I have updated the forecast model for GST and posted it to the website. 4th quarter results were very close to my previous forecast.
Cash flow from operations in 2015 should be in the $55 to $60 million range (net of pfd stock dividends), compared to their capital expenditure budget of $103 million. GST has more than enough liquidity fund this year's budget. Forecast is for 22% production growth this year.
My Fair Value Estimate is now $4.75, compared to First Call's price target of $4.04.
Gastar has a lot of upside in both Oklahoma and in their Marcellus and Utica shale assets. If you own GST, you should take a hard look at what CLR, NFX and XEC are saying about their Oklahoma play (SCOOP and STACK). XEC is drilling very close to Gastar's leasehold.
Gastar Exploration (GST)
Gastar Exploration (GST)
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Gastar Exploration (GST)
Often, when you talk about companies such as gst, you include discussion of their preferreds. What about their bonds. I learned in the conf call that their are a few that gst has issued that may be better investments than the preferreds. I have also discovered a number of bonds issued by other companies you like such as pq, and some mlps. Have you discussed some of these, which I may have missed? Do you choose not to discuss bonds? Just curious as they seem like good investments.
Re: Gastar Exploration (GST)
I just finished updating the Newfield Exploration (NFX) profile today. It will be posted to the website tonight and sent out via e-mail tomorrow. If you own GST you should read it carefully.
NFX is a large E&P that has several core areas. They are focusing 80% of their capital program this year on Central Oklahoma because they are getting FANTASTIC results up there in the SCOOP and STACK plays. Well costs are coming down and EURs are going up.
I bring this to your attention because GST has a lot of acreage in this area were NFX, CLR and XEC are spending Big Bucks to develop the play. GST acquired their leasehold in Oklahoma before lease costs went sky high in the area. CLR tells the market they have billions of barrels of recoverable oil in SCOOP.
NFX is a large E&P that has several core areas. They are focusing 80% of their capital program this year on Central Oklahoma because they are getting FANTASTIC results up there in the SCOOP and STACK plays. Well costs are coming down and EURs are going up.
I bring this to your attention because GST has a lot of acreage in this area were NFX, CLR and XEC are spending Big Bucks to develop the play. GST acquired their leasehold in Oklahoma before lease costs went sky high in the area. CLR tells the market they have billions of barrels of recoverable oil in SCOOP.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Gastar Exploration (GST)
In a report published Monday, Wunderlich Securities analyst Jason A. Wangler reiterated a Buy rating and $4.00 price target on Gastar Exploration, Inc. (NYSE: GST).
In the report, Wunderlich Securities noted, "Buy-rated Gastar Exploration (GST) reported a 4Q14 miss as EPS of $0.02 were below our $0.08 estimate and the Street's $0.06 forecast due primarily to continued differential issues, specifically in the Appalachian region, which caused revenue to below expectations. Production was in line with expectations at 11,700 boe/day as this figure was previously announced; but this shows how pricing weakness affects overall numbers. Gastar has focused on this issue for some time by aggressively hedging production and also focusing its activity in the more pricing-friendly Oklahoma position where it continues to generate strong results. With the production moving higher, CapEx being reigned in, and a solid liquidity position, we remain bullish on Gastar."
In the report, Wunderlich Securities noted, "Buy-rated Gastar Exploration (GST) reported a 4Q14 miss as EPS of $0.02 were below our $0.08 estimate and the Street's $0.06 forecast due primarily to continued differential issues, specifically in the Appalachian region, which caused revenue to below expectations. Production was in line with expectations at 11,700 boe/day as this figure was previously announced; but this shows how pricing weakness affects overall numbers. Gastar has focused on this issue for some time by aggressively hedging production and also focusing its activity in the more pricing-friendly Oklahoma position where it continues to generate strong results. With the production moving higher, CapEx being reigned in, and a solid liquidity position, we remain bullish on Gastar."
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
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wilmawatts
- Posts: 685
- Joined: Fri Apr 01, 2011 10:12 am
Re: Gastar Exploration (GST)
Good company
Re: Gastar Exploration (GST)
This week, I am focusing on updating the profiles and forecast models of the companies in our High Yield Income Portfolio. I just finished SXE and VNR. I hope to get time to work on GST late this week.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Gastar Exploration (GST)
Dan,
Can you please address mkarpoff's question above. For example, are we better off buying the GST.A or are we better off going up the ladder and buying their senior unsecured note with the same coupon which is B- rated for a little more money. I realize we will get less current return on the bond but is it safer? Also, if I remember correctly, it gets called in 2018 for a YTC of over 11pc.
