For the quarter the company reported:
— This decrease in total revenues is mainly the result of reduced revenues from onshore operations to $1,217,040 in the first quarter of 2009 as compared with $2,888,422 for the first quarter of 2008. This decrease reflects the significantly lower natural gas prices and the reduced industrial demand on the Waxahachie system for natural gas during the first quarter 2009 due to the recession. The company buys natural gas for its Waxahachie system based on an index less a fixed amount and sells the gas on the same index plus a fixed amount, therefore, the price of natural gas does not affect the per unit margin.
— Operating income for the first quarter of 2009 showed a loss of $188,437 as compared with a loss of $188 for the first quarter of 2008. This increased loss is primarily the result of increased depreciation, depletion and amortization and accretion expense, a decrease in revenues and a decrease in the gross margin realized upon the sale of natural gas by our onshore operations.
— Adjusted EBITDA for the first quarter of 2009 was $150,142 compared with $226,076 for the same quarter 2008.
— Total expenses for the first quarter of 2009 were $2,211,883 as compared with $3,694,180 for the same quarter of 2008. The cost of natural gas bought decreased from $2,569,114 for the first quarter of 2008 to $1,025,018 for the first quarter of 2009, because of decreased natural gas prices and volumes sold related to the Waxahachie system.
— Operation and maintenance expense reduced to $219,370 for the quarter ended March 31, 2009 from $261,114 for the quarter ended March 31, 2008. Depreciation, depletion and amortization expense increased to $263,590 for the first quarter of 2009 from $186,497 for the first quarter of 2008, because of increased asset levels and estimated asset retirement obligations.
— Accretion expense increase a little to $34,775 for the reporting quarter from $7,574 for the same quarter in 2008.
— General and administrative costs reduced to $669,130 for the quarter ended
March 31, 2009 from $677,554 for the quarter ended March 31, 2008.
Robert Panico, president and chief executive officer of Gateway Energy said, “During the first quarter of 2009, we felt the effects of the economic downturn, particularly as it adversely impacted volumes for our Waxahachie distribution system. Despite the challenges, we believe the economic instability of 2009 will present opportunities that the Company can capitalize on, using its strong cash and liquidity position and acquisition strategy. During 2009, we expect to see attractive assets that will be available at much more realistic valuations than were available in recent years.” Panico continued, “We are committed to an aggressive, but principled, approach to acquisitions during this period of opportunity.”
