Net loss attributable to
Adjusted earnings before interest, income taxes, depreciation, depletion and amortization ("adjusted EBITDA") for the third quarter of 2013 was
Natural gas, condensate, oil and natural gas liquids (NGLs) revenues increased 61% to
Average daily production was 59.3 million cubic feet of natural gas equivalent (MMcfe) per day for the third quarter of 2013, compared to 38.0 MMcfe per day for the same period in 2012. Sequentially, average daily production increased 3% from second quarter 2013 production of 57.6 MMcfe per day. Oil, condensate and NGLs as a percentage of production volumes was 29% in the third quarter of 2013 compared to 20% in the third quarter of 2012 and 29% in the second quarter of 2013.
Higher production volumes were primarily driven by our horizontal drilling activity in the liquids-rich area of the
The following table provides a summary of
For the Three Months Ended |
For the Nine Months Ended | |||||||||||||||
2013 |
2012 |
2013 |
2012 | |||||||||||||
Production: |
||||||||||||||||
Natural gas (MMcf) |
3,866 |
2,783 |
10,257 |
7,584 |
||||||||||||
Oil (MBbl) |
128 |
42 |
333 |
106 |
||||||||||||
NGLs (MBbl) |
137 |
77 |
347 |
186 |
||||||||||||
Total production (MMcfe) |
5,454 |
3,493 |
14,338 |
9,339 |
||||||||||||
Total (Mmcfe/d) |
59.3 |
38.0 |
52.5 |
34.1 |
||||||||||||
Average sales price per unit: |
||||||||||||||||
Natural gas per Mcf, including impact of realized hedging |
$ |
2.95 |
$ |
3.20 |
$ |
3.38 |
$ |
2.97 |
||||||||
Natural gas per Mcf, excluding impact of realized hedging |
$ |
2.61 |
$ |
2.27 |
$ |
2.94 |
$ |
1.99 |
||||||||
Oil per Bbl, including impact of realized hedging |
$ |
67.92 |
$ |
83.05 |
$ |
68.54 |
$ |
72.93 |
||||||||
Oil per Bbl, excluding impact of realized hedging |
$ |
73.40 |
$ |
76.54 |
$ |
68.26 |
$ |
68.93 |
||||||||
NGLs per Bbl, including impact of realized hedging |
$ |
27.54 |
$ |
32.40 |
$ |
30.80 |
$ |
34.31 |
||||||||
NGLs per Bbl, excluding impact of realized hedging |
$ |
33.79 |
$ |
25.26 |
$ |
30.01 |
$ |
29.02 |
||||||||
Average sales price per Mcfe, including impact of realized hedging |
$ |
4.37 |
$ |
4.25 |
$ |
4.76 |
$ |
3.92 |
||||||||
Average sales price per Mcfe, excluding impact of realized hedging |
$ |
4.42 |
$ |
3.28 |
$ |
4.41 |
$ |
2.98 |
We had hedges in place covering approximately 63% of natural gas and 81% of condensate, oil and NGLs production on a combined basis for the third quarter of 2013. We continue to maintain an active hedging program covering a portion of our estimated future production, which is reported in our periodic filings with the
Lease operating expense (LOE) was
Depreciation, depletion and amortization (DD&A) was
General and administrative (G&A) expense was
"The WEHLU acquisition will further expand our acreage position in the fairway of the Hunton play and add high-quality proved reserves to our asset base. Our confidence in the Hunton's potential has been bolstered by the positive early results of our fifth and sixth non-operated wells and the performance of Hunton wells drilled by other operators on nearby acreage.
