LEXINGTON, Ky., Jan. 10 /PRNewswire-FirstCall/ -- NGAS Resources, Inc.
(Nasdaq: NGAS) today announced record drilling activity for 2004. During the
year, NGAS drilled 155 successful wells representing a 74% increase over 2003
drilling operations, when the Company drilled 89 wells. The Company also
announced an operational update including fourth quarter highlights.
2004 Partnerships
NGAS sponsored, through its subsidiary Daugherty Petroleum, Inc., two
partnerships during 2004. NGAS continued its increased participation by
purchasing a 30 percent working interest in each partnership well. After each
partnership reaches payout, the Company's working interest will increase from
30 percent to 45 percent.
The initial 2004 partnership that closed in May proportionately funded 50
wells, all of which have been successfully drilled. To date, 25 wells are on
line and producing, with the remainder completed and awaiting pipeline hook-
up.
The year-end 2004 partnership closed in October with a maximum raise of
$20.8 million and proportionately funded 90 wells. To date, 42 wells have been
drilled and 7 wells are on line and producing. Currently, six drilling rigs
are operating to complete the year-end program by March 31, 2005.
4th Quarter Operations
During the fourth quarter, NGAS drilled 46 successful wells, completed 28
and turned 35 wells on line. In addition, the Company completed 18 miles of
gathering line ranging from 2-inch plastic to 8-inch steel.
Work continues on the 18-mile Leatherwood extension of the Company's 8-
inch steel gathering system; however, NGAS has revised it projected completion
date for the project to June 30, 2005. The delay was caused by the record
rainfall that Kentucky experienced during 2004 combined with unexpected right-
of-way complications. NGAS expects natural gas to commence flowing from wells
located along the western segment of the gathering line prior to the
completion date.
In addition, NGAS integrated the operations of assets acquired in three
previously announced acquisitions. Those acquisitions added approximately
90,000 gross (69,000 net) acres and an approximate 30.1 Bcfe of proved
reserves at a combined cost of $34.8 million. All the acquired assets are
located in the Company's core area in the southern Appalachian Basin.
Gas Contracts
NGAS utilizes numerous contracts to market its natural gas. As of this
date, approximately 45% of the Company's natural gas is covered by fixed
price, fixed volume contracts. The contract prices range from $5.83 to $8.16
per dekatherm, with a weighted average price of $6.28. The remainder of the
gas is covered by contracts with pricing terms generally tied to the Columbia
Gas Transmission - Appalachian index. The contracts expire over the next
three to 22 months.
2005 Drilling Programs
NGAS has just released its initial 2005 drilling program that is expected
to raise up to $12.25 million to partially fund 50 wells on NGAS drilling
prospects. NGAS will participate by purchasing 30 percent working interest in
each well. Drilling will commence immediately following the completion of
drilling on the year-end 2004 program.
CEO's Comment
"The year 2004 was a banner year for NGAS in terms of oil and gas
production, reserves and acreage increases," stated William S. Daugherty,
President & CEO of NGAS. "We were able to enhance our management staff by
adding strategic team members who are very experienced in oil and gas
operations in the Appalachian Basin. With our expanded asset base, control of
250,000 acres, interests in 580 wells, and expanded pipeline operations, NGAS
is positioned for accelerated growth."
NGAS Resources is a natural resources company focused on natural gas
development drilling and reserve growth. Based in Lexington, Kentucky, the
Company specializes in developing its own geological prospects concentrated in
the Appalachian Basin. Additional information about the Company can be
accessed on its website at: http://www.ngas.com .
This release includes forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act relating to matters such as
anticipated operating and financial performance and prospects. Actual
performance and prospects may differ materially from anticipated results due
to economic conditions and other risks, uncertainties and circumstances partly
or totally outside the control of the company, including risks of production
variances from expectations, volatility of product prices, the level of
capital expenditures required to fund ongoing drilling initiatives and the
ability of the company to implement its business strategy. These and other
risks are described in the company's periodic reports filed with the United
States Securities and Exchange Commission.
SOURCE NGAS Resources, Inc.
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Related links:
http://www.ngas.com
CONTACT:
Media, Teresa Barnes, Cell, +1-303-521-4080,
or Investor Relations, Michael P. Windisch, CFO, fax
+1-859-263-4228, both of NGAS Resources, Inc., +1-859-263-3948,
or ngas@ngas.com
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