Or do you think if they default on the preferred, they will also default on the Bond? Even if they did default on the bond there is probably a chance of a 50pc recovery of principle.
So, to make a long question short, are we better off with the preferred or the Bond?
Can you please address mkarpoff's question above. For example, are we better off buying the GST.A or are we better off going up the ladder and buying their senior unsecured note with the same coupon which is B- rated for a little more money. I realize we will get less current return on the bond but is it safer? Also, if I remember correctly, it gets called in 2018 for a YTC of over 11pc.
Or do you think if they default on the preferred, they will also default on the Bond? Even if they did default on the bond there is probably a chance of a 50pc recovery of principle.
So, to make a long question short, are we better off with the preferred or the Bond?
Re: Gastar Exploration (GST)
Saw your reply on bond thread. No need to reply to my previous post unless you have a good idea about a safe bond in another company with decent yield.
Re: Gastar Exploration (GST)
Based on my forecast, there is no reason to believe they will default on either the bonds or the preferred stock. Bonds are more secure than pfd stock.
From the Q4 press release:
J. Russell Porter, Gastar's President and CEO, commented, "Gastar ended 2014 on a very positive note and we are well positioned to execute our business plan in 2015. We have ample liquidity and are off to a very encouraging start in 2015 with additional excellent drilling results on our West Edmond Hunton Lime Unit ("WEHLU") acreage. In 2014, we strengthened our balance sheet with an equity issuance and continued our track-record of growing our reserve base to support a larger credit facility, which now includes an additional $55 million of borrowing capacity under the revolver. In addition to achieving reserve growth of 87% in 2014, we also continued to meet our strategic objective of increasing our weighting towards liquids, which now represents 53% of our reserve base, of which 29% is oil and 24% is NGLs."
"We are taking a conservative approach to our 2015 capital budget, which as previously announced was reduced to approximately $103 million, since we believe maintaining liquidity and financial discipline will benefit us in these uncertain market conditions. Despite a significantly lower capital budget in 2015 compared to 2014, we anticipate our production for 2015 will grow by approximately 22% compared to 2014 production (based on mid-point guidance)."
"We are investing our capital in areas that will generate acceptable returns while also positioning us for improved liquidity through new proven reserve additions. In the Mid-Continent, the Hunton formation continues to represent a substantial source of high return projects. Our 2015 Hunton drilling program will focus on our WEHLU acreage. We have seen oil production rates from wells in our WEHLU acreage that exceed our type curves, and when combined with the lower cost structure associated with the projects, we can achieve strong economic returns in the current price environment. We are encouraged by the early production results of our most recent upper and lower Hunton wells in the southern portion of our WEHLU acreage. In the Appalachian Basin, we have limited near-term lease expirations, allowing us to postpone any new drilling and wait for better natural gas and NGLs pricing to improve economic returns in the region."
From the Q4 press release:
J. Russell Porter, Gastar's President and CEO, commented, "Gastar ended 2014 on a very positive note and we are well positioned to execute our business plan in 2015. We have ample liquidity and are off to a very encouraging start in 2015 with additional excellent drilling results on our West Edmond Hunton Lime Unit ("WEHLU") acreage. In 2014, we strengthened our balance sheet with an equity issuance and continued our track-record of growing our reserve base to support a larger credit facility, which now includes an additional $55 million of borrowing capacity under the revolver. In addition to achieving reserve growth of 87% in 2014, we also continued to meet our strategic objective of increasing our weighting towards liquids, which now represents 53% of our reserve base, of which 29% is oil and 24% is NGLs."
"We are taking a conservative approach to our 2015 capital budget, which as previously announced was reduced to approximately $103 million, since we believe maintaining liquidity and financial discipline will benefit us in these uncertain market conditions. Despite a significantly lower capital budget in 2015 compared to 2014, we anticipate our production for 2015 will grow by approximately 22% compared to 2014 production (based on mid-point guidance)."
"We are investing our capital in areas that will generate acceptable returns while also positioning us for improved liquidity through new proven reserve additions. In the Mid-Continent, the Hunton formation continues to represent a substantial source of high return projects. Our 2015 Hunton drilling program will focus on our WEHLU acreage. We have seen oil production rates from wells in our WEHLU acreage that exceed our type curves, and when combined with the lower cost structure associated with the projects, we can achieve strong economic returns in the current price environment. We are encouraged by the early production results of our most recent upper and lower Hunton wells in the southern portion of our WEHLU acreage. In the Appalachian Basin, we have limited near-term lease expirations, allowing us to postpone any new drilling and wait for better natural gas and NGLs pricing to improve economic returns in the region."
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group