Q2 better but uses Chpt 11 Bk liquidity phrase.
Gasco Energy Announces Second Quarter 2013 Financial and Operating Results
Last update: 7/30/2013 4:53:00 PM
DENVER, July 30, 2013 /PRNewswire via COMTEX/ -- Gasco Energy, Inc. (otcqb:GSXN) ("Gasco" or the "Company") today announced financial and operating results for the second quarter ended June 30, 2013.
Q2-13 Financial Results Oil and gas sales for the second quarter ended June 30, 2013 were $2.9 million, as compared to $1.6 million for the same period in 2012. Natural gas sales comprised 83% of total oil and gas sales for Q2-13. The year-over-year increase in oil and gas sales is primarily attributed to a 99% increase in the average price received for the Company's natural gas volumes, a 6% increase in the average price received for oil volumes, offset in part by a 4% decrease in equivalent production volumes.
Gasco's average realized gas price was $4.50 per thousand cubic feet of natural gas (Mcf) for Q2-13, compared to $2.26 per Mcf in the prior-year period, excluding the effect of hedges. During June 2012, the Company settled its remaining commodity hedge contract, and the Company currently does not have any commodity hedges in place.
The average realized oil price for Q2-13 was $82.92 per barrel, as compared to $78.57 per barrel for the prior-year period. Gasco does not hedge its crude oil volumes.
For Q2-13, Gasco reported a net loss of $3.0 million, or $0.02 per basic and diluted share, as compared to a net loss of $5.1 million, or $0.03 per basic and diluted share in Q2-12.
As of June 30, 2013, Gasco's total assets were $53.2 million, its stockholders' equity was $13.1 million, and cash and cash equivalents were $2.0 million.
Net cash provided by operating activities during Q2-13 was $0.5 million, as compared to net cash used in operating activities of $3.0 million in the comparable 2012 reporting period. Net cash used in investing activities during Q2-13 was $0.25 million, as compared to net cash provided by investing activities in the prior-year period of $0.1 million.
Gasco Energy, Inc. Q2-13 Q1-13 Q2-12 % Change
Unit Cost Analysis Sequential Q-o-Q
Sales Volumes in Barrels of Oil Equivalent (Mcfe) 565,480 455,937 588,196 24% -4%
Average Price Received Gas ($ / Mcf) $ 4.50 $ 3.38 $ 2.26 33% 99%
Average Price Received Oil ($ / Bbl) 82.92 79.21 78.57 5% 6%
LOE Components
Direct Operating Expenses ($ / Mcfe) 1.65 0.98 1.45 68% 13%
Workover Expense ($ / Mcfe) 0.10 0.19 0.40 -45% -74%
Production Tax ($ / Mcfe) 0.06 0.09 0.10 -34% -40%
Total Lease Operating Expense ($ / Mcfe) 1.81 1.26 1.96 44% -7%
Transportation Expense ($ / Mcfe) 1.60 0.99 0.88 61% 82%
DD&A Expense ($ / Mcfe) 0.70 0.82 1.10 -14% -37%
G&A Expense ($ / Mcfe) 2.64 2.12 1.89 24% 39%
Non-cash Stock-based Compensation Expense ($ / Mcfe) $ 0.08 $ 0.11 $ 0.13 -26% -35%
Q2-13 Production Estimated cumulative net production for Q2-13 was 565 million cubic feet of natural gas equivalent (MMcfe), as compared to 588 MMcfe in the prior-year period. Included in the Q2-13 equivalent calculation are production volumes of 5,800 barrels of liquid hydrocarbons, as compared to the prior-year period production volumes of 4,200 barrels of liquid hydrocarbons. Net production changes are attributed to normal production declines in existing wells, which were partially offset by new producing wells and recompletions and workovers of existing wells.
First Half 2013 Period
Note Regarding Uinta Basin Joint Venture 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 transaction. Due to the 50% interest conveyance, operational and financial results for the six-month period ended June 30, 2013 are not similarly comparable to the same period ended June 30, 2012.
