August 19, 2009 (FinancialWire) — NGAS Resources, Inc. (NASDAQ: NGAS) has closed the sale of its remaining 50% interest in 485 miles of Appalachian gas gathering facilities to Seminole Energy Services for $22 million.

The purchase price was paid $7.5 million at closing, with the balance of $14.5 million payable by SES in monthly installments through December 2011.

The sale completed a mid-July monetization of the initial half interest in the gathering system to a subsidiary of SES for $28 million and was triggered by NGAS’ exercise of put rights that it acquired at that time. The put rights were conditioned on an equity raise by NGAS, which was closed for net proceeds of approximately $6.1 million on August 13, 2009. Proceeds from the second half of the gathering system sale and the equity raise were applied to reduce outstanding borrowings under NGAS’ revolving credit facility to $31 million. Payments on the $14.5 million promissory note issued by SES, including interest at 8% per annum, will be applied for further debt reduction.

William S. Daugherty, president and CEO of NGAS Resources, commented, “We are very pleased to complete this phase of our plans for strengthening the company by improving our balance sheet. The sale of the remaining interest in this portion of our Appalachian gathering system provides further liquidity to take advantage of our significant development opportunities.” Daugherty added, “In addition to monetizing this asset and remaining as operator of the gathering system, our firm capacity rights ensure long-term deliverability for our Appalachian gas production.”

The gas gathering system spans parts of southeastern Kentucky, eastern Tennessee and western Virginia, and interconnects with Spectra Energy Partners’ East Tennessee Interstate pipeline network. NGAS retained long-term operating rights and firm capacity rights of 30,000 Mcf per day in the gathering system.

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