"In October, we drilled our first operated well in the Hunton to test the acreage we acquired in June from Chesapeake Energy and will commence completion operations soon, with initial flow back expected in late November. By leveraging the drilling experience we gained in the Marcellus, we successfully drilled our first operated Hunton well in only 26 days at a lower drilling cost than we have experienced in our AMI third-party operated wells. We expect our second operated Hunton well will commence drilling by early
"Over the last few months, we took several key steps to enhance our liquidity for the remainder of 2013 and into 2014. During the third quarter of 2013, we completed the sale of non-core undeveloped leasehold acres in the Mid-Continent and a partial sale of acquired Chesapeake properties within our AMI area. Subsequent to third quarter end, our liquidity has been further enhanced by completion of the sale of
Operations Review and Update
Net production from the
Production continued to be impacted by third-party operated gathering system issues, although these were markedly improved from prior quarters. These issues reduced third quarter 2013 production by approximately 2.8 MMcfe/d (5% of total production) as compared to second quarter 2013 production curtailment of an estimated 7.6 MMcfe/d (13% of total production) and approximately 16.4 MMcfe/d (40% of total production) in the first quarter of 2013. We estimate that production volume curtailment attributable to these issues represented cash flow losses of
During the third quarter of 2013, we had 57 gross (27.0 net) operated wells on production in
The first four Goudy wells, placed on production in
We have resumed drilling in the Marcellus, with a small rig currently drilling the vertical top section of wells. In
Net capital expenditures for the third quarter in the
Hunton Limestone Oil Play
At
The Mid-Con 5H well (GST 50% WI), completed in
We began drilling our first operated Hunton well, the Burton 16-1H (GST 79% WI), in
During the fourth quarter of 2013,
In the Mid-Continent, net capital expenditures, excluding acquisition costs and divestment proceeds, in the third quarter of 2013 totaled
In
Guidance for the Fourth Quarter of 2013
We are providing the following guidance for the fourth quarter of 2013, which assumes the closing of our pending WEHLU acquisition by the end of November:
Net average production(1) |
49 - 52 MMcfe per day | |
Liquids percentage of production (1) |
35% to 38% | |
Lease operating expenses |
| |
Transportation, treating and gathering |
| |
Cash G&A(2) |
| |
Stock compensation expense |
|
(1) |
Based on equivalent of 6,000 cubic feet (Mcf) of natural gas to one barrel of oil, condensate or NGLs. | |
(2) |
Excludes any one-time costs related to WEHLU acquisition or parent company migration from |
Liquidity
At
On
Excluding the previously announced WEHLU acquisition, capital expenditures for the remainder of 2013 are expected to be approximately
Conference Call
The call will also be webcast live over the Internet at www.gastar.com. To listen to the live call on the Internet, please visit
A copy of this press release can be found on
About
Safe Harbor Statement and Disclaimer
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 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 with respect to natural gas and oil prices, a material decline in which could cause
Unless otherwise stated herein, equivalent volumes of production and reserves 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.
Contacts:
713-739-1800 / mgerlich@gastar.com
Investor Relations Counsel:
Dennard▪Lascar Associates: 713-529-6600
lelliott@DennardLascar.com/apearson@DennardLascar.com
- Financial Tables Follow -
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
For the Three Months Ended |
For the Nine Months Ended | ||||||||||||||
2013 |
2012 |
2013 |
2012 | ||||||||||||
(in thousands, except share and per share data) | |||||||||||||||
REVENUES: |
|||||||||||||||
Natural gas |
$ |
11,396 |
$ |
8,906 |
$ |
34,673 |
$ |
22,499 |
|||||||
Condensate and oil |
8,680 |
3,457 |
22,823 |
7,748 |
|||||||||||
NGLs |
3,768 |
2,483 |
10,690 |
6,394 |
|||||||||||
