NGAS RESOURCES, INC. 
By NGAS Resources, Inc. (Nasdaq: NGAS) today reported second quarter 2007 total revenue of $16.1 million compared to $18.3 million in the comparable quarter in 2006. This decrease was attributed to a planned reduction in contract drilling for sponsored programs. Gas gathering and compression revenue rose 37 percent in the period on increased fees for moving third party gas through the open-access section of the Company's gathering system. Oil and gas production revenue increased 13 percent year-over-year, reflecting a six percent increase in production volumes and nine percent increase in average realized prices.
The Company recognized a net loss of $0.8 million in second quarter 2007 versus net income of $0.7 million in second quarter 2006. The per share loss was $0.03 compared to earnings per fully diluted share of $0.03 per share in second quarter 2006. Results for the second quarter results of 2007 include an impairment charge of $1.0 million, or $0.03 per share, from a writeoff of exploratory well costs. Discretionary cash flow per share was $0.14 compared to $0.18. (A reconciliation of this non-GAAP measure is provided at the end of this release.)
William S. Daugherty, President and CEO of NGAS Resources, commented, "Our second quarter results reflect our evolving business model. We are exiting the sponsorship of drilling partnerships in southern Appalachia and retaining 100% of the available interest in the wells drilled on these prospects. We are also planning to implement a strategy to begin acquiring the producing assets of some of our partnerships in the area.? Mr. Daugherty added, ?While our financial results will be negatively impacted in the short-term, this change in strategy will accelerate our production and reserve growth, allowing us to deliver improved results over time and enhance long-term shareholder value.?
Operational and Financial Highlights for 2Q 2007 versus 2Q 2006:
- Average daily production was 8,455 Mcfe versus 8,012 Mcfe
- Total production volumes were up 6 percent to 769.4 Mmcfe
- 49 gross (21.90 net) wells drilled as compared to 49 gross (11.72 net)
- Average realized natural gas price was $8.54/Mcf versus $7.84
- Oil and gas revenue increased 13 percent to $6.7 million from $5.9 million
- Gas transmission and compression revenue rose 37 percent to $1.9 million
- Discretionary cash flow was $3.0 million versus $4.2 million
- Capital expenditures totaled $15.2 million
- 14 miles of pipeline added to gathering system
Second Quarter 2007 Overview
During the quarter, the Company drilled 49 gross (21.90 net) wells. Contract drilling revenue decreased 32 percent from the prior year to $7.4 million as the Company retained a larger interest in wells drilled.
Depreciation, depletion and amortization expenses were $2.4 million in the second quarter 2007 compared to $2.0 million in the second quarter of 2006. The increase was driven by asset base expansion and extension of gathering systems.
Selling, general and administrative expenses were $3.0 million, down from $3.2 million in the same quarter of 2006. This primarily reflects the timing and extent of marketing costs for sponsored drilling programs. As a percentage of revenue, SG&A costs were 18.9 percent as compared to 17.3 percent in second quarter 2006.
Interest expense in the quarter was $1.5 million compared to $1.1 million in the same period last year. This was attributable to increased credit facility financing to fund drilling activities.
Operational and Financial Highlights for First Half 2007 versus First Half 2006:
- Average daily production was 8,551 Mcfe versus 7,698 Mcfe
- Total production volumes were up 11 percent to 1.5 Bcfe
- 106 gross (45.50 net) wells drilled as compared to 128 gross (30.38 net) wells drilled
- Average realized natural gas price was $8.58 Mcf versus $8.56
- Oil and gas revenue increased 11 percent to $13.5 million from $12.1 million
- Discretionary cash flow was $5.7 million versus $7.7 million
- Capital expenditures totaled $26.5 million
- 29 miles of pipeline added to gathering system
Conference Call Information
A conference call will be held at 4:30 p.m. (Eastern) today to discuss 2Q 2007 results. The call in number is 800-289-0726 or 913-981-5545 (international). Conference ID number is 8096144. The conference call will be webcast and can be accessed by logging onto www.ngas.com or by clicking on the following link: http://investor.shareholder.com/media/eventdetail.cfm?mediaid=26934&c= NGAS&mediakey=88728C4609A302D749B6E806E9DC00F5&e=0. (Due to its length, this URL may need to be copied/pasted into your Internet browser's address field. Remove the extra space if one exists.) A slide presentation, which highlights management's discussion points, will be available on the Company's website. For those unable to listen to the live presentation, the webcast will be archived on the Company's website. A telephone replay will also be available for one week beginning at 7:30 p.m. (Eastern), August 7, 2007, and can be accessed by dialing 888-203-1112 or 719-457-0820 (international) and entering pin number 8096144.
About NGAS Resources
NGAS Resources is an independent exploration and production company focused on unconventional natural gas basins in the United States that support repeatable drilling opportunities, principally in the southern portion of the Appalachian basin. Additional information, including the Company's annual report on Form 10-K for 2006 and its quarterly reports on Form 10-Q can be accessed on its website at 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, and the level of capital expenditures required to fund drilling 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.
