NGAS Resources, Inc., is an independent exploration and production company focused on unconventional natural gas plays in the eastern United States, principally within the southern Appalachian Basin.  We generate our own geological prospects in this region, where we have established expertise and a long track record of success. Core assets include approximately 360,000 acres and interests in approximately 1,400 oil and gas wells and an extensive inventory for future horizontal drilling. We have a stable base of long-lived proved reserves, estimated at 78.4 billion cubic feet equivalents (Bcfe) at year-end 2009. We also operate the gas gathering facilities for our core Appalachian properties, providing deliverability directly from the wellhead to the interstate pipeline network serving major east coast markets. 

We have transitioned to horizontal air drilling with staged completion technology using nitrogen for fracing material with no water to develop our operated properties. To date, we have completed 50 horizontal wells, which produce high-quality natural gas from the Devonian shale formation which is present throughout our Appalachian operating areas and the New Albany shale formation in the Illinois Basin.

We recently began extending the lateral leg of our horizontal wells from 3,500 feet up to 4,500 feet while increasing the frac stages.  Based on initial 30-day production rates for these extended laterals, we anticipate ultimate recoveries of over 1.1 Bcfe per well. Also, by stacking multiple horizontal wells on a single drill site, we are further improving our cost efficiencies and reducing the total footprint. As we continue to increase our recovery volumes and rates at lower finding costs, our success in applying this technology is substantially enhancing the value proposition for our operated properties.

Last year, we sold 485 miles of our Appalachian gas gathering assets.  We remain the operator of the gathering system and have retained firm capacity rights for 30,000 Mcf/d to ensure deliverability to market for our Appalachian gas production.  By retaining firm capacity rights, we are also able to maintain our competitive position in southern Appalachia, as control of regional gas flow provides advantages to us in acquiring undeveloped acreage near our core fields.

Based on the expertise and success we have developed in the Appalachian Basin, we have diversified our asset base into similar unconventional plays in other basins. We are currently developing our New Albany shale play, within the south central portion of the Illinois Basin in western Kentucky, where we hold 52,000 acres for development. 

We achieved record production of 4.0 Bcfe in 2009, up six percent from the prior year. Our undeveloped acreage position of nearly 300,000 acres in the Appalachian Basin provides us with an extensive inventory of low-risk, repeatable drilling locations for future growth. We believe our extensive experience in the Appalachian Basin, and our relationships with partners, suppliers and mineral interest owners gives us competitive advantages in developing these resources to achieve annual volumetric growth and strong financial returns on a long-term basis. Our business model has proved highly resilient over time, and we have the acreage, infrastructure, and human resources in place to capitalize on these opportunities. 

The common stock of NGAS Resources is traded on the Nasdaq National Market under the symbol “NGAS”.