Total natural gas, condensate and oil and NGLs revenues |
23,844 |
14,846 |
68,186 |
36,641 |
|||||||||||
Unrealized hedge loss |
(5,004) |
(5,403) |
(7,156) |
(4,123) |
|||||||||||
Total revenues |
18,840 |
9,443 |
61,030 |
32,518 |
|||||||||||
EXPENSES: |
|||||||||||||||
Production taxes |
1,319 |
560 |
3,112 |
1,494 |
|||||||||||
Lease operating expenses |
2,190 |
780 |
6,196 |
4,754 |
|||||||||||
Transportation, treating and gathering |
1,098 |
1,305 |
3,386 |
3,715 |
|||||||||||
Depreciation, depletion and amortization |
8,467 |
7,135 |
21,428 |
19,744 |
|||||||||||
Impairment of natural gas and oil properties |
— |
78,054 |
— |
150,787 |
|||||||||||
Accretion of asset retirement obligation |
142 |
101 |
358 |
284 |
|||||||||||
General and administrative expense |
3,998 |
2,951 |
11,964 |
9,263 |
|||||||||||
Litigation settlement expense |
— |
— |
1,000 |
1,250 |
|||||||||||
Total expenses |
17,214 |
90,886 |
47,444 |
191,291 |
|||||||||||
INCOME (LOSS) FROM OPERATIONS |
1,626 |
(81,443) |
13,586 |
(158,773) |
|||||||||||
OTHER INCOME (EXPENSE): |
|||||||||||||||
Gain on acquisition of assets at fair value |
— |
— |
43,712 |
— |
|||||||||||
Interest expense |
(3,439) |
(30) |
(7,593) |
(86) |
|||||||||||
Investment income and other |
8 |
2 |
16 |
6 |
|||||||||||
Foreign transaction loss |
(3) |
(2) |
(15) |
(2) |
|||||||||||
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES |
(1,808) |
(81,473) |
49,706 |
(158,855) |
|||||||||||
Provision for income taxes |
— |
— |
— |
— |
|||||||||||
NET INCOME (LOSS) |
(1,808) |
(81,473) |
49,706 |
(158,855) |
|||||||||||
Dividend on preferred stock attributable to non-controlling interest |
(2,134) |
(1,984) |
(6,398) |
(4,947) |
|||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO GASTAR EXPLORATION LTD. |
$ |
(3,942) |
$ |
(83,457) |
$ |
43,308 |
$ |
(163,802) |
|||||||
NET INCOME (LOSS) PER COMMON SHARE ATTRIBUTABLE TO GASTAR EXPLORATION LTD. COMMON SHAREHOLDERS: |
|||||||||||||||
Basic |
$ |
(0.07) |
$ |
(1.31) |
$ |
0.71 |
$ |
(2.58) |
|||||||
Diluted |
$ |
(0.07) |
$ |
(1.31) |
$ |
0.68 |
$ |
(2.58) |
|||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: |
|||||||||||||||
Basic |
57,359,357 |
63,601,645 |
61,159,117 |
63,494,224 |
|||||||||||
Diluted |
57,359,357 |
63,601,645 |
63,971,038 |
63,494,224 |
CONSOLIDATED BALANCE SHEETS
| |||||||
September 30, |
December 31, | ||||||
2013 |
2012 | ||||||
(in thousands, except share data) | |||||||
ASSETS |
|||||||
CURRENT ASSETS: |
|||||||
Cash and cash equivalents |
$ |
21,375 |
8,901 |
||||
Accounts receivable, net of allowance for doubtful accounts of |
10,697 |
9,540 |
|||||
Commodity derivative contracts |
2,259 |
7,799 |
|||||
Prepaid expenses |
616 |
1,097 |
|||||
Total current assets |
34,947 |
27,337 |
|||||
PROPERTY, PLANT AND EQUIPMENT: |
|||||||
Natural gas and oil properties, full cost method of accounting: |
|||||||
Unproved properties, excluded from amortization |
102,338 |
67,892 |
|||||
Proved properties |
769,054 |
671,193 |
|||||
Total natural gas and oil properties |
871,392 |
739,085 |
|||||
Furniture and equipment |
2,409 |
1,925 |
|||||
Total property, plant and equipment |
873,801 |
741,010 |
|||||
Accumulated depreciation, depletion and amortization |
(506,187) |
(484,759) |
|||||
Total property, plant and equipment, net |
367,614 |
256,251 |
|||||
OTHER ASSETS: |
|||||||
Commodity derivative contracts |
7,399 |
1,369 |
|||||
Deferred charges, net |
2,133 |
836 |
|||||
Advances to operators and other assets |
12,311 |
4,275 |
|||||
Total other assets |
21,843 |
6,480 |
|||||
TOTAL ASSETS |
$ |
424,404 |
290,068 |
||||
LIABILITIES AND SHAREHOLDERS' EQUITY |
|||||||
CURRENT LIABILITIES: |
|||||||
Accounts payable |
$ |
5,611 |
$ |
23,863 |
|||
Revenue payable |
12,063 |
8,801 |
|||||
Accrued interest |
6,469 |
151 |
|||||
Accrued drilling and operating costs |
2,727 |
3,907 |
|||||
Advances from non-operators |
12,951 |
17,540 |
|||||
Commodity derivative contracts |
794 |
1,399 |
|||||
Commodity derivative premium payable |
1,819 |
— |
|||||
Asset retirement obligation |
750 |
358 |
|||||
Other accrued liabilities |
8,319 |
1,493 |
|||||
Total current liabilities |
51,503 |
57,512 |
