Gastar Exploration Inc.
Gastar Exploration Inc. (Form: 8-K, Received: 03/10/2017 10:24:39)

 

 

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

 

Date of Report (Date of earliest event reported): March 10, 2017 (March 9, 2017)

 

 

GASTAR EXPLORATION INC.

(Exact Name of Registrant as Specified in its Charter)

DELAWARE

 

001-35211

 

38-3531640

(State or other jurisdiction

 

(Commission File Number)

 

(IRS Employer

of incorporation)

 

 

 

Identification No.)

 

1331 LAMAR STREET, SUITE 650

HOUSTON, TEXAS 77010

(Address of principal executive offices)

 

(713) 739-1800

(Registrant's telephone number, including area code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

 

 

[   ]

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

 

[   ]

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

 

[   ]

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

 

[   ]

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

 

 


 

SECTION 2 – FINANCIAL INFORMATION

Item 2.02 Results of Operations and Financial Condition.

 

On March 9, 2017, Gastar Exploration Inc. (the “Company”) issued a press release announcing the Company’s financial results for the three and twelve months ended December 31, 2016.  A copy of the Company’s press release, dated March 9, 2017, is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.  

 

In accordance with General Instruction B.2 of Form 8-K, the information presented herein under Item 2.02 and set forth in the attached press release included as Exhibit 99.1 to this report is deemed to be “furnished” solely pursuant to Item 2.02 of this report and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act.

 

SECTION 7 - REGULATION FD

Item 7.01 Regulation FD Disclosure.

 

On March 10, 2017, the Company announced that it has declared a monthly cash dividend on its 8.625% Series A Preferred Stock and its 10.75% Series B Preferred Stock for March 2017.  A copy of the Company's press release, dated March 10, 2017, is furnished herewith as Exhibit 99.2 and is incorporated herein by reference.

 

In accordance with General Instruction B.2 of Form 8-K, the information presented herein under Item 7.01 and set forth in the attached press release included as Exhibit 99.2 to this report is deemed to be “furnished” solely pursuant to Item 7.01 of this report and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall such information or the exhibit be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.

SECTION 9 – FINANCIAL STATEMENTS AND EXHIBITS

Item 9.01  Financial Statements and Exhibits.

 

(d) Exhibits

 

The following is a list of exhibits furnished as part of this Form 8-K:

 

Exhibit No.

 

Description of Document

 

 

 

99.1

 

Press release dated March 9, 2017 announcing the Company’s financial results for the three and twelve months ended December 31, 2016.

99.2

 

Press release dated March 10, 2017 announcing that the Company has declared a monthly cash dividend for March 2017.

 


 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

Date: March 10, 2017

GASTAR EXPLORATION INC.

 

 

 

 

 

By:

/s/  J. Russell Porter

 

 

J. Russell Porter

 

 

 

President and Chief Executive Officer

 

 


 

EXHIBIT INDEX

 

Exhibit No.

 

Description of Document

 

 

 

99.1

 

Press release dated March 9, 2017 announcing the Company’s financial results for the three and twelve months ended December 31, 2016.

99.2

 

Press release dated March 10, 2017 announcing that the Company has declared a monthly cash dividend for March 2017.

 

 

 

Exhibit 99.1

 

For Immediate Release

 

   NEWS RELEASE

 

Contacts:

Gastar Exploration Inc.

Michael A. Gerlich, Chief Financial Officer

713-739-1800 / mgerlich@gastar.com

 

Investor Relations Counsel:
Lisa Elliott, Dennard▪Lascar Associates:                                                 713-529-6600 / lelliott@DennardLascar.com

 

 

Gastar Exploration Announces

Fourth Quarter, Full-Year 2016 Results and 2017 Guidance

 

HOUSTON , March 9, 2017 - Gastar Exploration Inc. (NYSE MKT: GST) (“Gastar” or the “Company”) today reported financial and operating results for the three and twelve months ended December 31, 2016.  The Company also provided guidance for the first quarter and full-year 2017.

