Take a look at slide 5 of Newfield Exploration's most recent presentation: http://www.newfield.com/assets/pdf/CapO ... yConfs.pdf
Notice that now they are mapping the Meramec zone to cover all of the Gastar's leasehold. That was not the case in some earlier maps I saw.
Newfield's 22 extended reach horizontal wells ("SXL") with 2 mile long laterals had average 30-day rates of 991 boepd (77%). Compare that to Gastar's 1st horizontal Meramec well that produced almost 1,100 boepd with a high oil cut.
If NFX would make a move to takeover GST, which they could easily do in a cash or stock-for-stock deal, the Gastar pfd stock would move quickly to par.
See slide 6: Newfield's acreage block is right next to Gastar's leasehold. They have permitted five horizontal wells that are direct offsets to Gastar's northern acreage block.
Gastar / Meramec zone in STACK
Gastar / Meramec zone in STACK
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Gastar / Meramec zone in STACK
You compared Gastar's value to the Felix buyout value and, if I recall, said it was over $7 per share. That would make it about 700% higher than today's price. I get your math, but I have never heard of a company being bought out at more than a 50% premium. I don't think there is any way Gastar's shareholders would sell for $2.
-
bearcatbob
Re: Gastar / Meramec zone in STACK
"You compared Gastar's value to the Felix buyout value and, if I recall, said it was over $7 per share. That would make it about 700% higher than today's price. I get your math, but I have never heard of a company being bought out at more than a 50% premium. I don't think there is any way Gastar's shareholders would sell for $2."
One of my great fears is that some of our favorites are "screaming takeover candidates". If we simply look at prices last spring - current takeover premiums would not reach the share valuations of last spring - and anyone holding for a recovery would be screwed. The last thing I want to see is for some our favorites to be taken over at even 2X their current price.
Bob
One of my great fears is that some of our favorites are "screaming takeover candidates". If we simply look at prices last spring - current takeover premiums would not reach the share valuations of last spring - and anyone holding for a recovery would be screwed. The last thing I want to see is for some our favorites to be taken over at even 2X their current price.
Bob
Re: Gastar / Meramec zone in STACK
<<The last thing I want to see is for some our favorites to be taken over at even 2X their current price.>>
Agreed. In a crash like this, the *scale* of deflated values makes recovery to previous levels most unlikely. Ditto reverse splits. Can't think of any that restored previous valuations.
Agreed. In a crash like this, the *scale* of deflated values makes recovery to previous levels most unlikely. Ditto reverse splits. Can't think of any that restored previous valuations.
Re: Gastar / Meramec zone in STACK
Depends on the demographic of who owns the shares. Retail, holding since the drop in price, would sell in a heartbeat at double the current depressed price. Professionals with huge positions, that's something else.
Re: Gastar / Meramec zone in STACK
On Tuesday (12/22) an EPG member called me and asked me what was the best way to play Gastar. He believes Gastar will be taken over by a large-cap that wants their STACK leasehold. I told him that if he wants to play that angle, the best thing to do is buy the preferred stock Series A.
The reason for this is simple. If a large-cap like DVN, NFX or XEC (which should all be taking a hard look at GST) buys GST (either for cash or a stock-for-stock deal), Gastar would become a wholly-owned subsidiary of the buyer. The new parent company would be liable for the monthly dividends on the preferred stock and, if they wanted to retire the preferred stock it would be at par ($25/share).
My last few years at Hess were spent on the Business Development team. We took over several companies during that time and we always made them subsidiaries for a few years before absorbing them into Hess Corp. This is done to protect the parent company from any hidden liabilities that may have been missed on due diligence. All of the "stuff" like debt and preferred stock of the target was always taken out at par.
PS: I have asked Gastar (Russ and Mike) several times if they have any intention of suspending dividends on the preferred stock. Each time they say no and remind me that they and several of their family members own the preferred stock. That said, I doubt they would tell me they were going to suspend dividends anyway. But their replies do seem sincere. Also, I have asked them if they NEED to sell the Marcellus/Utica package to survive. They also say no. They just want to sell it, so they can focus all of their attention on Oklahoma. They are very excited by the potential they have in Oklahoma.
The reason for this is simple. If a large-cap like DVN, NFX or XEC (which should all be taking a hard look at GST) buys GST (either for cash or a stock-for-stock deal), Gastar would become a wholly-owned subsidiary of the buyer. The new parent company would be liable for the monthly dividends on the preferred stock and, if they wanted to retire the preferred stock it would be at par ($25/share).
My last few years at Hess were spent on the Business Development team. We took over several companies during that time and we always made them subsidiaries for a few years before absorbing them into Hess Corp. This is done to protect the parent company from any hidden liabilities that may have been missed on due diligence. All of the "stuff" like debt and preferred stock of the target was always taken out at par.
PS: I have asked Gastar (Russ and Mike) several times if they have any intention of suspending dividends on the preferred stock. Each time they say no and remind me that they and several of their family members own the preferred stock. That said, I doubt they would tell me they were going to suspend dividends anyway. But their replies do seem sincere. Also, I have asked them if they NEED to sell the Marcellus/Utica package to survive. They also say no. They just want to sell it, so they can focus all of their attention on Oklahoma. They are very excited by the potential they have in Oklahoma.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
-
ddlopata084
- Posts: 102
- Joined: Sat Dec 27, 2014 8:56 pm
Re: Gastar / Meramec zone in STACK
I just watched MEMP go from $1.60 to $2.72 in 2 days. In this environment, I don't trust any view of stock prices and history of takeout values leading to probable take out value for GST.