Nov. 3, 2009 (PR Newswire) --
DENVER, Nov. 3 /PRNewswire-FirstCall/ -- Gasco Energy (NYSE Amex: GSX) today reported financial and operating results for the quarter ended September 30, 2009.
Third Quarter Financial Results
For the third quarter 2009, Gasco reported a net loss attributable to common shareholders of $2.9 million, or $0.03 per diluted share, as compared to net income attributable to common shareholders of $21.0 million, or $0.17 per diluted share, for the same period in 2008. Included in the third quarter 2009 results are derivative losses of $1.6 million attributed to hedge effect, which are comprised of an unrealized loss of $2.6 million partially offset by a realized gain of $1.0 million. Included in the third quarter 2008 results are derivative gains of $17.1 million attributed to hedge effect.
The Company reported oil and gas sales for the third quarter 2009 of $3.6 million, as compared to $9.7 million for the same period in 2008. The 63% quarter-over-quarter decrease in oil and gas sales is primarily attributed to a 59% decrease in prices received for sales of the Company's natural gas and a 42% decrease in prices received for oil volumes, combined with a 14% decrease in production quarter-over-quarter. Gathering and processing revenues from Gasco's midstream assets were $0.9 million for the third quarter 2009, as compared to $1.2 million in the prior-year period. Total revenues for the third quarter 2009 were $4.4 million, as compared to $11.2 million in the prior-year period.
Gasco's average realized gas price including the effect of realized derivative gains and losses was $4.06 per thousand cubic feet of natural gas (Mcf) for the third quarter of 2009, as compared to $7.74 per Mcf for the third quarter of 2008. The Company's risk management activities increased its average gas price by $1.05 per Mcf during the third quarter of 2009, and by $0.36 per Mcf during the 2008 period. Prior to the impact of hedges, the Company's average price received for its natural gas production during the third quarter of 2009 was approximately $3.01 per Mcf, as compared to $7.38 per Mcf in the prior-year period.
The average realized oil price was $57.53 per barrel for the third quarter of 2009, a 42% decrease from the $98.43 per barrel received during the third quarter of 2008. Gasco does not hedge its crude oil volumes.
Unit Cost Comparisons - LOE / DD&A / G&A
Lease operating expense (LOE) for the third quarter 2009 decreased to $0.9 million from $1.2 million in the same period in 2008. On a per-unit basis, LOE was $0.85 per thousand cubic feet of natural gas equivalent (Mcfe) in the third quarter 2009, as compared to $1.00 per Mcfe in the prior-year period. The decrease in per-unit LOE quarter-over-quarter is attributed to reduced production taxes ($0.23 per Mcfe lower) offset by increased operating expenses ($0.08 per Mcfe higher). The 28% decrease in total LOE in the third quarter 2009 is attributed to reduced chemical costs in well treatments, decreased workover expense and to sharply lower commodity prices on which production taxes are based.
Depletion, depreciation and amortization (DD&A) was $1.0 million for the third quarter 2009, as compared to $1.7 million for the same period in 2008. On a per-unit basis, DD&A for the third quarter 2009 was $0.94 per Mcfe, as compared to $1.40 in the 2008 period. The 42% lower third quarter 2009 DD&A is attributed to a decrease in the depletable base during 2009 due to impairment charges incurred by the Company in 2009.
The Company reported general and administrative (G&A) expense of $1.9 million in the third quarter 2009, versus $2.1 million in the same period in 2008, a 12% decline quarter-over-quarter. On a per-unit basis, total G&A expense for third quarter 2009 was $1.78 per Mcfe, as compared to $1.73 per Mcfe for the same period in 2008. G&A expense for the third quarter 2009 includes $0.5 million of non-cash, stock-based compensation expense, or, on a per-unit basis, $0.48 per Mcfe, as compared to the prior-period total of $0.7 million, or $0.58 per Mcfe.
Gathering operations expense in the third quarter 2009 decreased to $0.5 million from $1.0 million in the 2008 reporting period.
