NGAS Resources, Inc. announced Thursday an agreement to acquire approximately 23.2 Bcfe of proved gas reserves and 75,000 gross acres (61,875 net acres) of leases for $27 million, or $1.16 per Mcfe. The privately negotiated transaction includes substantially all the assets of Stone Mountain Energy Co., L.C. located in Bell, Harlan, and Leslie Counties, Kentucky, and Lee County, Virginia. The assets to be purchased include 113 oil and gas wells currently producing approximately 2,700 Mcfe/d. Gas production is delivered through a gathering system owned by Duke Energy Gas Services. “This major acquisition paves the way for future growth in line with our long-term strategic plan,” said William S. Daugherty, President of the Lexington, KY-based NGAS. “Our acreage position in the Appalachian Basin will be expanded to over 250,000 gross acres (170,000 net acres). The acquisition will also boost our current net daily production to approximately 5,000 Mcfe/d and will increase our proved oil and gas reserves to approximately 55 Bcfe, not including 2004 reserve adjustments. This transaction offers us opportunities to expand our throughput to major natural gas markets serviced through Duke’s system and strengthen our competitive position in the region.” NGAS changed its name from Daugherty Resources in June 2004.

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