MARK ERICKSON - GASCO ENERGY INC (GASE)
CEO Interview - published 08/02/2002

DOCUMENT # PAQ229

MARK A. ERICKSON is President, CEO and Director of Gasco Energy, Inc.
Mr. Erickson is one of the company Founders and serves as company
President and as a Director. Mr. Erickson served as past President of
RIS Resources (USA) and as a Director of Pennaco Energy, Inc., a coalbed
methane company focused in the Powder River Basin of Wyoming. Mr.
Erickson received his MS in Mineral Economics from the Colorado School
of Mines. He is a Registered Petroleum Engineer with 18 years of
diversified experience in petroleum engineering, business development,
finance, strategic planning, marketing and project management.

Sector: oil & gas drilling & exploration

TWST: Could you bring us up to date on what has gone on at Gasco Energy
since we spoke a year ago that investors should focus on?

Mr. Erickson: I'd like to highlight five main things that Gasco has
accomplished recently. First, we have worked hard since our last
interview to tighten our capital structure. To that effect, we have sold
25% of the non-producing assets of the company to an energy company,
Brek Energy. Brek owned preferred stock and common stock, which equated
to approximately 24% of our capital structure. Brek returned all
preferred and common stock to us in exchange for the non-producing
assets. Additionally, we gave Brek the option to purchase an additional
5% of the company's non-producing assets for $10.5 million. Second, our
lease position is now essentially complete. We have solid positions in
two of the top Rocky Mountain Basins, the Uinta Basin of Utah and the
Green River Basin of Wyoming, each recognized as two of the top under-
exploited natural gas basins in the Rocky Mountains. Third, we have made
a couple of key personnel additions. We've added a Controller, Peggy
Herald from Hallwood Petroleum, and John Longwell from Prima Energy.
Both of these individuals are very experienced and have outstanding
reputations within the industry. Fourth, Gasco has drilled two wells in
its Riverbend Project in Utah. We've started completions on those wells,
and to date there are now nine wells that are either drilling, in
various stages of completion, or producing in the Riverbend Project.
Those nine wells have been drilled by both Gasco and Phillips Petroleum
Company. And finally, in Wyoming, there are now two wells that have been
drilled and completed by Burlington. Both of these wells look like they
are discoveries ' one well is over pressured, with Jonah-type attributes
and the other is normally-pressured ' both are basin-centered gas
accumulations. Also in Wyoming, we have entered into a 3-D seismic shoot
covering approximately 100 square miles. This shoot will cover our over-
pressured discovery, providing us the opportunity to look at the area
more closely with sophisticated seismic techniques. Bottom line ' we've
been very active since our last interview.

TWST: Let's go back and touch on what you've done with the balance
sheet, the corporate financials. Having sold off these properties, does
that remove the outside ownership position completely?

Mr. Erickson: Yes. We transferred those 25% properties for 11 million
shares after converting the preferred stock. So it represents a big
block of our stock and removes the voting preference that was a part of
the preferred shares.

TWST: Has that removed Brek completely from the picture?

Mr. Erickson: Yes, it has. Brek is now an acreage owner, just like other
companies that are involved in our project areas.

TWST: From a cash perspective, what do you have at this point?

Mr. Erickson: Right now, the company has cash of approximately $2.5
million. We are in a unique position, in that most of the current wells
to be drilled in Wyoming and Utah have to be drilled per contractual
obligation by our partners. I shouldn't say 'have to be,' but in order
for Burlington Resources or Phillips to keep earning in the deals, they
need to continue drilling the contractual obligation wells. So, Gasco
has the ability to stretch its capital substantially by participating
alongside its partners.

TWST: That works to your advantage.

Mr. Erickson: Right. We are fortunate in that we have the partnerships
with Burlington and Phillips.

TWST: Looking at the Utah project, among the nine wells, what's the
breakdown between producing wells and wells that are being drilled at
this point?

Mr. Erickson: Right now, there are five wells flowing gas, two wells
awaiting completion and one well drilling. Gasco's Federal 23-29 is
currently producing into the sales line with two intervals completed and
five more to be completed. The company's Federal 42-29 has 10 completion
intervals and is currently being connected to the sales line before any
completions begin. Gasco also has a workover, the Alger Pass #1, which
has been re-stimluated and is currently flowing back frac fluid.
Phillips Petroleum has six wells. Four of the six are fully completed,
one is awaiting completion and the other is drilling.

