Gasco
has also drilled the State 21-32b-9-19 into approximately the upper
1,900 feet of the upper Mancos and is awaiting completion. This well
encountered similar geologic characteristics as the Company's previous
three Mancos penetrations. Gasco spudded two more Mancos tests in
October and expects to reach total depth on both wells during
November. The Company is now drilling upper Mancos tests in less than
20 days from the bottom of surface casing, the same amount of time as
the shallower Spring Canyon wells. The Company's fastest Mancos test
was drilled in 16 days to a depth of 14,250 feet.
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- Seismic Update. All of the Company's high resolution 2-D seismic has
been shot and processed. The data is currently being brought in-house
to begin working.
Teleconference
A conference call with investors, analysts and other interested parties is
scheduled for 10:30 a.m. EDT on Friday, November 2, 2007 to discuss third
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: Friday, November 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 19415722
Internet: Live and rebroadcast over the Internet: log on to
www.gascoenergy.com
-------------------
Replay: Available through Sunday, November 4, 2007 at (800) 642-1687
(US/Canada) and (706) 645-9291 (International) using passcode
19415722 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 November 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
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)
September 30, December 31,
2007 2006
ASSETS
CURRENT ASSETS
Cash and cash equivalents $7,471,167 $12,876,879
Restricted investment 1,787,500 3,575,000
Short-term investments - 6,000,000
Accounts receivable
Joint interest billings 2,448,648 5,955,186
Revenue 1,264,168 3,081,850
Inventory 999,182 1,297,498
Prepaid expenses 266,587 644,490
----------- -----------
Total 14,237,252 33,430,903
----------- ----------
PROPERTY, PLANT AND EQUIPMENT, at cost
Oil and gas properties (full cost method)
Proved mineral interests 204,554,713 159,407,481
Unproved mineral interests 12,465,419 12,538,067
Wells in progress 679,581 5,215,252
Gathering assets 14,514,568 12,703,346
Facilities and equipment 9,591,170 8,492,632
Furniture, fixtures and other 274,693 241,009
----------- -----------
Total 242,080,144 198,597,787
Less accumulated depletion, depreciation,
amortization and impairment (173,949,066) (68,945,779)
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Total 68,131,078 129,652,008
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OTHER ASSETS
Deposit 139,500 -
Deferred financing costs 1,982,832 2,371,507
--------- ---------
Total 2,122,332 2,371,507
--------- ---------
TOTAL ASSETS $ 84,490,662 $ 165,454,418
============ =============
The notes contained in Form 10-Q filed on November 1, 2007 are an
integral part of the consolidated financial statements.
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GASCO ENERGY, INC.
CONSOLIDATED BALANCE SHEETS (continued)
(Unaudited)
September 30, December 31,
2007 2006
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $4,102,641 $16,228,056
Revenue payable 1,502,490 1,678,427
Advances from joint interest owners 10,803,566 2,955,376
Accrued interest 1,750,595 844,102
Accrued expenses 327,000 595,000
----------- ----------
Total 18,486,292 22,300,961
----------- ----------
NONCURRENT LIABILITIES
5.5% Convertible Senior Notes 65,000,000 65,000,000
Long-term debt 3,000,000 -
Asset retirement obligation 981,143 908,543
Deferred rent expense 64,348 72,993
---------- ----------
Total 69,045,491 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 9,639 8,617
Additional paid-in capital 184,050,069 162,646,592
Accumulated deficit (186,970,534) (85,352,993)
Less cost of treasury stock of 73,700 common shares (130,295) (130,295)
------------ ----------
Total (3,041,121) 77,171,921
------------ ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 84,490,662 $ 165,454,418
============- =============
The notes contained in Form 10-Q filed on November 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
September 30,
-----------------------------------------
2007 2006
REVENUES
Gas $ 2,642,799 $ 4,563,576
Oil 554,891 336,963
Gathering 374,127 511,360
Rental income 354,562 -
Interest income 110,670 646,834
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Total 4,037,049 6,058,733
--------- ---------
OPERATING EXPENSES
Lease operating 1,024,063 749,214
Gathering operations 458,241 1,065,658
Depletion, depreciation and amortization 2,082,408 2,206,328
Impairment 32,790,000 -
General and administrative 1,858,566 1,768,788
Interest expense 970,496 1,055,504
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Total 39,183,774 6,845,492
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NET LOSS $ (35,146,725) $(786,759)
============== ==========
NET LOSS PER COMMON SHARE - BASIC AND DILUTED $ (0.37) $ (0.01)
========== ==========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING-
BASIC AND DILUTED 95,696,066 85,609,137
========== ==========
The notes contained in Form 10-Q filed on November 1, 2007 are an integral
part of the consolidated financial statements.