Fourth quarter 2016 highlights include:

 

Average daily production was 5,900 Boe per day, exceeding mid-point guidance by 7%

 

Production volumes comprised of 72% liquids, in line with mid-point guidance

 

Signed agreement to jointly develop approximately 19,100 undeveloped net acres in Kingfisher County, Oklahoma

 

Completed four Meramec wells during the fourth quarter

J. Russell Porter, Gastar's President and CEO, commented, “Despite the challenging oil price environment that reduced our cash flow and restricted our 2016 capital program, our high quality acreage position in the Oklahoma STACK Play allowed us to attract strong financial partners to help us meet our objectives.  The joint development agreement (the “Development Agreement”) we initiated with a large private global investment fund in the fourth quarter of 2016, combined with the capital transaction we completed with affiliates of Ares Management L.P. (“Ares”) in the first quarter of 2017 to provide $425 million in new financing, has positioned us to pursue a more active drilling program to de-lineate and de-risk our STACK assets.”

“During the fourth quarter of 2016 and the first two months of 2017, we have completed nine operated STACK wells, all of which have been drilled under the Development Agreement. The Ares capital

 


transaction will allow us to increase our drilling activity beyond the Development Agreement area and in early March, we added a third rig to focus on our acreage outside of the joint venture contract area.  Our drilling program will provide valuable information regarding the productivity of the Meramec and Osage formations on our acreage.  Our objectives in 2017 will be holding leases by production and delineating our acreage for both the Meramec and Osage formations.  We expect that by year end we will have de-risked a significant portion of our net acreage position in Oklahoma as related to these two formations,” concluded Porter.

Financial Review

Net loss attributable to Gastar’s common stockholders for the fourth quarter of 2016 was $8.2 million, or a loss of $0.06 per share, compared to a fourth quarter 2015 net loss of $161.1 million, or a loss of $2.07 per share.  Adjusted net loss attributable to common stockholders (non-GAAP), which excludes non-cash and unusual items, for the fourth quarter of 2016 was $7.5 million, or a loss of $0.06 per share, as compared to adjusted net loss attributable to common stockholders, which excludes non-cash and unusual items, of $12.6 million, or a loss of $0.16 per share, for the fourth quarter 2015. (See the accompanying reconciliation of non-GAAP adjusted net loss at the end of this news release.)

Adjusted earnings before interest, income taxes, depreciation, depletion and amortization (“adjusted EBITDA”) (non-GAAP) for the fourth quarter of 2016 was $10.6 million compared to adjusted EBITDA of $17.4 million for the fourth quarter of 2015 and $7.2 million for the third quarter of 2016. (See the accompanying reconciliation of non-GAAP adjusted EBITDA at the end of this news release.)

Total Company revenues were $18.3 million in the fourth quarter of 2016, a 19% decline from $22.6 million in the fourth quarter of 2015 and a 41% increase from $13.0 million in the third quarter of 2016.  

Revenues of oil, condensate, natural gas and natural gas liquids (“NGLs”), before the effects of commodity derivatives contracts, were $17.2 million in the fourth quarter of 2016, a 3% decline from $17.8 million in the third quarter of 2015 and an 18% increase from $14.5 million in the third quarter of 2016.  The reduction from fourth quarter of 2015 in oil, condensate, natural gas and NGLs revenues primarily resulted from a 58% decrease in equivalent volumes produced primarily related to the sale of the Company’s Appalachian Basin assets in April 2016 offset by a 128% increase in equivalent

 


product pricing.  The increase from third quarter 2016 revenues was due to a 17% increase in equivalent product pricing and a 1% increase in equivalent production volumes.

Commodity hedges were in place for approximately 69% of our oil and condensate production, 61% of our natural gas production and 64% of our NGLs production for the fourth quarter of 2016.  Commodity derivative contracts settled during the period resulted in a $1.8 million increase in revenue.  For details on Gastar’s current hedging position, please see our Annual Report on Form 10-K for the year ended December 31, 2016 filed with the U.S. Securities and Exchange Commission (“SEC”).  

Average daily production for the fourth quarter of 2016 was 5,900 barrels of oil equivalent (“Boe”) per day (“Boe/d”) as compared to 14,000 Boe/d in the fourth quarter of 2015 and basically flat when compared to the third quarter 2016 production. Fourth quarter 2015 included average daily production of 7,800 Boe/d attributable to our properties sold in the Appalachian Basin in April 2016. Oil, condensate and NGLs as a percentage of production volumes were 72% in the fourth quarter of 2016, compared to 56% in the fourth quarter of 2015 and 69% in the third quarter of 2016.

