Represents Major Expansion for Appalachian Based Natural Gas Company
LEXINGTON, Ky., Aug. 19 /PRNewswire-FirstCall/ -- NGAS Resources, Inc.
(Nasdaq: NGAS) announced today an agreement to acquire approximately 23.2 Bcfe
of proved gas reserves and 75,000 gross acres (61,875 net acres) of leases for
$27 million, or $1.16 per Mcfe. The privately negotiated transaction includes
substantially all the assets of Stone Mountain Energy Company, L.C. ("SME")
located in Bell, Harlan, and Leslie Counties, Kentucky, and Lee County,
Virginia.
The assets to be purchased include 113 oil and gas wells currently
producing approximately 2,700 Mcfe per day. Gas production is delivered
through a gathering system owned by Duke Energy Gas Services Corporation.
NGAS currently delivers natural gas production from its Straight Creek Field
to Duke's gathering system. Following the acquisition, NGAS plans to
integrate operations with its existing field activities in the region.
"This major acquisition paves the way for future growth in line with our
long-term strategic plan," said William S. Daugherty, President and CEO of
NGAS. "Our acreage position in the Appalachian Basin will be expanded to over
250,000 gross acres (170,000 net acres). The acquisition will also boost our
current net daily production to approximately 5,000 Mcfe per day and will
increase our proved oil and gas reserves to approximately 55 Bcfe, not
including 2004 reserve adjustments. This transaction offers us opportunities
to expand our throughput to major natural gas markets serviced through Duke's
system and strengthen our competitive position in the region."
The purchase agreement for the transaction provides for the assumption of
certain SME obligations, including future obligations under its oil and gas
leases, farm-out agreements and gas gathering and operating contracts. No SME
debt will be assumed. The closing under the purchase agreement is subject to
customary conditions. NGAS intends to fund the acquisition with cash and
through its reserve-based line of credit. The reserves were estimated by
Wright and Company, a petroleum engineering firm located in Houston and
Nashville that has compiled NGAS' reserves for the past six years.
NGAS Resources is a natural resources company focused on natural gas
development drilling and reserve growth. The Company changed its name from
Daugherty Resources in June 2004. Based in Lexington, Kentucky, the Company
specializes in developing geological prospects concentrated in the Appalachian
Basin. 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
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Related links:
http://www.ngas.com
CONTACT:
Investor Relations, Michael P. Windisch of
NGAS Resources, +1-859-263-3948, or Fax, +1-859-263-4228, or
E-mail, ngas@ngas.com
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