Nine-Month Period
Gasco reported a net loss attributable to common shareholders for the nine-months ended September 30, 2009 of $50.6 million, or $0.47 per diluted share, as compared to net income attributable to common shareholders of $15.8 million, or $0.14 per diluted share for the prior-year period. Included in the nine-month 2009 results are derivative gains of $0.7 million attributed to hedge effect, which are comprised of an unrealized gain of $12.8 million partially offset by a realized loss of $12.1 million. Included in the 2009 period's operating expenses are non-cash charges of $41.0 million related to the impairment of the carrying value of oil and gas properties. Included in the 2008 results are net derivative gains of $5.7 million, attributed to hedge effect.
Oil and gas sales for the first nine months of 2009 were $11.2 million, as compared to $30.7 million for the same period in 2008, a decrease of 64%. The decrease in oil and gas sales during the first nine months of 2009 as compared to the prior-year period is primarily attributed to a 63% decrease in prices received for sales of the Company's natural gas and a 54% decrease in prices received for oil volumes.
For the first nine months of 2009, total revenues were $14.3 million, as compared to $35.1 million in the same period in 2008, a decrease of 59%. For the first nine months of 2009, gathering system revenues accounted for $2.7 million as compared to $3.2 million during 2008. Gathering income was $0.8 million for 2009's nine-month period, as compared to $0.5 million in the same period in 2008.
Gasco's average realized gas price for the nine-month period 2009, including the effect of realized derivative gains and losses, was $6.86 per Mcf, as compared to $7.70 per Mcf in 2008. The Company's risk management activities increased its average gas price by $3.89 per Mcf during the first nine months of 2009 and decreased its average gas price by $0.42 during the 2008 period. Prior to the impact of hedges, the Company's average price received for its natural gas production during the nine-month period 2009 was approximately $2.97 per Mcf, as compared to $8.12 per Mcf in the prior-year period.
The average realized oil price was $42.67 per barrel for the nine-month period 2009, a 54% decrease from the $92.97 per barrel received in 2008. Gasco does not hedge its crude oil volumes.
At September 30, 2009, cash and cash equivalents were $12.3 million.
Long-term debt was $34.5 million at September 30, 2009, as compared to $31.0 million at December 31, 2008. The Company currently has a $250 million credit facility with JPMorgan, of which $35.0 million is available for borrowing capacity and $34.5 million is drawn in borrowing and $0.5 million is drawn in letters of credit.
Gasco's total assets at September 30, 2009 were $104.3 million, as compared to $153.9 million at year-end 2008. Net cash provided by operating activities for the first nine months of 2009 was $16.5 million as compared to $19.4 million for the same period in 2008.
Production Volumes
Cumulative net production for the quarter ended September 30, 2009 was 1,044 MMcfe, as compared to the prior-year net production of 1,220 MMcfe. For the nine-month period, Gasco produced 3,485 MMcfe, as compared to 3,610 MMcfe in 2008's nine-month period.
Risk Management
Gasco's swap agreements for 2009 through March 2011 are included below. At recent production levels, approximately 50% of Gasco's net production volumes were hedged through the following instruments:
Gasco 2009 - March 2011 Swap Agreements
Fixed Price Floating
Agreement Remaining Counterparty Price Gasco
Type Term Quantity Payer Payer (a)
---- ---- -------- ----- --------
Swap (b) 10/09 - 12/09 6,500 MMBtu per day $4.418 / MMBtu NW Rockies
Swap (b) 1/10 - 12/10 3,500 MMBtu per day $4.418 / MMBtu NW Rockies
Swap 1/10 - 3/11 3,000 MMBtu per day $4.825 / MMBtu NW Rockies
Swap (b) 1/11 - 3/11 2,000 MMBtu per day $4.418 / MMBtu NW Rockies
(a) Northwest Pipeline Rocky Mountains - Inside FERC first-of-month index
price
(b) Weighted average price for the entire period from June 2009 through
March 2011
Other News
Gasco is in discussions with prospective buyers to sell its Utah gathering system and related processing assets. The system gathers all of Gasco's Utah natural gas production as well as some third-party volumes. Simultaneous with any sale of these assets, Gasco will enter into a multi-year agreement with the new owner/operator to continue to gather all current and future production from the Company's acreage west of the Green River in the Uinta Basin. For the first nine months of 2009, gathering operations contributed operating income (gathering revenue less gathering expense) of $0.8 million.
