Nov 3, 2009 (GlobeNewswire via COMTEX News Network) --

    --   Debt Reduction from Sale of Appalachian Gathering Assets
  --   Production Up 5% in the Quarter and 9% for the Nine Months
          --   Adds to Acreage Position in Leatherwood Field

LEXINGTON, Ky., Nov. 3, 2009 (GLOBE NEWSWIRE) -- NGAS Resources, Inc. (Nasdaq:NGAS) today reported third quarter 2009 total revenue of $11.2 million, compared to $23.6 million in the third quarter of 2008. The decline reflects significantly lower commodity prices, reduced drilling activity and lower gas transmission and processing revenue following the sale of 485 miles of the company's Appalachian gas gathering assets during the quarter. A one-time, pre-tax gain of $3.4 million on the sale of the gathering assets was reported in the period.

The company reported a net loss of $0.1 million in the third quarter 2009 compared with net income of $0.9 million a year ago. Discretionary cash flow was $4.1 million or $0.14 per share in third quarter 2009 compared with $6.2 million, or $0.23. (A reconciliation of this non-GAAP measure is provided at the end of this release.)

William S. Daugherty, President and CEO of NGAS Resources, commented, "Operationally, the third quarter and year-to-date were quiet as our drilling program reflects the difficult macro-environment. However, it was a successful quarter strategically as we monetized our gas gathering assets, paid down our revolving debt and added acreage to our core Leatherwood field." Mr. Daugherty added, "We believe these initiatives, coupled with increasing operational momentum, have strengthened the company and positioned us for future growth."

Operational and Financial Highlights for 3Q 2009 versus 3Q 2008:

  --  Production volumes increased 5% to 1.0 Bcfe
  --  Average daily production was 10.8 Mmcfe versus 10.3 Mmcfe
  --  Average natural gas price was $5.67/Mcf versus $9.80
        -  Average price for the Appalachian gas portion was
           $6.53
  --  Debt reduction of $45 million in 3Q09

Third Quarter 2009 Expense Review

Depreciation, depletion and amortization expenses were $3.3 million in third quarter 2009, flat with the same quarter of the prior year, reflecting additions to oil and gas properties offset by the sale of gas gathering assets.

Selling, general and administrative expenses were down 27 percent in the 2009 third quarter to $2.6 million from $3.6 million in the same quarter of 2008. This primarily reflects the timing and extent of marketing costs for sponsored drilling partnerships. As a percentage of revenue, SG&A costs were 23.2 percent, compared to 15.1 percent in third quarter 2008.

Interest expense in the quarter was $1.2 million, a savings of 18 percent compared to $1.5 million in the same period last year, reflecting lower borrowings on the company's line of credit.

Corporate Events in Third Quarter 2009

 Continued...