Denver-based Gasco Energy Inc. last week simplified its portfolio by absorbing a working interest partner that had owned a 14% stake in undeveloped acreage in both Utah and Wyoming.

The transaction gives Gasco control of Brek Energy Corp., based in Reno, NV, for equity consideration of about 11 million shares of Gasco common stock, estimated to be worth $30 million, based on Gasco’s closing price on Sept. 20.

Brek controls leaseholds on 17,115 net acres in Uinta’s Riverbend in Utah, 14,109 net acres in the Greater Green River Basin in Wyoming, and 828 net acres in the Crocker Canyon in California. It also owns a controlling interest in Vallenar Energy Corp., which holds leases that cover about 9,191 gross and 8,865 net acres in the Rocksprings prospect in Texas. Before the merger is completed, Brek has to distribute its ownership of Vallenar and the California assets.

The deal increases Gasco’s average working interest in the Uinta Basin to 74% from its current average working interest of 60%. It also Gasco’s average working interest in the Green River Basin to 63% from its current average working interest of 49%.

“The acquisition is consistent with our strategy of consolidating acreage in our core areas from other operators and industry partners,” said Gasco CEO Mark Erickson. He said the transaction is accretive on a net asset value per-share basis and increases the company’s existing acreage position by 20%. “The transaction is a natural fit and one that we have targeted for some time. The undeveloped acreage represents the bulk of the value in this transaction.”

Because the properties “are a direct overlay to the leases we already hold in Utah and Wyoming, we are in a unique position to evaluate Brek,” said Erickson. “The resource and reserve potential of Brek’s properties are nearly proportionate to our own properties. Increased ownership furthers our conviction and dedication to best developing the Uinta Basin while reinforcing our bullishness on the Rockies as one of the most important areas for future development of natural gas.”

Brek’s year-end 2005 proved reserves totaled 5.8 Bcfe, of which 98% is natural gas. About 80% of the reserves are proven undeveloped. At year-end 2005, Gasco’s proven reserves totaled 76.7 Bcfe. Current net production included in the transaction is estimated at 170 Mcf/d. Gasco will not incur any additional overhead expenses as a result of the acquisition.

Pro forma for the transaction, Gasco will own or control 124,281 gross acres (91,565 net) in the Uinta Basin and 92,212 gross acres (57,718 net) in the Green River Basin. Once the transaction is completed, Gasco expects to operate 52 gross wells and own more than 100 miles of gathering system, plus a gas processing plant. Gasco also will own or control 216,493 gross and 149,283 net leasehold acres in its core areas of operations.

The boards of directors of Gasco and Brek have approved the terms of the transaction, which is expected to close near the end of 2006. The completion of the acquisition is subject to the approval of the stockholders of Brek and the completion of a distribution of certain subsidiaries of Brek to its stockholders. Under the terms of the transaction, a wholly owned subsidiary of Gasco will merge with and into Brek. As a result of the merger, Brek will become a wholly owned subsidiary of Gasco.

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