NGAS Resources (NGAS)
NGAS Resources, Inc.
120 Prosperous Place
Lexington, KY 40509-1844
Phone: (859) 263-3948
Toll Free: 800.977.2363
NGAS Resources, Inc., is an independent exploration and production company focused on unconventional natural gas plays in the eastern United States, principally in the southern portion of the Appalachian Basin and the Illinois Basin. We specialize in generating our own geological prospects in this region, where we have established expertise and a long track record of success. Core assets include 77.9 billion cubic feet equivalents (Bcfe) of proved reserves, 400,000 acres and interests in 1,400 oil and gas wells. We operate the gas gathering facilities for our core Appalachian properties. This enables us to move approximately 90 percent of our gas production directly from the wellhead to interstate pipelines serving major east coast natural gas markets. We believe our extensive experience in this region, relationships with partners, suppliers and mineral interest owners, gives us competitive advantages in developing these resources to achieve annual volumetric growth and strong financial returns on a long-term basis.
Our business is structured to achieve capital appreciation through growth in our natural gas production and reserves. During 2008, we achieved record production of 3.7 Bcfe, up 13% from the prior year. We also increased our estimated proved developed reserves at the end of 2008 by 18.7% to 57 Bcfe, with an additional 21 Bcfe of proved undeveloped reserves. Our undeveloped acreage position of nearly 250,000 acres in the Appalachian Basin provides us with an extensive inventory of low-risk, repeatable drilling locations for future growth.
In 2008, we transitioned our drilling program from vertical to horizontal drilling which is enhancing the value proposition for our operated properties by substantially increasing our recovery volumes and rates at lower finding costs. We focused our horizontal drilling program in our core Leatherwood field, where we successfully completed 20 horizontal wells in 2008. Each well has a single lateral leg up to 3,500 feet through the lower Huron section of the Devonian shale formation, which is present throughout our Appalachian operating areas. Given our success in Leatherwood, we have expanded our horizontal drilling initiative to our other properties. In the first two months of 2009, we successfully completed three wells in our Fonde, Stone Mountain, and Straight Creek fields in southern Appalachia.
In August 2009, we sold a significant portion of our Appalachian gas gathering assets to Seminole Gas Company, our 50-50 joint venture partner in the Rogersville gas stripping facility. The gathering assets that we sold span approximately 485 miles through parts of southeastern Kentucky, eastern Tennessee and western Virginia. We will remain the operator of the pipeline long term. We also retained firm capacity rights of 30,000 Mcf/d ensuring that we are able to move our Appalachian gas production to market. By retaining firm capacity rights, we are also able to maintain our competitive advantages from control of regional gas flow and the ability to acquire undeveloped acreage near our core fields.
We follow a disciplined capital allocation process in selecting opportunities to expand our substantial inventory of drilling prospects that meet our criteria for predictable, long-lived reserves. Our goal is to consolidate our position in the Appalachian Basin, while diversifying our asset base with similar unconventional plays outside the basin. As part of this strategy, we are aggressively developing our New Albany shale play within the south central portion of the Illinois Basin in western Kentucky where we have successfully drilled 37 wells in our new field discovery, Haley’s Mill. We currently hold 46,000 acres there for development. To move the gas to market, our gas gathering system and processing facilities came on line in September 2008.
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The moderator TechKim presently does not own any NGAS shares.