The following table provides a summary of Gastar’s total net production volumes and overall average commodity prices for the three and twelve months ended December 31, 2016 and 2015:

 


 

 

For the Three Months Ended December 31,

 

 

For the Years Ended December 31,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

Net Production:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oil and condensate (MBbl)

 

 

269

 

 

 

359

 

 

 

1,105

 

 

 

1,425

 

Natural gas (MMcf)

 

 

913

 

 

 

3,399

 

 

 

6,145

 

 

 

13,759

 

NGLs (MBbl)

 

 

123

 

 

 

359

 

 

 

739

 

 

 

1,213

 

Total production (MBoe)

 

 

544

 

 

 

1,284

 

 

 

2,869

 

 

 

4,931

 

Net Daily Production:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oil and condensate (MBbl/d)

 

 

2.9

 

 

 

3.9

 

 

 

3.0

 

 

 

3.9

 

Natural gas (MMcf/d)

 

 

9.9

 

 

 

36.9

 

 

 

16.8

 

 

 

37.7

 

NGLs (MBbl/d)

 

 

1.3

 

 

 

3.9

 

 

 

2.0

 

 

 

3.3

 

Total daily production (MBoe/d)

 

 

5.9

 

 

 

14.0

 

 

 

7.8

 

 

 

13.5

 

Average sales price per unit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oil and condensate per Bbl, including impact of

   hedging activities (1)

 

$

51.89

 

 

$

42.59

 

 

$

45.80

 

 

$

46.86

 

Oil and condensate per Bbl, excluding impact of

   hedging activities

 

$

46.73

 

 

$

35.91

 

 

$

38.92

 

 

$

41.17

 

Natural gas per Mcf, including impact of hedging

   activities (1)

 

$

3.04

 

 

$

1.45

 

 

$

2.04

 

 

$

1.81

 

Natural gas per Mcf, excluding impact of hedging

   activities

 

$

2.69

 

 

$

0.82

 

 

$

1.77

 

 

$

1.23

 

NGLs per Bbl, including impact of hedging

   activities (1)

 

$

18.16

 

 

$

14.67

 

 

$

11.81

 

 

$

14.42

 

NGLs per Bbl, excluding impact of hedging activities

 

$

17.51

 

 

$

5.76

 

 

$

9.81

 

 

$

5.89

 

Average sales price per Boe, including impact of

   hedging activities (1)

 

$

34.83

 

 

$

19.84

 

 

$

25.06

 

 

$

22.14

 

Average sales price per Boe, excluding impact of

   hedging activities

 

$

31.56

 

 

$

13.82

 

 

$

21.31

 

 

$

16.77

 

_____________________________

(1)

The impact of hedging includes only the gain (loss) on commodity derivative contracts settled during the periods presented.

Lease operating expenses (“LOE”) per Boe of production was $8.79 in the fourth quarter of 2016 versus $4.09 in the fourth quarter of 2015 and $9.59 in the third quarter of 2016, including workover costs.  Excluding the Appalachian Basin, LOE per Boe for the fourth quarter of 2016 was $8.67 compared to $7.50 for the fourth quarter of 2015 and $9.40 per Boe for the third quarter of 2016.  The increase in LOE per Boe in the Mid-Continent in 2016 was partially due to higher water disposal costs related to flush production of new wells.  

Depreciation, depletion and amortization (“DD&A”) expense per Boe in the fourth quarter of 2016 was $9.44 compared to $13.19 for the fourth quarter of 2015 and $9.70 in the third quarter of 2016. The decrease in the fourth quarter of 2016 from the comparable period in 2015 was the result of a lower DD&A rate due to impairment charges incurred in 2015 and the first quarter of 2016 and the crediting to the full cost pool for the net proceeds from the sale of the Company’s Appalachian Basin assets completed in April 2016.

 


General and administrative (“G&A”) expense was $3.6 million in the fourth quarter of 2016 compared to $3.7 million in the fourth quarter of 2015 and $3.9 million in the third quarter of 2016. G&A expense for the fourth quarter of 2016 included $773,000 o f non-cash stock-based compensation expense, versus $1.1 million in the fourth quarter of 2015 and $810,000 in the third quarter of 2016.

