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Gasco Energy Announces Agreement To Sell Its Riverbend Project Midstream Assets

DENVER, Feb. 1 /PRNewswire-FirstCall/ -- Gasco Energy (NYSE Amex: GSX) today announced that it has entered into an asset purchase agreement with Monarch Natural Gas, LLC, a portfolio company of Metalmark Capital Partners, in which Gasco has agreed to sell substantially all of its Riverbend midstream assets, and its salt water evaporative facilities, for total cash consideration of $23 million subject to certain adjustments.  The closing of the transactions is subject to the satisfaction of a number of conditions.  Gasco expects closing to occur during the first quarter of 2010.  J.P. Morgan Securities acted as financial advisor to Gasco in connection with the sale.

Included in the transaction is the Company's 100% interest in its wholly owned gathering system and related assets in the Uinta Basin of Utah.  The asset purchase agreement includes 105 miles of large-diameter mainline gathering lines, related compression equipment, a 55,000 MMBtu natural gas processing plant, dehydrators and other above-ground facilities in addition to the salt water evaporative facilities.  As part of the asset purchase agreements, Gasco will enter into a transition services agreement whereby Gasco will provide certain services relating to the operation of the midstream assets to Monarch for a six-month term commencing at the time of closing.  Also at closing, Gasco and Monarch will enter into separate gas gathering and salt water disposal services agreements with Monarch which in the case of the gas gathering agreement provides for an initial gathering rate of $0.435 per MMBtu, plus 5% of the proceeds from the sale of natural gas and natural gas liquids.  

Commenting on the midstream asset sale, King Grant, Gasco's President & Chief Financial Officer said:  "The proceeds of this transaction with Monarch will allow us to strengthen our balance sheet through using the proceeds to repay a portion of our outstandings under our $35 million reserve-based revolving line of credit.  At the same time the gas gathering agreement that we are entering into as part of this transaction will assure us that our natural gas will be able to move to market.  After closing, Monarch, whose management team consists of skilled and veteran operators, will process and move our gas to market at what we believe to be competitive rates.  Our Board of Directors is currently evaluating our 2010 capital expenditure budget for Riverbend Mancos shale completions and recompletions, which we expect to announce, along with 2009 proved reserves, in the coming weeks."

About Gasco Energy

Denver-based Gasco Energy, Inc. is natural gas and petroleum exploitation, development and production company engaged in locating and developing hydrocarbon resources, primarily in the Rocky Mountain region.  Gasco's principal business is the acquisition of leasehold interests in petroleum and natural gas rights, either directly or indirectly, and the exploitation and development of properties subject to these leases.  Gasco currently focuses its drilling efforts in the Riverbend Project located in the Uinta Basin of northeastern Utah, targeting the Wasatch, Mesaverde, Blackhawk, Mancos, Dakota and Morrison formations.  To learn more, visit http://www.gascoenergy.com.

About Monarch Natural Gas LLC

Monarch Natural Gas LLC, with offices in Austin, Dallas, TX , Denver, CO, and Houston, TX, is a private energy company focused on making investments in the midstream sector including gathering, processing, treating, transportation, storage and marketing of natural gas, natural gas liquids (NGLs), oil and related hydrocarbons. The principals of Monarch have worked together since the early 1990s in a number of operating companies the experience from which it will draw upon to identify, execute, provide strategic direction to and if needed operate new investments in midstream companies and assets. Monarch's management team will be responsible for sourcing and executing investments in acquisitions and development projects, in which their experience and knowledge will provide strategic guidance and will, where necessary, take charge of day-to-day operations.

About Metalmark Capital

Metalmark Capital is a leading private equity firm whose principals have a long track record of successful investing in targeted sectors, with particular focus and competence in energy and natural resources, industrials and healthcare.  Metalmark Capital seeks to build long-term value through active and supportive partnerships with the companies and management teams in which they invest.  Metalmark Capital is an investment center of Citi Capital Advisors.  For more information, please visit www.metalmarkcapital.com.    

This press release does not constitute an offering of interests in any fund or partnership managed by Metalmark Capital. If and when an investment opportunity is structured, all investors must obtain and carefully read the related confidential offering memorandum and any amendments or supplements thereto.

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