TWST: What does the production look like relative to expectations?

Mr. Erickson: The first three Phillips wells were not completed with the
latest completion practices and as a result did not meet our
expectations. We are excited because Gasco now has Gasco-operated wells
and is applying the latest practices. One of the major differences
between what we are currently doing and what Phillips did, is that we
lay our flowlines to the wells and then complete them so that they flow
immediately to sales. We think it is very important to keep the water
off the formations. Tight gas sands tend to soak water like a sponge,
which is very detrimental to natural gas production. Phillips has now
implemented this procedure in its completion program and its most recent
well is looking very encouraging. We are also very excited with the
initial completions within our Federal 23-29. In addition, the second
well we drilled, the Federal 42-29, encountered one of the thickest pay
sections we've seen to date ' 275 feet of pay in the Mesa Verde and 75
feet of pay in the Wasatch. We expect to commence completion on that
well within the next 30 days.

TWST: Is this all gas production?

Mr. Erickson: Yes, we're focused on natural gas production.

TWST: Anything else?

Mr. Erickson: I am happy to report that our alliances with Halliburton
and Caza have been very beneficial to all parties. Through our
Halliburton alliance we have utilized a mud system new to the area, the
DAP (Di-Ammoniam Phosphate) mud system. The use of this system resulted
in a very stable and competent well. This mud system is basically
fertilizer in fresh water. So it is very environmentally friendly. Other
operators in the area have taken notice of the system and are now
adopting it. With Caza, we are currently evaluating a pitless mud
system, which is also environmentally friendly. The pitless mud system
would eliminate the need for reserve pits, thus maintaining the natural
integrity of the land and also results in lower drill-site preparation
costs.

TWST: What are the plans are for the next couple of quarters?

Mr. Erickson: Gasco will continue its completion program in the Uinta
Basin. We would also like to begin drilling again. In Wyoming,
Burlington currently has plans to drill three additional wells in the
Wyoming play. Gasco is currently looking at two old well bores that
offer potential recompletion opportunities. These opportunities offset
the Burlington discoveries. Burlington will also be shooting an
additional 120 miles of high-resolution 2-D seismic. Of course we are
also looking forward to the results from the 3-D seismic program over
our Grindstone Project.

TWST: In terms of drilling programs, what's on tap for the next couple
of quarters?

Mr. Erickson: The well that Phillips is currently drilling and the three
Burlington wells in Wyoming are all part of Gasco's plan.

TWST: As you look at all these, where is the big opportunity for you?

Mr. Erickson: Right now, we're excited about all three of our projects.
Our Grindstone Project in Wyoming is an over pressured basin-center
accumulation with Jonah-style attributes. Our Muddy Creek Project in
Wyoming is the second opportunity. This prospect is a shallower (less
than 10,000-feet deep), normally pressured basin center accumulation,
which appears to have regional extension. In Utah, our Riverbend Project
continues to progress. It's ahead of Wyoming by probably 12 to 18
months. The project continues to improve. The drilling has further
confirmed our geologic models. The completions are improving and we're
seeing better results from the current group of wells that are being
drilled and completed. The thick pay encountered in the Federal 42-29 is
very encouraging.

TWST: Why are the more recent wells more productive?

Mr. Erickson: I think the main reason in Utah is that the wells are
connected to the sales line before being completed. As mentioned before,
this enables us to minimize the amount of time that the well might be
shut-in with water on the formation. The initial Phillips wells did not
have sales lines and the wells were shut-in with fluid sitting over the
completed zones. The fluids are then imbibed into the pore spaces, which
reduces permeability and then the ability of the wells to flow gas. The
use of flow-through flac plugs is also another reason for the better
success recently. These plugs also help keep fluid off of the sands.
They have the added benefit of expediting the completion program, thus
saving capital. One of the exciting conclusions from the first Phillips
wells was the confirmation of our geologic models. It's really up to the
engineers ' now that we know the gas is there ' to determine the best
method to get the gas out economically.

TWST: So it really is just improved technology.

Mr. Erickson: It is improved technology compared to what was being used
in the area, but we are utilizing existing technology.

TWST: So it's really a competitive advantage that you have.

Mr. Erickson: I think the primary competitive advantage that we have is
the experience of the people within this company. The average years of
experience of our technical people is 20 years. In Utah, where we have
our Halliburton alliance, Halliburton has put a very strong technical
team in place to work with us on that project. So another competitive
advantage is the alliance with Halliburton and all of the technology
they bring to bear on the project.