Operations Review and Update

The following table provides a summary of Gastar’s Mid-Continent production volumes and average commodity prices for the three and twelve months ended December 31, 2016 and 2015:

 

 

 

For the Three Months Ended December 31,

 

 

For the Years Ended December 31,

 

Mid-Continent

 

2016

 

 

2015

 

 

2016

 

 

2015

 

Net Production:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oil and condensate (MBbl)

 

 

269

 

 

 

307

 

 

 

1,058

 

 

 

1,182

 

Natural gas (MMcf)

 

 

901

 

 

 

879

 

 

 

3,818

 

 

 

3,370

 

NGLs (MBbl)

 

 

123

 

 

 

113

 

 

 

503

 

 

 

433

 

Total net production (MBoe)

 

 

542

 

 

 

566

 

 

 

2,198

 

 

 

2,177

 

Net Daily Production:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oil and condensate (MBbl/d)

 

 

2.9

 

 

 

3.3

 

 

 

2.9

 

 

 

3.2

 

Natural gas (MMcf/d)

 

 

9.8

 

 

 

9.6

 

 

 

10.4

 

 

 

9.2

 

NGLs (MBbl/d)

 

 

1.3

 

 

 

1.2

 

 

 

1.4

 

 

 

1.2

 

Total net daily production (MBoe/d)

 

 

5.9

 

 

 

6.2

 

 

 

6.0

 

 

 

6.0

 

Average sales price per unit (1) :

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oil and condensate (per Bbl)

 

$

46.73

 

 

$

39.45

 

 

$

40.12

 

 

$

46.18

 

Natural gas (per Mcf)

 

$

2.70

 

 

$

2.03

 

 

$

2.21

 

 

$

2.57

 

NGLs (per Bbl)

 

$

17.51

 

 

$

13.12

 

 

$

13.94

 

 

$

13.15

 

Average sales price per Boe (1)

 

$

31.63

 

 

$

27.14

 

 

$

26.35

 

 

$

31.67

 

_____________________________

(1)

Excludes the impact of hedging activities

Fourth quarter 2016 net production from the Mid-Continent area decreased 4% compared to the fourth quarter of 2015 and was up 1% when compared to the third quarter of 2016. Fourth quarter 2016 Mid-Continent production consisted of approximately 50% oil, 28% natural gas and 22% NGLs.  

 


We currently have a total of three rigs operating on our Mid-Continent acreage, of which one rig is operating in the Development Agreement area and two rigs are operating outside of the Development Agreement area.  We anticip ate that by July 2017, one of the two rigs will return to drilling in the Development Agreement area.  

As of March 6, 2017, we had production and drilling operations at various stages on the following operated STACK wells on our acreage:

Well Name

 

Current

Working

Interest (1)

 

 

Approximate Lateral Length

(in feet)

 

 

Peak

Production

Rates (2)

(Boe/d)

 

 

Boe/d (3)

 

 

% Oil (4)

 

 

Date of First

Production or Status

 

Approximate

Gross Costs to

Drill & Complete ($ millions)

 

Meramec Completions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Holiday Road 2-1H (6)

 

 

78.3%

 

 

 

4,300

 

 

 

654

 

 

 

230

 

 

 

74%

 

 

04/11/16

 

$

4.0

 

Ingle 29-1H (5)

 

 

16.5%

 

 

 

4,900

 

 

 

1,037

 

 

 

612

 

 

 

75%

 

 

10/22/16

 

$

5.2

 

Geis 31-1H (5)

 

 

11.6%

 

 

 

4,900

 

 

 

877

 

 

 

490

 

 

 

76%

 

 

10/31/16

 

$

3.8

 

Katy 21-1H (5)

 

 

13.6%

 

 

 

4,900

 

 

N/A

 

 

 

327

 

 

 

69%

 

 

11/17/16

 

$

4.0

 

Lilly 28-1H (5)(6)

 

 

12.7%

 

 

 

4,400

 

 

N/A

 

 

 

581

 

 

 

89%

 

 

12/02/16

 

$

4.5

 

Mott 19-1H (5)

 

 

8.9%

 

 

 

4,500

 

 

N/A

 

 

 

68

 

 

 

84%

 

 

01/08/17

 

$

4.5

 

Mott 20-2H (5)

 

 

13.8%

 

 

 

5,000

 

 

N/A

 

 

 

734

 

 

 

80%

 

 

01/10/17

 

$

4.4

 

Victoria 25-1H (5)

 

 

12.0%

 

 

 

4,600

 

 

N/A

 

 

 

490

 

 

 

71%

 

 

01/11/17

 

$

4.4

 

Kramer 29-1H (5)

 

 

9.3%

 

 

 

4,400

 

 

N/A

 

 

 

624

 

 

 

89%

 

 

01/23/17

 

$

5.0

 

Ma Stucki 30-1H (5)

 

 