6
GASCO ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Nine Months Ended
September 30,
--------------------------------------------
2007 2006
REVENUES
Gas $ 12,650,364 $ 14,573,596
Oil 1,524,238 866,692
Gathering 1,333,174 1,363,755
Rental income 698,437 -
Interest income 382,037 2,298,540
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Total 16,588,250 19,102,583
---------- ----------
OPERATING EXPENSES
Lease operating 2,423,037 2,145,978
Gathering operations 1,365,192 1,825,034
Depletion, depreciation and amortization 7,785,923 7,976,401
Impairment 97,090,000 51,000,000
General and administrative 6,405,221 7,041,831
Interest expense 3,136,418 3,113,338
----------- ----------
Total 118,205,791 73,102,582
----------- ----------
NET LOSS (101,617,541) (53,999,999)
Preferred stock dividends - (1,393)
------------ -----------
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS $(101,617,541) $ (54,001,392)
============= ==============
NET LOSS PER COMMON SHARE - BASIC AND DILUTED $ (1.11) $ (0.63)
========== ==========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING - BASIC AND DILUTED 91,901,998 85,384,515
========== ==========
The notes contained in Form 10-Q filed on November 1, 2007 are an integral
part of the consolidated financial statements.
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GASCO ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30,
-----------------------------------
2007 2006
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(101,617,541) $ (53,999,999)
Adjustment to reconcile net loss to net cash used in
operating activities
Depletion, depreciation, amortization and impairment expense 104,809,828 58,941,433
Accretion of asset retirement obligation 66,095 34,968
Stock-based compensation 2,418,316 3,198,834
Amortization of deferred rent (8,645) (3,551)
Amortization of deferred financing costs 388,675 373,658
Changes in operating assets and liabilities:
Accounts receivable 5,324,220 (2,374,582)
Inventory 298,316 (2,082,859)
Prepaid expenses 238,403 320,788
Accounts payable (2,640,893) 2,119,670
Revenue payable (175,937) (58,374)
Advances from joint interest owners 7,848,190 1,337,719
Accrued interest 906,493 893,753
Accrued expenses (268,000) 428,742
---------- ---------
Net cash provided by operating activities 17,587,520 9,130,200
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for furniture, fixtures and other (33,684) (62,866)
Cash paid for acquisitions, development and exploration (56,401,472) (55,109,912)
Proceeds from property sales 3,475,153 -
Increase in short-term investments - (6,000,000)
Proceeds from sale of short-term investments 6,000,000 -
Cash designated as restricted - (100,612)
Cash undesignated as restricted 1,787,500 8,351,500
----------- ------------
Net cash used in investing activities (45,172,503) (52,921,890)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 19,300,000 -
Borrowings under line of credit 12,000,000 -
Repayment of borrowings (9,000,000) -
Cash paid for stock offering costs (120,729) -
Preferred dividends - (1,393)
Exercise of options to purchase common stock - 1,370,675
Cash paid for debt issuance costs - (240,262)
---------- ---------
Net cash provided by financing activities 22,179,271 1,129,020
---------- ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS (5,405,271) (42,662,670)
CASH AND CASH EQUIVALENTS:
BEGINNING OF PERIOD 12,876,879 62,661,368
---------- ----------
END OF PERIOD $7,471,167 $ 19,998,698
========== ============
The notes contained in Form 10-Q filed on November 1, 2007 are an integral
part of the consolidated financial statements.
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