Gasco Energy provided an interim operations update on its Riverbend Project in Utah's Uinta Basin and on its California projects in the San Joaquin Basin.
Riverbend Project Second Quarter 2011 Operations Update
Gasco is finalizing the federal drilling permits for its two Green River Formation oil wells, (GSX-operated / 100% WI). The Company is satisfying all of the well permitting requirements that are necessary to drill on federal lands and expects to spud both wells during the third quarter, as previously announced. The Company anticipates that completions for both wells will follow shortly after both wells have been drilled. As previously disclosed, the Company has elected to defer its up-hole natural gas well recompletion program until the latter part of the third quarter and into the fourth quarter in anticipation of stronger seasonal natural gas prices.
At June 30, 2011, Gasco operated 133 gross wells. Gasco currently has an inventory of 18 operated wells with up-hole recompletions and has one Upper Mancos well awaiting initial completion activities.
Estimated cumulative net production for the quarter ended June 30, 2011 was 947 million cubic feet equivalent (MMcfe), a 17.8% decrease from 2Q10 production of 1,152 MMcfe. The 1.3% decline in sequential quarterly equivalent production, 947 MMcfe in 2Q11, as compared to 959 MMcfe in 1Q11, is primarily attributed to a third-party gathering company's compressors being down and/or performing below design specifications. High line pressures over the past quarter days have reduced production by approximately 95 MMcf and 760 barrels of liquids.
Gasco posted improved liquids volumes of 10,000 barrels of liquids for 2Q11, as compared to 7,600 barrels in 1Q11, a 31.6% increase sequentially. The Company attributes the oil production growth to increased condensate production from its new recompletions and to well workovers.
Natural gas volumes of 887 MMcf for 2Q11 were down 2.8% sequentially, as compared to 913 MMcf in 1Q11.
California Projects Update
The operator of this shallow oil prospect continues to work with the California State Agencies to acquire the appropriate permits. While some progress has been made, final approval is still pending from the California Fish and Game Department. Gasco continues to work with the operator and California officials in getting the permits as quickly as possible. Based on the information provided, the Company continues to believe that drilling may begin in the third quarter.
The operator of this oil prospect has been analyzing the recently acquired 3D seismic data and is currently high-grading drillable locations based upon the ongoing 3D interpretation. Well permitting has commenced, and Gasco understands that the project is still on schedule to have its initial well spud by year-end 2011.
Antelope Valley Trend
The operator of these oil and liquids-rich prospects is in the process of drilling 3D seismic shot-holes and anticipates data acquisition to begin next month. Gasco expects that drilling on the trend will occur in 2012.
Gasco continues to develop new prospects and acquire acreage along the west side of the San Joaquin Basin. The new prospects are a continuation of the structural and stratigraphic geologic model that Gasco has been working for the past nine years that has yielded recent success along the west side as demonstrated by discoveries and field development by other operators with similar geologic models.
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