2.9%

 

 

 

4,800

 

 

N/A

 

 

N/A

 

 

N/A

 

 

03/02/17

 

$

4.2

 

Best 20-1H (5)

 

 

3.9%

 

 

 

4,900

 

 

N/A

 

 

N/A

 

 

N/A

 

 

Completing

 

$

4.5

 

Eldon 34-1H (5)

 

 

7.7%

 

 

 

4,800

 

 

N/A

 

 

N/A

 

 

N/A

 

 

WOC

 

$

4.5

 

Snowden 27-1H (5)

 

 

11.8%

 

 

 

5,100

 

 

N/A

 

 

N/A

 

 

N/A

 

 

WOC

 

$

5.5

 

Bradbury 28-1H (5)

 

 

7.5%

 

 

 

7,300

 

 

N/A

 

 

N/A

 

 

N/A

 

 

Drilling

 

$

6.6

 

Pickle 33-1H (5)

 

 

6.2%

 

 

 

5,100

 

 

N/A

 

 

N/A

 

 

N/A

 

 

WOC

 

$

4.5

 

Johnny 32-1H (5)

 

 

5.0%

 

 

 

4,900

 

 

N/A

 

 

N/A

 

 

N/A

 

 

WOC

 

$

4.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Osage Completions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

McGee 29-1H (6)

 

 

81.0%

 

 

 

4,200

 

 

 

414

 

 

 

211

 

 

 

72%

 

 

09/25/16

 

$

4.3

 

Great Divide 1-12H (5)

 

 

7.5%

 

 

 

5,000

 

 

N/A

 

 

N/A

 

 

N/A

 

 

Completing

 

$

3.5

 

Hane 14-1H

 

 

35.0%

 

 

 

4,900

 

 

N/A

 

 

N/A

 

 

N/A

 

 

Drilling

 

$

3.5

 

Pedlik 10-1H

 

 

65.0%

 

 

 

4,900

 

 

N/A

 

 

N/A

 

 

N/A

 

 

Drilling

 

$

3.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oswego Completions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tomahawk 7-1H

 

 

79.3%

 

 

 

4,200

 

 

 

418

 

 

 

87

 

 

 

90%

 

 

09/24/16

 

$

2.7

 

_____________________________

(1)

Current estimated working interest.  Working interest subject to change based on final force pooling orders.

(2)

Represents highest daily gross Boe rate.  N/A indicates that the well has not yet reached its peak initial production rate.

(3)

Represents average gross production for the most recent five (5) days through February 28, 2017.  

(4)

Percent oil production inception to date.

(5)

Drilling program well.  Working interest reflected is our total current working interest after Development Agreement impact.    

(6)

Excludes one-time fishing or coring costs.

 

 

Gastar’s net capital expenditures in the fourth quarter of 2016 totaled $11.5 million, comprised of $2.4 million for drilling, completions and infrastructure costs, $8.1 million for unproved acreage extensions and renewals and $1.0 of other capitalized costs.  For all of 2016, capital expenditures, excluding divestments, totaled $58.9 million.  As previously reported, the Company has established a 2017 capital budget of approximately $84.0 million comprised of $46.0 million of drilling and completion costs, $30.8 million in leasing costs and $7.2 million for capitalized interest and administration costs.

 


Liquidity

At December 31, 2016, Gastar had approximately $71.5 million in available cash and cash equivalents, $84.6 million in borrowings outstanding and $370,000 in letters of credit issued under its revolving credit facility.  

Since December 31, 2016 Gastar has received an additional $9.5 million of the South STACK acreage sales proceeds bringing the total net sales proceeds received to date to $58.1 million.  Gastar anticipates receiving an additional $12.7 million of South STACK sales proceeds by July 2017.

On March 3, 2017, Gastar closed a transaction with funds managed by affiliates of Ares that provided for $425 million in new financing to the Company in the form of a $250 million first lien secured term loan, $125 million second lien secured convertible notes and a $50 million common stock issuance (collectively, the “Ares Investment”).  Proceeds from the Ares Investment were used to fully repay Gastar's existing revolving credit facility, redeem its $325 million 8 5/8% senior secured notes due May 2018 (the ”2018 Notes”) and pay related transaction fees and expenses.  On February 22, 2017, Gastar called the 2018 Notes for redemption at a redemption price of 102.156%, plus accrued and unpaid interest, which will be redeemed on March 24, 2017.

