AUGUST 14, 2006 (HOUSTON, TEXAS) ... Gastar Exploration Ltd. (AMEX: GST; TSX: YGA) reported a net loss attributable to common shares for the three months ended June 30, 2006 of $6.7 million, or $0.04 per basic and diluted common share, compared to a net loss of $8.7 million, or $0.07 per basic and diluted common share for the three months ended June 30, 2005. The current quarter loss did not include a non-cash full cost ceiling impairment of natural gas and oil properties while the 2005 quarterly loss included a non-cash full cost ceiling impairment charge of $4.3 million. The net loss for 2006 includes a litigation settlement expense of $1.2 million. The 2005 quarterly loss also included the expensing of a $662,000 call premium and the expensing of $630,000 of unamortized deferred costs both related to the early retirement of the 15% senior notes in June 2005. Total revenues for the three months ended June 30, 2006 were $6.7 million, an increase of $1.8 million from revenues of $4.9 million reported for the comparable period in 2005. The 2006 quarterly increase in revenues was attributable to a 58% increase in the quarterly production which was partially offset by a 15% decline in natural gas prices. Average daily production for the three months ended June 30, 2006 was 13.2 million cubic feet of natural gas equivalents per day ("MMcfed"), compared to 8.4 MMcfed for the three months ended June 30, 2005. Second quarter 2006 production increased 19% as compared to first quarter 2006 production of 11.1 MMcfed.
Gastar reported a net loss attributable to common shares for the six months ended June 30, 2006 of $49.6 million, or $0.30 per basic and diluted common share, compared to a net loss of $16.3 million, or $0.14 per basic and diluted common share for the six months ended June 30, 2005. The six month losses for 2006 and 2005 included a non-cash full cost ceiling impairment of natural gas and oil properties of $37.3 million and $8.7 million, respectively. Total revenues for the six months ended June 30, 2006 were $13.3 million, an increase of $3.6 million from revenues of $9.7 million reported for the comparable period in 2005. Of the 2006 increase in revenues, 96% was the result of increases in production, and 4% was attributable to higher prices. Average daily production for the six months ended June 30, 2006 was 12.1 MMcfed compared to 8.9 MMcfed for the comparable 2005 period. EBITDA for the six months ended June 30, 2006 was $3.2 million, down from EBITDA of $4.5 million for the six months ended June 30, 2005 primarily due to $1.2 million of litigation settlement expense.
J. Russell Porter, Gastar's President and Chief Executive Officer, made the following comment, "Our significant growth in current quarter production is primarily the result of drilling successes in our East Texas Bossier play. We anticipate our production growth trend will continue with the recent announcement of the John Parker #1 log results and the anticipated results from the Wildman Trust #2 currently nearing total depth. Gastar is planning an increased level of activity with the addition of a third rig in early fourth quarter which should result in an ability to further increase production growth. A large scale 3-D seismic survey currently being permitted and acquired in the Hilltop area along with continued successful offset drilling by other operators should confirm that our Bossier acreage is well positioned and will be a vehicle for the creation of significant value for our shareholders in the future."
Gastar Exploration Ltd. is an exploration and production company focused on finding and developing natural gas assets in North America and Australia. The Company pursues a balanced strategy combining select higher risk, deep natural gas exploration prospects with lower risk coal bed methane (CBM) development. The Company owns and controls exploration and development acreage in the deep Bossier natural gas play of East Texas and in the deep Trenton-Black River play in the Appalachian Basin. Gastar's CBM activities are conducted within the Powder River Basin of Wyoming and upon the approximate 3.0 million acres controlled by Gastar and its joint development partners in Australia's Gunnedah Basin and Gippsland Basins, located in New South Wales and Victoria, respectively.
Safe Harbor Statement and Disclaimer:
This Press Release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934. A statement identified by the words "expects", "projects", "plans", and certain of the other foregoing statements may be deemed forward-looking statements. Although Gastar believes that the expectations reflected in such forward-looking statements are reasonable, these statements involve risks and uncertainties that may cause actual future activities and results to be materially different from those suggested or described in this press release. These include risks inherent in the drilling of natural gas and oil wells, including risks of fire, explosion, blowout, pipe failure, casing collapse, unusual or unexpected formation pressures, environmental hazards, and other operating and production risks inherent in natural gas and oil drilling and production activities, which may temporarily or permanently reduce production or cause initial production or test results to not be indicative of future well performance or delay the timing of sales or completion of drilling operations; risks with respect to oil and natural gas prices, a material decline in which could cause the Company to delay or suspend planned drilling operations or reduce production levels; and risks relating to the availability of capital to fund drilling operations that can be adversely affected by unfavorable drilling results, production declines and declines in natural gas and oil prices and other risk factors described in the Company's Annual Report on Form 10-K, as filed on March 31, 2006 with the United States Securities and Exchange Commission at www.sec.gov and on the System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com .
The American Stock Exchange and Toronto Stock Exchange have not reviewed and do not accept responsibility for the adequacy or accuracy of this release.
Gastar Exploration Ltd.
1331 Lamar, Suite 1080
Houston, TX 77010
(713) 739-1800 FAX (713) 739-0458
Attention: J. Russell Porter
Web Site: www.gastar.com