TWST: What kind of gas pricing do you need to make these wells work?

Mr. Erickson: We pretty much look at a $2.50 NYMEX price as the economic
lower limit of a project's viability. At gas prices above $3.00, the
economics look very, very strong. Right now, the Rocky Mountains are
suffering from gas-on-gas competition due to pipeline constraints, and a
lot of new gas has been brought on in the Rocky Mountains. So prices in
the Rockies have been, I would say, abnormally low compared to the
NYMEX.  We see those problems being alleviated starting this winter with
additional demand due to winter heating. Then, the Kern River pipeline
expansion is expected to go in service in the second quarter of next
year. That's a 900 million cubic feet of gas per day project, which we
see as largely de-bottlenecking the Rocky Mountains from that point
forward.

TWST: So that will solve the constraint problem.

Mr. Erickson: Yes, we believe it will.

TWST: Is the demand in California there, for that much additional gas?

Mr. Erickson: California is a very strong market. Some of the natural
gas and electric problems that the state had 18 months ago were
indicative of the need in California. It doesn't take much additional
economic growth to increase the demand even further.  We also see
additional strong demand beginning to develop in Nevada.

TWST: As we look out over the next couple of quarters, what should
investors judge you on? What are the benchmarks or milestones that
people should watch for?

Mr. Erickson: I think people should continue to monitor our strategy of
increasing our net asset value through the drill bit. I'm proud to
report that we are on track. We have met our goals of the previous year.
We continue to follow through on our business strategy. I think it's
important for investors to monitor our well results. We have three
projects. All of these projects are in various stages of development.
While no single well will make or break any these plays, I think it's
important for investors to see the trend of better completions, followed
promptly by drilling. I think investors also need to monitor companies'
reporting standards, how they conduct their business and how they report
their activities to investors. With the addition of our Controller, we
are working very closely as a team to insure that we are reporting our
financial position and key developments within the company accurately.

TWST: Would you say that your accounting is fairly transparent at this
point?

Mr. Erickson: Very definitely. Being a young, emerging company, an E&P
company, our financial reporting is much simpler compared to some of the
natural gas marketing companies and trading companies, which have very
sophisticated contractual deals or transactions. With a young E&P
company, it comes down to how the company is spending its money, what
the results are, and how it is reporting those results.

TWST: So there's not a whole lot to play with, from your perspective.

Mr. Erickson: No. As I mentioned, some of the complicating issues, like
the large shareholder and the preferred stock, have been cleared. Our
capital structure is now easier to understand. We have acquired the
assets that required drilling wells. Now it is a more straightforward
company.

TWST: With the management additions that you mentioned earlier, do you
have the team in place now that you need?

Mr. Erickson: Yes, we do. From a technical standpoint and a financial
standpoint, we are very strong. Any future additions to the company
would be primarily support staff, associated with any type of large
development program.

TWST: As you've gone through this evolutionary phase, what has that done
to the corporate culture?

Mr. Erickson: Look at the people on our team. We have maintained a
strong technical team, a group that is very technically oriented. We've
worked real hard to get experienced, independent workers in place, and
we shore them up with key contractual people. We don't want our expert
technical people becoming administrators. We want them to grow the
company. You might say that we tend to be a virtual company ' virtual in
the sense that we have a strong technical team and try to outsource
administrative functions so as not to dilute that technical effort. The
team that we have in place is very capable of growing Gasco, of taking
this company to the next level.

TWST: In terms of the relationships you have with your partners, how
long term are those?

Mr. Erickson: We expect our relationships with Burlington and Phillips
to be in place for the long term. In both of those projects ' in Utah
and Wyoming ' we have structured the deals to retain significant acreage
positions, retain large working interests and our own areas of
operations. We look at our partnerships as beneficial both from a
technology standpoint ' working with major companies to unlock the
resource and to enjoy the benefits of their drilling ' and from a
developing asset standpoint. Meaning capitalizing on their obligations
to grow the projects while we retain significant offset acreage
positions. And, since these relationships are very important to us, we
work hard at ensuring that all parties benefit.

TWST: How do you feel about Gasco's current market value?