|||||
LONG-TERM LIABILITIES: |
|||||||
Long-term debt |
194,830 |
98,000 |
|||||
Commodity derivative contracts |
— |
1,304 |
|||||
Commodity derivative premium payable |
7,651 |
— |
|||||
Asset retirement obligation |
8,006 |
6,605 |
|||||
Other long-term liabilities |
— |
111 |
|||||
Total long-term liabilities |
210,487 |
106,020 |
|||||
Commitments and contingencies |
|||||||
SHAREHOLDERS' EQUITY: |
|||||||
Common stock, no par value; unlimited shares authorized; 61,134,950 and 66,432,609 shares issued and outstanding at |
306,593 |
316,346 |
|||||
Additional paid-in capital |
30,526 |
28,336 |
|||||
Accumulated deficit |
(251,479) |
(294,787) |
|||||
Total shareholders' equity |
85,640 |
49,895 |
|||||
Non-controlling interest: |
|||||||
Preferred stock of subsidiary, aggregate liquidation preference |
76,774 |
76,641 |
|||||
Total equity |
162,414 |
126,536 |
|||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
$ |
424,404 |
$ |
290,068 |
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
For the Nine Months Ended | |||||||
2013 |
2012 | ||||||
(in thousands) | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|||||||
Net income (loss) |
$ |
49,706 |
$ |
(158,855) |
|||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|||||||
Depreciation, depletion and amortization |
21,428 |
19,744 |
|||||
Impairment of natural gas and oil properties |
— |
150,787 |
|||||
Stock-based compensation |
2,540 |
2,575 |
|||||
Unrealized hedge loss |
7,156 |
4,123 |
|||||
Realized loss (gain) on derivative contracts |
18 |
(662) |
|||||
Amortization of deferred financing costs |
1,790 |
157 |
|||||
Accretion of asset retirement obligation |
358 |
284 |
|||||
Gain on acquisition of assets at fair value |
(43,712) |
— |
|||||
Changes in operating assets and liabilities: |
|||||||
Accounts receivable |
(1,259) |
2,429 |
|||||
Prepaid expenses |
481 |
345 |
|||||
Accounts payable and accrued liabilities |
733 |
129 |
|||||
Net cash provided by operating activities |
39,239 |
21,056 |
|||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
|||||||
Development and purchase of natural gas and oil properties |
(77,813) |
(100,606) |
|||||
Acquisition of natural gas and oil properties |
(78,809) |
— |
|||||
Proceeds from sale of natural gas and oil properties |
70,708 |
— |
|||||
Advances to operators |
(13,104) |
(4,282) |
|||||
Use of advances from non-operators |
(4,589) |
(1,085) |
|||||
Purchase of furniture and equipment |
(484) |
(235) |
|||||
Net cash used in investing activities |
(104,091) |
(106,208) |
|||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
|||||||
Proceeds from revolving credit facility |
19,000 |
70,000 |
|||||
Repayment of revolving credit facility |
(117,000) |
(30,000) |
|||||
Proceeds from issuance of senior secured notes, net of discount |
194,500 |
— |
|||||
Repurchase of outstanding common shares |
(9,753) |
— |
|||||
Proceeds from issuance of preferred stock, net of issuance costs |
133 |
49,169 |
|||||
Dividend on preferred stock attributable to non-controlling interest |
(6,398) |
(4,947) |
|||||
Deferred financing charges |
(2,807) |
(332) |
|||||
Other |
(349) |
(282) |
|||||
Net cash provided by financing activities |
77,326 |
83,608 |
|||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
12,474 |
(1,544) |
|||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD |
8,901 |
10,647 |
|||||
CASH AND CASH EQUIVALENTS, END OF PERIOD |
$ |
21,375 |
$ |
9,103 |
NON-GAAP FINANCIAL INFORMATION AND RECONCILIATION
We use both GAAP and certain non-GAAP financial measures to assess performance. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. Our management believes that these non-GAAP measures provide useful supplemental information to investors in order that they may evaluate our financial performance using the same measures as management. These non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. In evaluating these measures, investors should consider that the methodology applied in calculating such measures may differ among companies and analysts. A reconciliation is provided below outlining the differences between these non-GAAP measures and the directly related GAAP measures.
