Acquisition Is Major Expansion for Appalachian Based Natural Gas Company
LEXINGTON, Ky., Oct. 12 /PRNewswire-FirstCall/ -- NGAS Resources, Inc.
(Nasdaq: NGAS) announced today it has completed its acquisition from privately
held Stone Mountain Energy Company, L.C. ("SME"). The purchase included
23.2 Bcfe of proved gas reserves from oil and gas interests covering 75,000
gross (approximately 61,875 net) acres for $27 million, or $1.16 per Mcfe.
The acquisition was made by the Company's operating subsidiary, Daugherty
Petroleum, Inc. ("DPI"), and included substantially all of SME's oil and gas
assets in Bell, Harlan, and Leslie Counties, Kentucky, and Lee County,
Virginia.
With the acquisition, the Company also expanded its gas gathering
arrangements with Duke Energy Gas Services Corporation. NGAS already delivers
natural gas production from its Straight Creek Field to Duke's gathering
system in southeastern Kentucky. Production from the acquired acreage,
currently around 2,700 Mcfe per day, will also be dedicated to Duke's system.
"This acquisition is a major part of our long-term strategic plan for
continuing growth," said William S. Daugherty, President and CEO of NGAS.
"The acquired acreage, along with 14,000 gross (approximately 7,600 net) acres
of leases we recently acquired in Leslie and Bell Counties, Kentucky, extends
our acreage position in the Appalachian Basin to over 250,000 gross
(170,000 net) acres. It boosts our current net daily production to
approximately 6,000 Mcfe per day from 570 wells we now operate in the region
and expands our proved oil and gas reserves to approximately 61.5 Bcfe, not
including 2004 reserve adjustments. The transaction also gives us greater
throughput to major natural gas markets serviced through Duke's system and
strengthens our competitive position in the region."
As part of the acquisition, DPI added eight SME employees to its staff and
assumed certain SME obligations, including future obligations under its oil
and gas leases, farm-out arrangements and operating agreements. No SME debt
was assumed in the transaction. The reserve figures for the acquired
properties 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, Inc.
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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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