Mr. Erickson: Like most CEOs right now, I'm very disappointed with the
stock market in general and the effect that it's had not only on Gasco,
but on the entire energy sector. I think it's very important to have a
healthy market for energy companies so as to meet this nation's needs. A
strong capital market gives us more flexibility in raising capital and
growing our business. That, in turn, results in more energy supply '
which the nation needs. I'm concerned that there will be a significant
drop in the nation's natural gas production this year, and that drop is
going to be very difficult for energy companies to make up. Prior to
this drop in production, the industry had been going full tilt for some
18 months, and we were only able to increase natural gas supply by
1%-2%. If we lose 4%-6% of supply this year due to soft natural gas
prices and uncertainties in the market ' and you can see it in the rig
count that's dropped from probably 1,200 rigs to 800 ' it is going to be
very difficult for the industry to make up in its current state of being
undercapitalized and in a manpower shortage. We will not be able just to
turn the valve on and meet the energy needs. If the economy turns around
and production drops, we see continuing volatility in the natural gas
market. And if prices do jump, that's not necessarily a good thing for
the industry or for the consumers. We'd like to see predictable,
profitable prices for the long term. That would be a positive for
industry and a positive for consumers.

TWST: When you sit down with investors, what are the two or three
reasons you give them today to take a look at Gasco?

Mr. Erickson: First and foremost is the growth potential of the company.
Our business strategy is focused on creating net asset value. We have
three key projects that all look viable. These projects all have the
individual potential to be significant to Gasco, but the combined effect
of all of these prospects could potentially evolve Gasco into a
trillion-cubic-foot-plus type company. The upside of this company may be
substantial. Next, I would focus investors on our people. Our core team
is very experienced, technically oriented, with a solid reputation and a
great track record of building companies and achieving success within
our focus area, the Rocky Mountains. Third, I would underscore our
strong industry relationships ' our partnerships with Burlington, with
Phillips Petroleum, with Halliburton, with Caza. These are industry
leaders and those partnerships are important to us. They validate what
we're doing. They bring a lot of technical power to bear on the projects
that we're working and increase the chance of success.

TWST: As you look at the company today, what's the risk? What keeps you
up at night?

Mr. Erickson: The risk, I would say, is typical of small cap and micro-
cap companies. It's that the ability of the company to raise additional
funds is always at the forefront of our thought process. How do we
maintain a clean, simple capital structure and keep the company
adequately capitalized to execute on its business strategy?
Additionally, investors need to focus on how our projects are perceived.
Are we continuing with the trend of improvement on our projects?
Ultimately, it's going to come down to dollars and the success of our
projects.

TWST: Given that concern ' and given your good projects and tight
funding ' does that make you a target for somebody?

Mr. Erickson: That's not something that we are out seeking. We are not
seeking a merger candidate or someone to come in and acquire us right
now. We think that's premature. But have we caught the attention of the
industry in the Rocky Mountains? Absolutely! For a small company like
this to have put together the substantial positions it has, in what I
believe are the top two Rocky Mountain natural gas basins. I'm sure that
as we progress and demonstrate additional success, there will be people
who will be interested in acquiring Gasco. In fact, that's our ultimate
exit strategy. We have a three- to five-year business plan to create
value, to wring the risk out of the projects, and to sell the company to
an acquire-and-exploit-type organization. We see our niche as creating
value ' going in early, identifying the projects, and proving them. In
the long haul, it makes more sense for companies with larger balance
sheets, more financial flexibility and lower cost of capital, to come in
and develop these assets. When that time comes we will look at selling
the company and moving on to the next project. On the other hand, we
have the management team in place that's capable of developing these
assets and growing the company, if that's the path we choose to follow.

TWST: Is there anything else we should have touched on?

Mr. Erickson: To recap, the last seven months since we spoke have been
very exciting for Gasco. We've seen our projects mature substantially.
We think we have improved the capital structure to make it simpler and
easier to understand. We have strengthened our team. We have moved ahead
and executed on our business strategy and continue to see improvements
and positive trends on all of our projects.

TWST: Thank you. (TM)

MARK A. ERICKSON
 President, CEO
 Gasco Energy, Inc.
 14 Inverness Drive
 Suite 236, Building H
 Englewood, CO 80112
 (303) 483-0044
 (303) 483-0011 - FAX
 www.gascoenergy.com
 e-mail: info@gascoenergy.com

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This Interview with Mark A. Erickson, President & CEO, Gasco Energy,
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Copyright 2002 The Wall Street Transcript Corporation
All Rights Reserved


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