Reconciliation of Net Income (Loss) to Net Income (Loss) Excluding Special Items: | |||||||||||||||
For the Three Months Ended |
For the Nine Months Ended | ||||||||||||||
2013 |
2012 |
2013 |
2012 | ||||||||||||
(in thousands, except share and per share data) | |||||||||||||||
NET (LOSS) INCOME ATTRIBUTABLE TO GASTAR EXPLORATION LTD. AS REPORTED |
$ |
(3,942) |
$ |
(83,457) |
$ |
43,308 |
$ |
(163,802) |
|||||||
SPECIAL ITEMS: |
|||||||||||||||
Unrealized hedge loss |
5,004 |
5,403 |
7,156 |
4,123 |
|||||||||||
Impairment of natural gas and oil properties |
— |
78,054 |
— |
150,787 |
|||||||||||
Non-recurring general and administrative costs related to acquisition of assets |
292 |
— |
1,710 |
— |
|||||||||||
Non-recurring severance costs related to property divestment |
659 |
— |
659 |
— |
|||||||||||
Non-recurring stock compensation benefit related to property divestment |
(422) |
— |
(422) |
— |
|||||||||||
Litigation settlement expense |
— |
— |
1,000 |
1,250 |
|||||||||||
Gain on acquisition of assets at fair value |
— |
— |
(43,712) |
— |
|||||||||||
Write off of fees associated with Old Amended Revolving Credit Facility |
— |
— |
1,154 |
— |
|||||||||||
Foreign transaction loss |
3 |
2 |
15 |
2 |
|||||||||||
ADJUSTED NET INCOME (LOSS) ATTRIBUTABLE TO GASTAR EXPLORATION LTD. |
$ |
1,594 |
$ |
2 |
$ |
10,868 |
$ |
(7,640) |
|||||||
ADJUSTED NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO GASTAR EXPLORATION LTD. COMMON SHAREHOLDERS: |
|||||||||||||||
Basic |
$ |
0.03 |
$ |
0.00 |
$ |
0.18 |
$ |
(0.12) |
|||||||
Diluted |
$ |
0.03 |
$ |
0.00 |
$ |
0.17 |
$ |
(0.12) |
|||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: |
|||||||||||||||
Basic |
57,359,357 |
63,601,645 |
61,159,117 |
63,494,224 |
|||||||||||
Diluted |
57,359,357 |
63,601,645 |
63,971,038 |
63,494,224 |
|||||||||||
Reconciliation of Adjusted Earnings Before Interest, Income Taxes, Depreciation, Depletion and Amortization ("Adjusted EBITDA") : | |||||||||||||||
For the Three Months Ended |
For the Nine Months Ended | ||||||||||||||
2013 |
2012 |
2013 |
2012 | ||||||||||||
(in thousands, except share and per share data) | |||||||||||||||
NET (LOSS) INCOME ATTRIBUTABLE TO GASTAR EXPLORATION LTD. AS REPORTED |
$ |
(3,942) |
$ |
(83,457) |
$ |
43,308 |
$ |
(163,802) |
|||||||
Interest expense |
3,439 |
30 |
7,593 |
86 |
|||||||||||
Dividend expense |
2,134 |
1,984 |
6,398 |
4,947 |
|||||||||||
Depreciation, depletion and amortization |
8,467 |
7,135 |
21,428 |
19,744 |
|||||||||||
Accretion of asset retirement obligation |
142 |
101 |
358 |
284 |
|||||||||||
Impairment of natural gas and oil properties |
— |
78,054 |
— |
150,787 |
|||||||||||
Gain on acquisition of assets at fair value |
— |
— |
(43,712) |
— |
|||||||||||
Unrealized hedge loss |
5,004 |
5,403 |
7,156 |
4,123 |
|||||||||||
Non-cash stock compensation expense |
574 |
729 |
2,540 |
2,575 |
|||||||||||
Litigation settlement expense |
— |
— |
1,000 |
1,250 |
|||||||||||
Foreign transaction loss |
3 |
2 |
15 |
2 |
|||||||||||
Interest income and other |
(8) |
(2) |
(16) |
(6) |
|||||||||||
Non-recurring general and administrative costs related to acquisition of assets |
292 |
— |
1,710 |
— |
|||||||||||
Non-recurring severance costs related to property divestment |
659 |
— |
659 |
— |
|||||||||||
Adjusted EBITDA |
$ |
16,764 |
$ |
9,979 |
$ |
48,437 |
$ |
19,990 |
|||||||
SOURCE
News Provided by Acquire Media