After listening to the conference call, I have updated my forecast model for Gastar Exploration (GST) and posted it to the EPG website. You can view it on the website or download it to Excel.
If you have not done so, you need to view the updated presentation on the Gastar website and listen to the conference call replay. This will answer a lot of your questions.
The big sell-off today is because investors were hoping they would announce the sale of their South Stack leasehold (26,000 acres in NE Canadian County). Instead, Gastar announced they are taking it off the market for now. Drilling activity is picking up to the North, West and South of this acreage block and Gastar thinks it is best to wait for more well data in the area. NFX has already released results on some very good STACK wells just to the west. Again, the last thing GST shareholders want is for Gastar to sell this leasehold at a price well below what it could be worth in six to nine months.
Today, Gastar has $20 million in cash and positive cash flow from operations. This year they will participate in ten outside operated STACK wells. The program is designed to de-risk their North Stack leasehold block.
Gastar: Updated Forecast
Gastar: Updated Forecast
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: Updated Forecast
Sweet. Thanks Dan
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ddlopata084
- Posts: 102
- Joined: Sat Dec 27, 2014 8:56 pm
Re: Gastar: Updated Forecast
Dan - I believe they have a $14M bond payment coming up, middle of the month. I assume that makes their cash $6M within the next week?
Thx
Thx
Re: Gastar: Updated Forecast
of all the investments i have have made over the past 12 years , this has to be the worst..
Re: Gastar: Updated Forecast
I wish I could say that.
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bearcatbob
Re: Gastar: Updated Forecast
Dan,
It is excuses like this that makes me nuts. If their property is worth a crap - now is not the time to sell it. That decision should be a good thing - if the property is worth what we are told.
I checked in to see commentary about their latest well results. My read is that the market thought the results were not good.
When was the last time you said a projection you have made was wrong? It is ok to be wrong as the future often surprises. Admitting one's forecast was wrong for me for once would be a good thing.
Color me very disappointed. Again.
Bob
It is excuses like this that makes me nuts. If their property is worth a crap - now is not the time to sell it. That decision should be a good thing - if the property is worth what we are told.
I checked in to see commentary about their latest well results. My read is that the market thought the results were not good.
When was the last time you said a projection you have made was wrong? It is ok to be wrong as the future often surprises. Admitting one's forecast was wrong for me for once would be a good thing.
Color me very disappointed. Again.
Bob
Re: Gastar: Updated Forecast
Bob;
I do not recall saying the South Stack package would sell or what it would sell for. It is too early to determine the quality of the Holiday Road well, which was explained by Russ Porter on the conference call. My forecasts are based on the best information I have at the time.
Small-caps have more risk. Think about sticking with the large-caps. Just a suggestion.
What you buy or sell and when you buy or sell it is 100% your responsibility.
I do not recall saying the South Stack package would sell or what it would sell for. It is too early to determine the quality of the Holiday Road well, which was explained by Russ Porter on the conference call. My forecasts are based on the best information I have at the time.
Small-caps have more risk. Think about sticking with the large-caps. Just a suggestion.
What you buy or sell and when you buy or sell it is 100% your responsibility.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Gastar: Updated Forecast
Dan - my concern is that the rig was released after the second well - seems that if it was a a good sucess they would have found a way to continue drilling. I found this on the Yahoo message board - would appreciate any comments and recommendations on weather to sell or hold.
The posters who have concluded that this afternoon's news means GST has decided to "roll the dice" are misunderstanding Thankfully it is the opposite. They decided to stop "rolling the dice".
the decision to sell the 26,500 STACK acreage piece WAS the attempt at rolling the dice. Rolling dice means that they were going to attempt to go forward alone as a going concern, despite not having sufficient capital to proving up the acreage on their own. The idea would have been to use proceeds of the 26,500 acres to fund that endeavor starting.
Now they have decided that is not what is prudent to do. ( THANKFULLY). they are scrapping that idea & move to PLAN B ( which IMO is the best & prudent )
PLAN B is sell the company entirely to a better capitalized player who has the money or can raise money reasonably to develop the valuable GST acreage
So the people selling in after hours are small retail players who don't understand what is happening, that that actually the news is good.