NGAS RESOURCES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30 | June 30 | |||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
| REVENUE | ||||||||||||||||
| Contract drilling | $ | 7,459,704 | $ | 11,029,274 | $ | 16,704,923 | $ | 31,440,774 | ||||||||
| Oil and gas production | 6,730,947 | 5,935,783 | 13,483,179 | 12,139,967 | ||||||||||||
| Gas transmission and compression | 1,887,039 | 1,374,585 | 3,834,980 | 2,078,156 | ||||||||||||
| Total revenue | 16,077,690 | 18,339,642 | 34,023,082 | 45,658,897 | ||||||||||||
| DIRECT EXPENSES | ||||||||||||||||
| Contract drilling | 5,919,020 | 7,840,559 | 13,099,737 | 24,543,489 | ||||||||||||
| Oil and gas production | 1,799,186 | 1,529,940 | 3,482,200 | 2,983,408 | ||||||||||||
| Gas transmission and compression | 779,843 | 541,869 | 1,879,436 | 1,174,298 | ||||||||||||
| Impairment of oil and gas assets | 964,000 | -- | 964,000 | -- | ||||||||||||
| Total direct expenses | 9,462,049 | 9,912,368 | 19,425,373 | 28,701,195 | ||||||||||||
| OTHER EXPENSES (INCOME) | ||||||||||||||||
| Selling, general and administrative | 3,042,364 | 3,164,516 | 7,064,246 | 7,638,908 | ||||||||||||
| Options, warrants and deferred compensation | 329,177 | 419,787 | 670,300 | 848,534 | ||||||||||||
| Depreciation, depletion and amortization | 2,361,176 | 1,964,578 | 4,667,646 | 3,502,490 | ||||||||||||
| Interest expense | 1,534,216 | 1,089,070 | 2,758,972 | 1,689,453 | ||||||||||||
| Interest income | (49,689 | ) | (101,524 | ) | (133,743 | ) | (219,884 | ) | ||||||||
| Other, net | 45,156 | 86,440 | 137,905 | 127,388 | ||||||||||||
| Total other expenses | 7,262,400 | 6,622,867 | 15,165,326 | 13,586,889 | ||||||||||||
| INCOME (LOSS) BEFORE INCOME TAXES | (646,759 | ) | 1,804,407 | (567,617 | ) | 3,370,813 | ||||||||||
| DEFERRED INCOME TAX EXPENSE | 113,665 | 1,081,454 | 447,071 | 2,022,123 | ||||||||||||
| NET INCOME (LOSS) | $ | (760,424 | ) | $ | 722,953 | $ | (1,014,688 | ) | $ | 1,348,690 | ||||||
| NET INCOME (LOSS) PER SHARE | ||||||||||||||||
| Basic | $ | (0.03 | ) | $ | 0.03 | $ | (0.05 | ) | $ | 0.06 | ||||||
| Diluted | $ | (0.03 | ) | $ | 0.03 | $ | (0.05 | ) | $ | 0.06 | ||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||||||||||||||
| Basic | 21,798,607 | 21,456,828 | 21,794,843 | 21,417,395 | ||||||||||||
| Diluted | 21,798,607 | 22,919,707 | 21,794,843 | 23,072,192 | ||||||||||||
NGAS RESOURCES, INC. CONSOLIDATED BALANCE SHEETS (Unaudited) | |||||||||||||||||||||||||||||||||||||
June 30, | December 31, | ||||||||||||||||||||||||||||||||||||
2007 | 2006 | ||||||||||||||||||||||||||||||||||||
| ASSETS | (Unaudited) | ||||||||||||||||||||||||||||||||||||
| Current assets: | |||||||||||||||||||||||||||||||||||||
| Cash | $ | 2,872,020 | $ | 14,431,977 | |||||||||||||||||||||||||||||||||
| Accounts receivable | 7,964,917 | 9,108,574 | |||||||||||||||||||||||||||||||||||
| Prepaid expenses and other current assets | 866,114 | 1,108,734 | |||||||||||||||||||||||||||||||||||
| Loans to related parties | 7,466 | 7,147 | |||||||||||||||||||||||||||||||||||
| Total current assets | 11,710,517 | 24,656,432 | |||||||||||||||||||||||||||||||||||
| Bonds and deposits | 570,695 | 533,695 | |||||||||||||||||||||||||||||||||||
| Oil and gas properties | 164,762,711 | 144,217,532 | |||||||||||||||||||||||||||||||||||
| Property and equipment | 3,842,173 | 3,342,571 | |||||||||||||||||||||||||||||||||||
| Loans to related parties | 253,401 | 257,430 | |||||||||||||||||||||||||||||||||||
| Deferred financing costs | 1,985,437 | 2,264,022 | |||||||||||||||||||||||||||||||||||
| Other non-current assets | 3,502,229 | 2,634,271 | |||||||||||||||||||||||||||||||||||
| Goodwill | 313,177 | 313,177 | |||||||||||||||||||||||||||||||||||
| Total assets | $ | 186,940,340 | $ | 178,219,130 | |||||||||||||||||||||||||||||||||
| LIABILITIES | |||||||||||||||||||||||||||||||||||||
| Current liabilities: | |||||||||||||||||||||||||||||||||||||
| Accounts payable | 6,658,999 | 9,286,849 | |||||||||||||||||||||||||||||||||||
| Accrued liabilities | 3,519,817 | Share
© Business Wire - 2007
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