Gasco Energy, Inc.(fka GSXN)

[Timothy Smith]

Gasco Energy Provides Second Quarter 2012 Operations Update

Jul 12, 2012 7:00:00 AM

DENVER, July 12, 2012 /PRNewswire/ -- Gasco Energy, Inc. (NYSE Amex: GSX) ("Gasco" or the "Company") today provided an interim operations update on its Riverbend Project in Utah's Uinta Basin and on its California projects in the San Joaquin Basin.

Riverbend Project Operations Update

Quarterly Production

Estimated cumulative net production for the quarter ended June 30, 2012 was 563.4 million cubic feet equivalent (MMcfe). By commodity for Q2-12, Gasco reported net crude oil volumes of 4,781 barrels and net natural gas volumes of 534.7 MMcf.

During Q1-12, Gasco conveyed a 50% interest in certain of its Uinta Basin properties to its joint venture partner concurrent with the March 22, 2012 closing of the joint venture. Q2-12 is the first full reporting period in which Gasco's Uinta Basin net production reflects this conveyance under the terms of the Gasco-operated joint venture. The Uinta Basin accounts for 100% of Gasco's production. By comparison, prior to the effect of the conveyance of the joint venture partner's interest, Gasco would have produced 870.2 MMcfe for the second quarter 2012.

Production Update

Gasco recently installed improved lifting equipment on each of the Green River wells that were drilled during the first half of 2012. The Federal 34-19G-9-19 has averaged 32 gross barrels of oil per day (BOPD) over the past 31 days, as compared to average production of approximately 12 to 15 BOPD prior to installing the new equipment. The Federal 23-30G-9-19 recently had the new equipment installed and is being brought back into production. Gasco continues to work on its Green River wells in an effort to increase black wax production.

Second-Half 2012 Drilling Plans

As previously announced, Gasco plans to commence its Uinta Basin drilling and completions program during the third quarter of 2012. The program contemplates a capital expenditure budget of approximately $3.6 million for the drilling and completion of six gross (1.0 net) new Green River Formation oil wells and six gross (2.0 net) new-drill natural gas wells. A single recompletion (0.3 net) was included in the initial capital expenditure budget, however, additional Green River recompletions and workovers are now being considered for 2012. All of the scheduled wells within the drilling program are in the permitting process. While actual timing of the wells is dependent upon receipt of the approved permits, the Company believes it will have the necessary inventory of permits to complete the 2012 drilling program on schedule.

"Artificial gas lift can be effectively utilized for Green River oil production in the Uinta Basin," said King Grant, Gasco's President and CEO. "Our Green River oil production, however, is shallower and did not best respond to gas lift. The improved rates resulting from newly installed rod pumps in the place of artificial gas lift on the wells are encouraging. We believe this is a cost-effective way to optimize production and we intend to use rod pumps in our new-drill Green River wells in an effort to attain higher estimated ultimate recoveries."

California Projects Update

Willow Springs

As previously announced, the exploration well tested non-commercial rates of oil in the Phacoides Formation and the partners moved up the well bore to test additional potential pay horizons. Two tests were made of the Monterey Shale in an off-structure position. While both zones indicated decent quality reservoir characteristics, both zones encountered non-commercial rates of hydrocarbons. Based upon all of the testing results, Gasco's partner made the decision to plug and abandon the well. While the Willow Springs well did not find commercial hydrocarbons, it did confirm Gasco's structural geologic model, found oil within the Phacoides Formation and confirmed the existence of Monterey Shale reservoir.

Gasco's partner has the option of spudding a second well within the Willow Springs acreage before March 2013.

Antelope Valley Trend

In order to complete the processing of the large Antelope Valley 3D seismic survey, Gasco's partner has been granted a one-year extension in the spudding of the first test earning well at Gasco's Antelope Valley Trend of prospects. The first test well will spud before July 2013. In exchange for the drilling extension, Gasco's partner has also committed to spudding a well on the Southwest Cymric prospect prior to December 31, 2013.

Northwest McKittrick

Permit issuance continues to be delayed within the California Fish and Wildlife Department. Gasco's partner is waiting on final approval of a "takings" value for endangered species mitigation. Upon approval, payment can be made to the Kern Water Bank and a permit to drill will be issued. Gasco believes that the first earning well can be drilled this year.

Commenting on the Company's California projects, Mr. Grant continued: "While not a producer, the Willow Springs exploratory well did yield important information for the partners. Further analysis revealed that we came in on the flank of the structure and we believe that the oil is trapped up-dip in the structure which can be drilled at a later date pending further structural and reservoir analysis. Importantly, the reservoir rock was good quality which is encouraging for further exploratory drilling in the area. In addition, we believe that more detailed analysis of the Antelope Valley 3-D seismic data could yield additional drilling locations for further exploration on our lands, and we are pleased our partner is planning to drill a well on the Southwest Cymric prospect."

About Gasco Energy

Denver-based Gasco Energy, Inc. is a natural gas and petroleum exploitation, development and production company engaged in locating and developing hydrocarbon resources, primarily in the Rocky Mountain region and in California's San Joaquin Basin. Gasco's principal business is the acquisition of leasehold interests in petroleum and natural gas rights, either directly or indirectly, and the exploitation and development of properties subject to these leases. Gasco focuses its drilling efforts in the Riverbend Project located in the Uinta Basin of northeastern Utah, targeting the oil-bearing Green River Formation and the natural gas-prone Wasatch, Mesaverde, Blackhawk, Mancos, Dakota and Morrison formations. To learn more, visit Gasco's website at www.gascoenergy.com.