Gasco Energy Extends Credit Facility; Provides Update on Gate Canyon Testadmin
Gasco Energy, Inc. announced an amendment to its Credit Agreement and provided an interim operations update on its Riverbend Project in Utah’s Uinta Basin.
On December 10, 2008, the Company closed on an amendment to its Credit Agreement led by JPMorgan pursuant to which the maturity date of the facility was extended one year to March 29, 2011. The interest rate pricing grid was increased 0.25% to the levels detailed below and the commitment fee was changed to 0.50% from a variable grid between 0.30% and 0.50%. The borrowing base of $45 million in place prior to the amendment was maintained and the other commercial terms of the Credit Agreement remain substantially unchanged.
Interest on borrowings under the Credit Agreement accrues at variable interest rates at either, at Gasco’s election, a Eurodollar rate or an alternate base rate. The Eurodollar rate is calculated as LIBOR plus an applicable margin that varies from 1.50% (for periods in which the Company has utilized less than 50% of the borrowing base) to 2.25% (for periods in which the Company has utilized greater than 90% of the borrowing base). The alternate base rate is calculated as (1) the greater of (a) the Prime Rate, (b) the Federal Funds Effective Rate plus 0.50% or (c) the Adjusted LIBO Rate for a one month interest period on such day plus 1%, plus (2) an applicable margin that varies from 0.25% (for periods in which the Company has utilized less than 50% of the borrowing base) to 1.00% (for periods in which the Company has utilized greater than 90% of the borrowing base). Gasco elects the basis of the interest rate at the time of each borrowing; however, under certain circumstances, Gasco’s lender may require it to use the non-elected basis in the event the elected basis does not adequately and fairly reflect the cost of making such loans. In addition, Gasco is obligated to pay a commitment fee of 0.50% under the Credit Agreement quarterly in arrears based on a percentage multiplied by the daily amount that the aggregate commitments exceed borrowings under the agreement.
Gate Canyon Deep Test Update
The Gate Canyon 23-16 (25% working interest, Gasco operated) has begun initial completion operations. The well was completed in the Morrison Formation with one frac job and in the Dakota Formation with three frac jobs. The fracs were put away successfully according to design. A coiled tubing unit was brought in to drill out intermediate plugs so that testing of the well could begin. During the drill-out procedure, the bottom-hole assembly became stuck, the tubing was cut near the top of the stuck portion (the “fish”) and the coiled tubing unit was moved off location. A workover rig is on location to recover the fish and finish drilling out the remaining plugs.
Commenting on Uinta activities, Gasco CEO and President, Mark Erickson said: “We are pleased with the successful fracture stimulation of the Morrison and Dakota intervals, but we are not yet able to report production testing results for the GCS #23-16 completion due to mechanical issues with the wellbore. The fishing operation to recover the remaining bottom-hole assembly was delayed while the Company secured the necessary tools and equipment. The fishing operation began this week and, should take about two weeks to complete. Production testing of the completed intervals will follow and then we plan to proceed with completion of up-hole pay in the Mancos, Blackhawk and Mesaverde. Additional details on the well, as they become available, will be provided in the Company’s fourth quarter 2008 operations update in early January 2009.”
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. 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 currently focuses its drilling efforts in the Riverbend Project located in the Uinta Basin of northeastern Utah, targeting the Wasatch, Mesaverde, Blackhawk, Mancos, Dakota and Morrison formations. To learn more, visit http://www.gascoenergy.com.