Guidance for First Quarter 2017 and Full-Year 2017

Our guidance for the first quarter of and full-year 2017 is provided in the table below and represents the Company's best estimate of the range of likely future results. Guidance could be affected by the factors described below in "Forward Looking Statements."

Production

 

First Quarter

2017

 

Full-Year 2017

 

 

 

 

 

 

 

Net average daily (MBoe/d) (1)

 

5.2 – 5.4

 

5.5 – 6.1

 

Liquids percentage

 

70% - 73%

 

72% - 75%

 

 

 

 

 

 

 

Cash Operating Expenses

 

 

 

 

 

Production taxes (% of production revenues)

 

2.5% - 2.7%

 

2.6% - 2.9%

 

Direct lease operating ($/Boe)

 

$8.30 - $8.80

 

$7.90 - $8.50

 

Transportation, treating & gathering ($/Boe)

 

$0.70 - $0.75

 

$0.75 - $0.85

 

Cash general & administrative ($/Boe)

 

$6.45 - $6.75

 

$5.40 - $5.80

 

________________

(1) Based on equivalent of 6 thousand cubic feet (Mcf) of natural gas to one barrel of oil, condensate or NGLs.

 

 

 


Conference Call

Gastar has scheduled a conference call for 9:00 a.m. Eastern Time (8:00 a.m. Central Time) on Friday, March 10, 2017.  Investors may participate in the call either by phone or audio webcast.

By Phone:

Dial 1-412-902-0030 at least 10 minutes before the call. A telephone replay will be available through March 17 by dialing 1-201-612-7415 and using the conference ID: 13656628.

 

 

By Webcast:

Visit the Investor Relations page of Gastar's website at www.gastar.com under “Events & Presentations.” Please log on a few minutes in advance to register and download any necessary software. A replay will be available shortly after the call.

For more information, please contact Donna Washburn at Dennard-Lascar Associates at 713-529-6600 or e-mail  dwashburn@DennardLascar.com .

About Gastar Exploration

Gastar Exploration Inc. is a pure play Mid-Continent independent energy company engaged in the exploration, development and production of oil, condensate, natural gas and natural gas liquids. Gastar’s principal business activities include the identification, acquisition, and subsequent exploration and development of oil and natural gas properties with an emphasis on unconventional reserves, such as shale resource plays. Gastar holds a concentrated acreage position in what is believed to be the core of the STACK Play, an area of central Oklahoma which is home to multiple oil and natural gas-rich reservoirs including the Meramec, Oswego, Osage, Woodford and Hunton formations. For more information, visit Gastar's website at www.gastar.com.

 

Forward Looking Statements

 

This news release includes “forward looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  Forward looking statements give our current expectations, opinion, belief or forecasts of future events and performance.  A statement identified by the use of forward looking words including “may,” “expects,” “projects,” “anticipates,” “plans,” “believes,” “estimate,” “will,” “should,” 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 news release.  These include risks inherent in natural gas and oil drilling and production activities, including risks with respect to

 


continued low or further declinin g prices for natural gas and oil that could result in further downward revisions to the value of proved reserves or otherwise cause Gastar to further delay or suspend planned drilling and completion operations or reduce production levels which would advers ely impact cash flow; risks relating to the availability of capital to fund drilling operations that can be adversely affected by adverse drilling results, production declines and continued low or further declining prices for natural gas and oil; risks of fire, explosion, blowouts, pipe failure, casing collapse, unusual or unexpected formation pressures, environmental hazards, and other operating and production risks, 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; delays in receipt of drilling permits; risks relating to unexpected adverse developments in the status of properties; risks relating to the absence or delay in receipt of government approvals or third-party consents; risks relating to our ability to integrate acquired assets with ours and to realize the anticipated benefits from such acquisitions; and other risks described in Gastar’s Annual Report on Form 10-K and other filings with the SEC, available at the SEC’s website at www.sec.gov.  Our actual sales production rates can vary considerably from tested initial production rates depending upon completion and production techniques and our primary areas of operations are subject to natural steep decline rates. By issuing forward looking statements based on current expectations, opinions, views or beliefs, Gastar has no obligation and, except as required by law, is not undertaking any obl igation, to update or revise these statements or provide any other information relating to such statements.

Targeted expectations and guidance for the first quarter and full year of 2017 are based upon the current 2017 planned capital expenditures budget, which may be subject to revision and reevaluation dependent upon future developments, including drilling results, our liquidity position, a further decline in commodity prices, availability of crews, supplies and production capacity, weather delays and significant changes in drilling costs.