The most likely format of the deal, likely already being worked on, is the acquiring entity has been and is buying the secured 2017 notes in the open market at the discounts from par that have been available. When they have acquired enough , the announcement will come that GST has agreed to a merger or sale of the company to the acquirer. Assuming the acquirer is a public company, the deal will be a cash &stock swap deal, (mostly stock ), ie enough cash to pay off the revolver
What will it all mean , in dollars & cents? Don't hold me to exact prices but ballpark will be that the secured note holders who have not sold their notes will be made essentially whole, at 100 cents on the dollar. The preferred holders may be induced to take some discount from par, but still higher than here, and the common in the $2.50-$3.25 area
The posters who have concluded that this afternoon's news means GST has decided to "roll the dice" are misunderstanding Thankfully it is the opposite. They decided to stop "rolling the dice".
the decision to sell the 26,500 STACK acreage piece WAS the attempt at rolling the dice. Rolling dice means that they were going to attempt to go forward alone as a going concern, despite not having sufficient capital to proving up the acreage on their own. The idea would have been to use proceeds of the 26,500 acres to fund that endeavor starting.
Now they have decided that is not what is prudent to do. ( THANKFULLY). they are scrapping that idea & move to PLAN B ( which IMO is the best & prudent )
PLAN B is sell the company entirely to a better capitalized player who has the money or can raise money reasonably to develop the valuable GST acreage
So the people selling in after hours are small retail players who don't understand what is happening, that that actually the news is good.
The most likely format of the deal, likely already being worked on, is the acquiring entity has been and is buying the secured 2017 notes in the open market at the discounts from par that have been available. When they have acquired enough , the announcement will come that GST has agreed to a merger or sale of the company to the acquirer. Assuming the acquirer is a public company, the deal will be a cash &stock swap deal, (mostly stock ), ie enough cash to pay off the revolver
What will it all mean , in dollars & cents? Don't hold me to exact prices but ballpark will be that the secured note holders who have not sold their notes will be made essentially whole, at 100 cents on the dollar. The preferred holders may be induced to take some discount from par, but still higher than here, and the common in the $2.50-$3.25 area
Re: Gastar: Updated Forecast
Gastar has been saying since late last year that after drilling the Holiday Road well that they would not drill anymore operated wells in 2016. They do plan to participate (with small working interest) in up to 10 outside operated STACK wells within or close to their North Stack leasehold block. As a working interest holder, they get all of the well logs. The goal is to use this information to plan their own Stack drilling program for 2017. Hopefully, when oil prices are a lot higher. I think at least two of the wells will be operated by Newfield.
Regarding a TAKEOVER by another company. This is a possibility and it would be smart for the acquirer to buy up as much of the Gastar debt and preferred stock at a discount before making a takeover bid.
If you look at the NavPort slides from our April 25 luncheon, you can see several private upstream companies in Stack. A few of them have BIG MONEY VC firms backing them, which could easily handle a takeover of this size.
Regarding a TAKEOVER by another company. This is a possibility and it would be smart for the acquirer to buy up as much of the Gastar debt and preferred stock at a discount before making a takeover bid.
If you look at the NavPort slides from our April 25 luncheon, you can see several private upstream companies in Stack. A few of them have BIG MONEY VC firms backing them, which could easily handle a takeover of this size.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Gastar: Updated Forecast
With so much volatility, there are great day trading opportunities in this and many of the other sweet 16 or small cap companies. Fun to keep a portion of a portfolio for pure play.
Re: Gastar: Updated Forecast
Yes, during the rebound period of each oil price cycle there is a lot of volatility. I have noticed that the Sweet 16 that are down one week are up the next week. Each weekend you can download the Sweet 16 main spreadsheet to see my valuation compared to First Call's price targets. By watching it week after week you will start to see the trends.
I think PDCE is a good one to check out for day trading opportunities.
I think PDCE is a good one to check out for day trading opportunities.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group