LEXINGTON, Ky., Oct. 4 /PRNewswire-FirstCall/ -- NGAS Resources, Inc.
(Nasdaq: NGAS) today announced the completion of a $6,100,000 institutional
private placement of its 7% Convertible Note due October 4, 2009. The note is
convertible into the Company's common stock at an initial conversion price of
$6.00 per share.
"The funds from this private placement will support our long term growth
strategy," stated William S. Daugherty, President and CEO. "In two separate
transactions, we recently acquired over 6.5 Bcfe of proved natural gas
reserves on approximately 14,737 gross (7,604 net) acres of leases in Leslie
and Bell Counties, Kentucky for a total of $7.8 million, or $1.20 per Mcfe.
These acquisitions, along with our pending acquisition covering 23.2 Bcfe of
proved gas reserves from Stone Mountain Energy for $27 million, should add
over 3,700 Mcfe to our daily production. We expect to use about half our
proceeds from today's note financing to complete the Stone Mountain
acquisition within the next two weeks and the balance for ongoing drilling
initiatives and construction of gathering systems in our core Appalachian
Basin operating areas."
The note private placement was covered by a purchase agreement with
BayStar Capital Fund II, LP, a private fund managed by BayStar Capital
Management, LLC, headquartered in Larkspur, California. Under the purchase
agreement, the investor also received a five-year warrant to purchase up to
440,000 common shares at an exercise price of $6.00 per share. The purchase
agreement provides for the Company to register the shares issuable upon
conversion of the note and exercise of the warrants for resale on behalf of
the investor.
Investment banking services for the transaction were provided to the
Company by The Shemano Group, Inc., headquartered in San Francisco,
California, which received a 7% fee and five-year warrants to purchase up to
43,700 shares of the Company's common stock at $6.00 per share.
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, Inc.
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Related links:
http://www.ngas.com
CONTACT:
Michael P. Windisch of NGAS Resources, Inc.,
+1-859-263-3948, or fax, +1-859-263-4228, or ngas@ngas.com
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