NGAS Resources Inc. (NGAS, Financial) filed Quarterly Report for the period ended 2009-09-30.
NGAS Resources is a natural resources company focused on natural gas development drilling and reserve growth. Based in Lexington Kentucky the company specializes in developing its own geological prospects concentrated in the Appalachian Basin. Ngas Resources Inc. has a market cap of $51.5 million; its shares were traded at around $1.69 with and P/S ratio of 0.6. Ngas Resources Inc. had an annual average earning growth of 12.9% over the past 5 years.
Production revenues for the third quarter of 2009 reflect an increase of 5% in production output to 997 Mmcfe, compared to 948 Mmcfe in the year-earlier period, offset by declines of 42% in natural gas prices, 45% in oil prices and 63% for sales of natural gas liquids. Our volumetric growth reflects strong performance from our horizontal wells and the commencement of production from our Haleys Mill field in western Kentucky during August 2008, along with our share of production from non-operated wells drilled for our 2008 drilling partnership. Approximately 50% of our natural gas production in the current quarter was sold under fixed-price physical delivery contracts, and the balance primarily at prices determined monthly under formulas based on prevailing market indices. Realized natural gas prices in the 2009 third quarter averaged $6.53 per Mcf for our Appalachian production and $5.67 per Mcf overall, compared to an average overall realization of $9.80 per Mcf in the third quarter of 2008.
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NGAS Resources is a natural resources company focused on natural gas development drilling and reserve growth. Based in Lexington Kentucky the company specializes in developing its own geological prospects concentrated in the Appalachian Basin. Ngas Resources Inc. has a market cap of $51.5 million; its shares were traded at around $1.69 with and P/S ratio of 0.6. Ngas Resources Inc. had an annual average earning growth of 12.9% over the past 5 years.
Highlight of Business Operations:
Liquidity from Gathering System Sale and Equity Raise. On July 15, 2009, we sold a 50% undivided interest in 485 miles of our Appalachian gas gathering facilities (Gathering System) to Seminole Gas Company, L.L.C. (Seminole) for $28 million. As part of the transaction, we entered into various gas marketing and gas sales arrangements with Seminole and its parent company, Seminole Energy Services, LLC (Seminole Energy). Under these arrangements, we retained operating rights for the Gathering System and firm capacity rights for daily delivery of 30,000 Mcf of controlled gas, ensuring long-term deliverability for our Appalachian production through the system. We also granted Seminole Energy a six-month option to purchase our retained 50% interest in the Gathering System for $22 million, payable $7.5 million in cash and the balance over 30 months under a promissory note bearing interest at 8% per annum. We reserved the right to trigger the exercise of the purchase option, conditioned on our completion of a qualifying equity offering. On August 17, 2009, after satisfying that condition, we closed the sale of our remaining interest in the Gathering System to Seminole Energy under the terms of its purchase option. Proceeds of $35.5 million from the Gathering System sale and approximately $6.1 million from the equity raise were applied to debt reduction under our revolving credit facility. Liquidity from these transactions has provided us with greater flexibility to take advantage of our development opportunities.Production revenues for the third quarter of 2009 reflect an increase of 5% in production output to 997 Mmcfe, compared to 948 Mmcfe in the year-earlier period, offset by declines of 42% in natural gas prices, 45% in oil prices and 63% for sales of natural gas liquids. Our volumetric growth reflects strong performance from our horizontal wells and the commencement of production from our Haleys Mill field in western Kentucky during August 2008, along with our share of production from non-operated wells drilled for our 2008 drilling partnership. Approximately 50% of our natural gas production in the current quarter was sold under fixed-price physical delivery contracts, and the balance primarily at prices determined monthly under formulas based on prevailing market indices. Realized natural gas prices in the 2009 third quarter averaged $6.53 per Mcf for our Appalachian production and $5.67 per Mcf overall, compared to an average overall realization of $9.80 per Mcf in the third quarter of 2008.
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