Unless otherwise stated herein, equivalent volumes of production are based upon an energy equivalent ratio of six Mcf of natural gas to each barrel of liquids (oil, condensate and NGLs), which ratio is not reflective of relative value.  Our NGLs are sold as part of our wet gas subject to an incremental NGLs pricing formula based upon a percentage of NGLs extracted from our wet gas production.  Our reported production volumes reflect incremental post-processing NGLs volumes and residual gas volumes with which we are credited under our sales contracts.

 

 

- Financial Tables Follow –

 


 

GASTAR EXPLORATION INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

For the Three Months Ended December 31,

 

 

For the Years Ended     December 31,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

 

 

(in thousands, except share and per share data)

 

REVENUES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oil and condensate

 

$

12,547

 

 

$

12,896

 

 

$

43,011

 

 

$

58,668

 

Natural gas

 

 

2,460

 

 

 

2,792

 

 

 

10,854

 

 

 

16,901

 

NGLs

 

 

2,152

 

 

 

2,065

 

 

 

7,252

 

 

 

7,136

 

Total oil and condensate, natural gas and NGLs revenues

 

 

17,159

 

 

 

17,753

 

 

 

61,117

 

 

 

82,705

 

Gain (loss) on commodity derivatives contracts

 

 

1,128

 

 

 

4,855

 

 

 

(2,863

)

 

 

24,589

 

Total revenues

 

 

18,287

 

 

 

22,608

 

 

 

58,254

 

 

 

107,294

 

EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Production taxes

 

 

439

 

 

 

560

 

 

 

1,908

 

 

 

2,877

 

Lease operating expenses

 

 

4,776

 

 

 

5,253

 

 

 

20,605

 

 

 

23,728

 

Transportation, treating and gathering

 

 

358

 

 

 

533

 

 

 

1,704

 

 

 

2,187

 

Depreciation, depletion and amortization

 

 

5,130

 

 

 

16,942

 

 

 

29,673

 

 

 

62,887

 

Impairment of natural gas and oil properties

 

 

 

 

 

144,760

 

 

 

48,497

 

 

 

426,878

 

Accretion of asset retirement obligation

 

 

82

 

 

 

115

 

 

 

368

 

 

 

502

 

General and administrative expense

 

 

3,573

 

 

 

3,717

 

 

 

19,445

 

 

 

17,069

 

Litigation settlement benefit

 

 

 

 

 

 

 

 

(10,100

)

 

 

 

Total expenses

 

 

14,358

 

 

 

171,880

 

 

 

112,100

 

 

 

536,128

 

INCOME (LOSS) FROM OPERATIONS

 

 

3,929

 

 

 

(149,272

)

 

 

(53,846

)

 

 

(428,834

)

OTHER (EXPENSE) INCOME:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(8,507

)

 

 

(8,256

)

 

 

(35,246

)

 

 

(30,686

)

Investment and other income

 

 

33

 

 

 

3

 

 

 

31

 

 

 

13

 

LOSS BEFORE PROVISION FOR INCOME TAXES

 

 

(4,545

)

 

 

(157,525

)

 

 

(89,061

)

 

 

(459,507

)

Provision for income taxes

 

 

 

 

 

 

 

 

 

 

 

 

NET LOSS

 

 

(4,545

)

 

 

(157,525

)

 

 

(89,061

)

 

 

(459,507

)

Dividends on preferred stock

 

 

 

 

 

(3,618

)

 

 

(3,618

)

 

 

(14,473

)

Undeclared cumulative dividends on preferred stock

 

 

(3,618

)

 

 

 

 

 

(10,855

)

 

 

 

NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS

 

$

(8,163

)

 

$

(161,143

)

 

$

(103,534

)

 

$

(473,980

)

NET LOSS PER SHARE OF COMMON STOCK ATTRIBUTABLE TO COMMON STOCKHOLDERS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.06

)

 

$

(2.07

)

 

$

(0.93

)

 

$

(6.11

)

Diluted

 

$

(0.06

)

 

$

(2.07

)

 

$

(0.93

)

 

$

(6.11

)

WEIGHTED AVERAGE SHARES OF COMMON

   STOCK OUTSTANDING:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

132,936,419

 

 

 

77,685,049

 

 

 

111,367,452

 

 

 

77,511,677

 

Diluted

 

 

132,936,419

 

 

 

77,685,049

 

 

 

111,367,452

 

 

 

77,511,677

 

 


GASTAR EXPLORATION INC.

