TYLER, Texas, March 17, 2009 (GLOBE NEWSWIRE) -- Pegasi Energy Resources Corp. (OTCBB:PGSI), an East Texas based oil and gas exploration and production company, announced a 47% increase in its proven reserve category as of December 31, 2008, based on an independent engineer report prepared by James E. Smith & Associates, Inc. The increase is based on the previously reported purchase of an additional 10% Working Interest in its East Texas program, giving the Company an 80% interest, and the successful drilling of the Harris 2 and Childers 2 Cotton Valley wells. The acquisition and completion of the two wells increases Pegasi reserve base based on the December 31, 2008 reserve report as follows: P1 33.6 BCFE, P2 25.7 BCFE and P3 296.6BCFE. This is an increase of 19.52BCFE in the P1 category.
Total revenues for the year ended December 31, 2008 totaled $2,601,236, compared to $2,133,009 for the year ended December 31, 2007. Production revenues of oil and gas increased $366,975 for the year ended December 31, 2008 compared to the year ended December 31, 2007. This increase in revenues reflects the impact of higher sales volume for natural gas as well as an increase in sales prices for natural gas of about 74%. The numbers are preliminary and may change after the audit is complete.
"2008 was a year of significant accomplishments," stated Chairman Michael Neufeld. "After our initial public offering in December 2007, we were able to maintain and add to our leasehold position under extreme competitive conditions as a result of Bossier and Haynesville drilling in our project area." To enhance our own gas marketing, we completed the expansion of our main gas trunkline and gathering lines which increased capacity for both Pegasi and third part sales. The two recently drilled Cotton Valley wells, reported earlier, demonstrated the presence of an exploitable oil column in the lower section of the Cotton Valley. The company is exploring different avenues of additional financing to exploit the oil potential. The company anticipates lower drilling and completion costs in 2009.
About Pegasi Energy Resources Corporation
Pegasi Energy Resources Corporation is an organic growth-oriented independent oil and gas exploration and production company headquartered in Tyler, Texas. Pegasi is focused on a repeatable, low geological risk, high potential project in the active East Texas oil and gas region. The company's strategy is focused on establishing a portfolio of drilling opportunities to exploit undeveloped reserves to grow production, as well as undertaking exploration to grow future reserves. Additional information concerning Pegasi Energy is available at ww.pegasienergy.com. Investor inquiries may be directed to Richard Lindermanis 903-595-4139.
Forward Looking Statements
Cautionary Note to U.S. Investors -- The United States Securities and Exchange Commission ("SEC") permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this press release, such as probable, possible and potential, that the SEC's guidelines strictly prohibit us from including in filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 8-K, filed with the SEC on December 18, 2007, available from us at our principal executive offices at 218 N. Broadway, Suite 204, Tyler Texas 75702. You can also obtain this form from the SEC by calling 1-800-SEC-0330.
The statements in this press release regarding Pegasi Energy's expectations with respect to the timing of testing and drilling operations, transportation of crude oil, acquisition of seismic data, and the construction of the pipeline, the use to which seismic data will be put, the ability of Pegasi Energy to plan a full field development, including additional drilling, facilities and pipeline to handle new production as appropriate through 2010, and the expectation as to sources of funding, are 'forward-looking statements' within the meaning of Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Exchange Act of 1934. Although these forward-looking statements reflect the good faith judgment of management, forward-looking statements are inherently subject to known and unknown risks and uncertainties that may cause actual results to be materially different from those discussed in these forward-looking statements including, but not limited to, in the case of these forward-looking statements: unexpected delays in drilling or pipeline or other transportation infrastructure completion due to equipment failure or other unforeseen reasons; unforeseen events, such as unexpected difficulties in drilling or unexpected discoveries, may cause Pegasi Energy to reallocate resources, which may delay drilling, surveys, design plans, transportation infrastructure development and production or alter the mix of development drilling and exploration drilling in Pegasi Energy's portfolio; and unexpected costs may decrease funds available to carry out Pegasi Energy's plans described in this press release, which could delay or prevent execution of these plans. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. Pegasi Energy assumes no obligation to update these forward-looking statements to reflect any event or circumstance that may arise after the date of this release, other than as may be required by applicable law or regulation. Readers are urged to carefully review and consider the various disclosures, including the risk factors, made by Pegasi Energy in its reports filed with the Securities and Exchange Commission, in particular under the caption "Risk Factors" of its 8-K filed on December 18, 2007, which attempt to advise interested parties of the risks and factors that may affect Pegasi Energy's business. If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, Pegasi Energy's actual results may vary materially from those expected or projected.