NGAS Resources, Inc. announced that its estimated proved reserves at year-end 2007 were 105 billion cubic feet equivalents (Bcfe), of which 46% were proved developed. Based on annualized fourth quarter production, the reserve life index at the end of 2007 was 28.8 years overall and approximately 13.1 years for the company’s proved developed producing reserves. A majority of the acreage in the company’s major fields is undeveloped, providing a multi-year inventory of drilling locations for future development.
The company’s annual production in 2007 increased 15% to 3.3 Bcfe compared to 2.9 Bcfe in 2006. Production in the fourth quarter of 2007 was 0.92 Bcfe, an increase of 18% on a period-over-period basis and 11% from third quarter 2007 levels. The realized sales price for natural gas, which represents 97% of the company's proved reserves, averaged $8.06 per Mcf for the fourth quarter of 2007 and $8.19 per Mcf for the year as a whole.
"Our significant increase in production reflects the evolution of our business model for accelerating organic growth by retaining larger net positions in new wells on our operated properties," commented William S. Daugherty, president and CEO. "Due to the pace of drilling and the complexities of infrastructure development, we had a substantial backlog of wells awaiting connection at year end. This includes all the wells drilled during the year in our Fonde field and our New Albany shale project in western Kentucky. We expect to see significant upside as we bring these wells on line this year." Mr. Daugherty further commented, "Our growth strategy for 2008 will be focused on that task, as well as adding to our acreage position in key fields and taking advantage of horizontal drilling opportunities. We plan to focus those initiatives in our Leatherwood field, where we spudded our first horizontal well on February 9th and expect to drill between 10 to 15 horizontal wells by year end."
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