Gastar

[Chena47]

Dan any new insights to Gastar. The preferred stock continues to move up nicely.

[dan_s]

Nothing new. When they announce Q1 results hopefully they have a good report on the 2nd Meramec well and an update on the South STACK sale.

Gastar has completed step one of a three step process that should put them back in good graces with Wall Street. Read our recent profile, which can be found on the EPG website under the Small-Cap tab.

[ddlopata084]

Dan - one more, have you heard any news through the grapevine relative to their Scoop/Stack/Canadian asset sale. I thought they expected to have a full set of bids in by early-mid April? Realize they would not publicly announce anything until Q1 call in June?

[dan_s]

All I know is that several companies are taking a hard look at the South Stack asset package.

Yesterday I heard from Leslie Haines who runs Oil & Gas Investor magazine. She said they are featuring STACK in their next edition and agreed with me that is may be America's hottest oil play.

[wilmawatts]

Acreage sales as I recall in the STACK recently have been in the $11,000 acre range.

What do you think GST will get for their STACK acreage Dan/

Did Devon pay some outrageous price per acre for some private STACK company they acquired n the last year?

Just trying to get a feel of what the balance sheet might look like after the STACK sale. Back of the envelope I think it will look really good, but you are the expert here Big Guy.

Not sure what the GST basis is in the leasehold, but I will bet they have a gain on sale and wont have a balance sheet write down.

[dan_s]

Devon paid $26,000 per acre for what they got from Felix. Production came with the acreage.

VNR sold 25,000 acres in STACK for $11,000/acre.

Gastar's leasehold probably not as good as what VNR sold, but I am not a geologist, so no idea at this point what the bids will look like. Hopefully, we get an update on the sales process with the Q1 results.

[bobs]

Did RRC sell some stack acreage with production for under 10K per acre?
Any thoughts re how that might mirror GST stack acreage without any production?

[dan_s]

We will soon find out the value of Gastar's South Stack leasehold. "Beauty is in the eye of the beholder". STACK is a red hot oil play, but all acreage is not the same. NFX has completed some very good STACK wells that directly offset the acreage block. That is all I know.

[Wade4213]

Dan -

What can cause the GST preferreds to break down over 10% on high volume so suddenly?

Many thanks for your thoughts.

T

[dan_s]

More seller than buyers. It is that simple on any given day. No news on GST until they release Q1 results late on Thursday.

[setliff]

i was looking at the chart and it looks pure technical and profit taking upon reaching a point of high resistance. from the chart it appears it might hang around that area for a while. all fwiw.

[dan_s]

The market is waiting for two very important bits of information from Gastar:

1. What will the South Stack package sell for? If they get $5,000 to $6,000 per acre, it will significantly improve the balance sheet and eliminate all risk of default. FWIW I don't think Gastar has to sell this package. They have enough cash flow from operations to fund this year's capital program and pay interest on their debt. They had a gun to their head and had to sell the Marcellus/Utica package. That transaction go Wells Fargo to back off, which they did.

2. If the second STACK well in their North Stack acreage block is anywhere close to as good as the first Stack well, it will significantly lower the risk on hundreds of horizontal drilling locations and significantly increase the value of North Stack. The well logs looked good and the completion went well, but we won't really know how good the well is until all of the frac fluid is returned and the well has been on-line for 60-90 days. The first Stack well is holding up and running above the type curve.

We may not get answers to these questions on Friday, but it would be nice. The recent move in oil prices definitely helps the chances of getting a nice bid on South Stack.