Oil and gas sales for the first half of 2013 were $4.7 million, as compared to $4.8 million for the same period in 2012. The decrease in oil and gas sales during the first half 2013, as compared to the prior-year period, is primarily attributed to the Uinta Basin transaction and normal production decline and to a 5% decrease in the average price received for oil volumes, offset in part by a 56% increase in prices received for natural gas volumes.
The average prices received for the first half of 2013 were $4.00 per Mcf and $81.11 per barrel of oil, as compared to $2.57 per Mcf and $85.36 per barrel in the 2012 first-half reporting period.
For the first half of 2013, Gasco reported a net loss of $4.7 million, or $0.03 per share, as compared to a net loss of $10.2 million, or $0.06 per share in the prior year period. Included in the first half 2013 results are a non-cash gain of $0.7 million attributed to derivatives and $0.2 million related to an impairment of the carrying value of the Company's inventory.
Excluding the effect of the above-stated non-cash items, Gasco would have posted a net loss of $3.8 million, or $0.02 per share for the six-month period ended June 30, 2013. Net loss excluding the effect of non-cash items is a non-GAAP financial measure.
Net cash provided by operating activities for the first half of 2013 was $0.3 million as compared to net cash used in operating activities of $3.5 million for the same period in 2012. The Company invested approximately $1.1 million during the first half of 2013 in oil and gas activities. Net cash provided by investing activities during the first half of 2012 included $19.2 million in cash proceeds from the sale of certain of the Company's Uinta Basin assets as part of the previously announced Uinta Basin joint venture. Net cash used in financing activities was $8.5 million in the first half of 2012.
Outlook Due to the significant extended decline in the natural gas market and low natural gas prices in recent years caused primarily by excess production, Gasco has not been able to recover its exploration and development costs as anticipated. As such, there is substantial doubt regarding the Company's ability to generate sufficient cash flows from operations to fund its ongoing operations, and the Company currently anticipates that cash on hand and forecasted cash flows from operations will only be sufficient to fund cash requirements for working capital through September of 2013. This expectation has been revised from the Company's previous estimate as reported in its Form 10-Q for the quarter ended March 31, 2013, due to the implementation of cost savings measures and cash management strategies.
In addition, the Company did not pay the April 5, 2013 semi-annual interest payment on its 2015 Notes, and as a result, an event of default occurred under the indenture, which could result in legal action for collection of the 2015 Notes or the filing of an involuntary petition for bankruptcy against the Company. As a result of the event of default, the trustee of the 2015 Notes or the holders of at least 25% in aggregate principal amount of the 2015 Notes have the right to accelerate payment obligations under the 2015 Notes. As of July 30, 2013, total accumulated principal and interest on the 2015 Notes (including default interest) equaled $47,233,455. The Company has not received any notice of acceleration of the 2015 Notes as of July 30, 2013 and it is engaged in discussions with the holders of the 2015 Notes regarding responding to the default.
Gasco has not allocated any amounts to its 2013 capital budget. The Company's prior revolving credit facility matured in June 2012, at which time Gasco repaid all of the outstanding borrowings thereunder. While the Company has attempted to secure a replacement facility, it has been unable to do so on acceptable terms and the Company is no longer actively in discussions to obtain a replacement facility. There can be no assurance that Gasco will be able to adequately finance its operations or execute its existing short-term and long-term business plans, and the Company's liquidity and results of operations are likely to be materially adversely affected if it is unable to generate sufficient operating cash flows, secure additional capital or otherwise pursue a strategic restructuring, refinancing or other transaction to provide the Company with additional liquidity.
As previously announced, Gasco has engaged Stephens, Inc., a financial advisor, to assist the Company in evaluating such potential strategic alternatives, including a sale of the Company or all of its assets. It is possible these strategic alternatives will require the Company to make a pre-packaged, pre-arranged or other type of filing for protection under Chapter 11 of the U.S. Bankruptcy Code (or an involuntary petition for bankruptcy may be filed against the Company). These factors raise substantial doubt about Gasco's ability to continue as a going concern.
Teleconference Call Gasco has elected to postpone its second quarter conference call with investors, analysts and other interested parties until such a time that that the Company can convey further substantial and material information regarding its current liquidity situation.
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
