Debt exchange hurts NGAS earnings

Lexington-based NGAS Resources, which explores for and produces natural gas, reported Thursday a net loss of $4.8 million for its first quarter, driven by costs associated with the company's recent debt exchange.

A year ago, the company lost $1.4 million in the same period.

The loss in the first quarter was 15 cents a share, down from the loss of 5 cents a share a year ago.

About $3.8 million of the loss in the quarter was due to non-cash and one-time charges related to the company's recent debt exchange, according to a company news release.

"Along with reducing the face amount by over $8 million, the main benefit was the financial flexibility it provided by extending the maturity date from later this year until May 2012," said CEO William S. Daugherty in a statement. "This far outweighed the accounting impact on earnings."

The losses also were driven by issues including lower production and decreased funding.

Revenue for the first quarter totaled $11.3 million, down 34.3 percent from $17.2 million in the first quarter of 2008.

The company said average daily production fell 21.7 percent in the first quarter compared to a year earlier. It also saw the average realized natural gas price increase just slightly, to $6.76 per Mcf, or thousand cubic feet, in the most recent quarter from $6.74 per Mcf in the first quarter of 2009.