CONSOLIDATED BALANCE SHEETS

 

 

 

December 31,

 

 

 

2016

 

 

2015

 

 

 

(in   thousands, except share data)

 

ASSETS

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

71,529

 

 

$

50,074

 

Accounts receivable, net of allowance for doubtful accounts

    of $1,953 and $0, respectively

 

 

26,883

 

 

 

14,302

 

Commodity derivative contracts

 

 

6,212

 

 

 

15,534

 

Prepaid expenses

 

 

755

 

 

 

5,056

 

Total current assets

 

 

105,379

 

 

 

84,966

 

PROPERTY, PLANT AND EQUIPMENT:

 

 

 

 

 

 

 

 

Oil and natural gas properties, full cost method of accounting:

 

 

 

 

 

 

 

 

Unproved properties, excluded from amortization

 

 

67,333

 

 

 

92,609

 

Proved properties

 

 

1,253,061

 

 

 

1,286,373

 

Total natural gas and oil properties

 

 

1,320,394

 

 

 

1,378,982

 

Furniture and equipment

 

 

2,622

 

 

 

3,068

 

Total property, plant and equipment

 

 

1,323,016

 

 

 

1,382,050

 

Accumulated depreciation, depletion and amortization

 

 

(1,131,012

)

 

 

(1,053,116

)

Total property, plant and equipment, net

 

 

192,004

 

 

 

328,934

 

OTHER ASSETS:

 

 

 

 

 

 

 

 

Commodity derivative contracts

 

 

1,638

 

 

 

9,335

 

Deferred charges, net

 

 

676

 

 

 

985

 

Advances to operators and other assets

 

 

102

 

 

 

331

 

Other

 

 

405

 

 

 

4,944

 

Total other assets

 

 

2,821

 

 

 

15,595

 

TOTAL ASSETS

 

$

300,204

 

 

$

429,495

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Accounts payable

 

$

8,867

 

 

$

2,029

 

Revenue payable

 

 

6,690

 

 

 

5,985

 

Accrued interest

 

 

3,515

 

 

 

3,730

 

Accrued drilling and operating costs

 

 

2,615

 

 

 

2,010

 

Advances from non-operators

 

 

3,504

 

 

 

167

 

Commodity derivative contracts

 

 

338

 

 

 

 

Commodity derivative premium payable

 

 

1,654

 

 

 

3,194

 

Asset retirement obligation

 

 

89

 

 

 

89

 

Other accrued liabilities

 

 

2,462

 

 

 

6,764

 

Total current liabilities

 

 

29,734

 

 

 

23,968

 

LONG-TERM LIABILITIES:

 

 

 

 

 

 

 

 

Long-term debt

 

 

404,493

 

 

 

516,476

 

Commodity derivative contracts

 

 

 

 

 

451

 

Commodity derivative premium payable

 

 

969

 

 

 

2,788

 

Asset retirement obligation

 

 

5,443

 

 

 

5,997

 

Total long-term liabilities

 

 

410,905

 

 

 

525,712

 

Commitments and contingencies (Note 14)

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY:

 

 

 

 

 

 

 

 

Preferred stock, 40,000,000 shares authorized

 

 

 

 

 

 

 

 

Series A Preferred stock, par value $0.01 per share; 10,000,000

   shares designated; 4,045,000 shares issued and outstanding

   at December 31, 2016 and 2015, respectively, with liquidation

   preference of $25.00 per share

 

 

41

 

 

 

41

 

 


Series B Preferred stock, par value $0.01 per share; 10,000,000

   shares designated; 2,140,000 shares issued and outstanding

   at December 31, 2016 and 2015, respectively, with liquidation

   preference of $25.00 per share

 

 

21

 

 

 

21

 

Common stock, par value $0.001 per share; 550,000,000 and

   275,000,000 shares authorized at December 31, 2016 and 2015,

   respectively; 150,377,870 and 80,024,218 shares issued and

   outstanding at December 31, 2016 and 2015, respectively

 

 

150

 

 

 

80

 

Additional paid-in capital

 

 

644,306

 

 

 

571,947

 

Accumulated deficit

 

 

(784,953

)

 

 

(692,274

)

Total stockholders' equity

 

 

(140,435

)

 

 

(120,185