NGAS Reports Third Quarter 2006 Production up 44%.Gas Transmission and Compression Revenue Increases 417% LEXINGTON, Ky. -- NGAS NGAS Next Generation Application Solutions (Lucent) Resources, Inc. (Nasdaq: NGAS) today reported third quarter 2006 total revenue of $14.9 million, a 2 percent decline from the comparable quarter last year. Gas gathering and compression revenue rose 417 percent 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 32 percent. A 44 percent increase in production volume was partially offset by a 13 percent decline in the average sales price for natural gas. Contract drilling revenue declined 27 percent as the Company took a larger interest in new wells. Net income in third quarter 2006 was $135,959 versus $187,197 in third quarter 2005. Earnings per fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share of $0.01 were flat with the comparable period in the prior year. Weighted average fully diluted shares outstanding were 22,858,854 compared to 19,597,136 in the third quarter of 2005. Operational and Financial Highlights for 3Q 2006 versus 3Q 2005: * Average daily production was 7,528 Mcfe versus 5,220 Mcfe * Total production volume increased 44 percent to 692.6 Mmcfe * 52 gross (18.25 net) wells drilled versus 34 gross (9.72 net) * Average sales price for natural gas was $7.70/Mcf versus $8.82/Mcf * Oil and gas revenue increased 32 percent to $5.6 million * Gas gathering and compression revenue rose 417 percent to $1.6 million * Discretionary cash flow Discretionary cash flow Cash flow that is available after the funding of all positive net present value (NPV) capital investment projects; it is available for paying cash dividends, repurchasing common stock, retiring debt, and so on. was $2.9 million versus $1.9 million * Capital expenditures totaled $8.1 million * 32 miles of pipeline added to field-wide gathering systems William S William, crown prince of Germany William or Frederick William, 1882–1951, crown prince of Germany, son of William II. In World War I he commanded (1914) an army on the Western Front and was nominal commander in the German attack . Daugherty, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of NGAS Resources commented, "In order to take advantage of strong long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. natural gas supply and demand fundamentals, we remain focused on delivering growth through the drill-bit. Our implementation of this strategy is concentrated in unconventional natural gas basins that support repeatable drilling opportunities. To sustain our growth, we will continue to expand our gas gathering infrastructure and increase our interest in new wells." Mr. Daugherty added, "With over 1,100 drilling locations and our gas gathering infrastructure, we are well positioned for future growth." Third Quarter 2006 During the quarter, the Company drilled 52 gross (18.25 net) wells. Contract drilling revenue decreased 27 percent from the prior year to $7.7 million as the Company took an increased interest in new wells. Contract drilling margins were 20 percent reflecting the transition from turnkey See turnkey system. to cost-plus pricing Cost-plus pricing is a pricing method commonly used by firms. It is used primarily because it is easy to calculate and requires little information. There are several varieties, but the common thread in all of them is that you first calculate the cost of the product, then include an for new drilling programs. Selling, general and administrative expenses were $2.6 million, down 12 percent from the same quarter of 2005. This primarily reflects a reduction in marketing expenditures for drilling programs. As a percentage of revenue, SG&A costs were 18 percent, down from 20 percent in third quarter 2005. Depreciation, depletion depletion n. when a natural resource (particularly oil) is being used up. The annual amount of depletion may, ironically, provide a tax deduction for the company exploiting the resource because if the resource they are exploiting runs out, they will no longer be able and amortization expenses were $1.9 million in third quarter 2006, compared to $1.0 million in third quarter of 2005. The increase in these charges reflects substantial additions to oil and gas properties, gas gathering systems and related equipment, including the NGAS Gathering system. Interest expense in the quarter was $1.3 million, compared to $0.4 million in the same period last year. The increase was attributable to higher debt from the issuance of convertible notes at year-end 2005 as well as credit facility fundings for drilling and gas gathering activities. Operational and Financial Highlights for Nine Months 2006 versus Nine Months 2005: * Average daily production was 7,640 Mcfe versus 4,814 Mcfe * Total production volumes were up 59 percent to 2.1 Bcfe * 180 gross (48.63 net) wells drilled versus 118 gross (33.70 net) * Average sales price for natural gas was $8.27 Mcf versus $8.05/Mcf * Oil and gas revenue increased 67 percent to $17.7 million * Discretionary cash flow doubled to $10.6 million * Capital expenditures totaled $43.6 million * 89 miles of pipeline added to field-wide gathering systems * Gas gathering and compression fees totaling $1.8 million from NGAS Gathering system Conference Call Information A conference call will be held at 4:30 p.m. (Eastern) today to discuss 3Q 2006 results. The call in number is 800-289-0508 or 913-981-5550 (international). Conference ID number is 1000740. The conference call will be webcast and can be accessed by logging onto www.ngas.com or http://viavid.net/dce.aspx?sid=00003721. A PowerPoint 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), November 9, 2006, and can be accessed by dialing 888-203-1112 or 719-457-0820 (international) and entering pin number 1000740. About NGAS Resources NGAS Resources is an independent exploration and production company focused on unconventional natural gas basins in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for 2005 and its quarterly report on Form 10-Q Form 10-Q See 10-Q. for the third quarter of 2006, can be accessed on its website at www.ngas.com. This release includes forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the Private Litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. Reform Act of 1995 relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc 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 CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or 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. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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