Let's start another discussion.
I remain very bullish on GST. Based on their guidance, they are now on-track for ~60% production growth in 2015 and a HUGE increase in proven reserves year-after-year. Small-Caps with this much running room are PRIME TAKEOVER TARGETS.
As I point out in each newsletter, the Small-Caps have a much higher beta than the Sweet 16. IMO the market over-reacts to these equity offerings. They are usually great buying opportunities.
My Fair Value Estimate did go down $0.25/share to $10.75, but a stronger balance sheet probably deserves a higher multiple. The equity offering plus cash flows from operations should fund their 2015 cap ex budget. That means interest expense will remain reasonable. We do not want to own small-caps with a lot of debt. Believe me, debt can be a killer for these smaller companies.
If you own the pfd stock you should be very happy today. The equity offering significantly reduces risk for pfd shareholders.
Gastar
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wilmawatts
- Posts: 685
- Joined: Fri Apr 01, 2011 10:12 am
Re: Gastar
I Iike this one Dan, a lot
Even with the share issuance. As you note debt can be a killer for small companies.
The CEO has a huge steak, and their wells are incredible, at least the initial production test
I bought another 4000 shares today, and I think I will be happy a year or two from now with the purchase price
Even with the share issuance. As you note debt can be a killer for small companies.
The CEO has a huge steak, and their wells are incredible, at least the initial production test
I bought another 4000 shares today, and I think I will be happy a year or two from now with the purchase price
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wilmawatts
- Posts: 685
- Joined: Fri Apr 01, 2011 10:12 am
Re: Gastar
* Small-Caps with this much running room are PRIME TAKEOVER TARGETS. *
I asked the CEO what his fair value was, the price he would consider selling the company. He said $24, maybe a slight premium to that.
Was an interesting discussion.
I asked the CEO what his fair value was, the price he would consider selling the company. He said $24, maybe a slight premium to that.
Was an interesting discussion.
Re: Gastar
I have known Russ for years. He is more bullish about the future of Gastar than I have ever seen him. He is very excited about what they have in both the Utica and Oklahoma.
I think his board would have a hard time turning down an offer over $15/share and Russ would walk away with a whole lot of money at that price. At our luncheon in Dallas on July 8 he said it would take an offer north of $20/share to get his attention.
My "Fair Value Estimates" are based on operating cash flow per share X a multiple that I think is appropriate based on each company's liquidity and running room. Gastar has a lot of both. Their acreage in the Utica is now VERY VALUABLE.
Cash Flow Per Share ("CFPS")
2012A = $0.48
2013A = $0.79
2014E = $1.10 < My CFPS estimate are net of the dividends on their pfd stock.
2015E = $1.90
As you can see above, GST has a lot of upside for us as we move forward in time and my model rolls forward.
I think his board would have a hard time turning down an offer over $15/share and Russ would walk away with a whole lot of money at that price. At our luncheon in Dallas on July 8 he said it would take an offer north of $20/share to get his attention.
My "Fair Value Estimates" are based on operating cash flow per share X a multiple that I think is appropriate based on each company's liquidity and running room. Gastar has a lot of both. Their acreage in the Utica is now VERY VALUABLE.
Cash Flow Per Share ("CFPS")
2012A = $0.48
2013A = $0.79
2014E = $1.10 < My CFPS estimate are net of the dividends on their pfd stock.
2015E = $1.90
As you can see above, GST has a lot of upside for us as we move forward in time and my model rolls forward.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group