Gastar

[dan_s]

Gastar Exploration (GST) is going to use the $44 million that was raised from a recent equity offering to fund an 8 well drilling program. Details will be announced when they release Q2 results.

Gastar is also going to participate in 10-12 outside operated STACK wells, all of which should help prove up more of their leasehold.

My SWAG is that the new wells will be spaced to prove up a lot of their STACK leasehold. I also believe they still plan to sell South Stack (~26,000 acres). Several of Gastar's new wells will be in South Stack and wells drilled by other companies, including NFX, should prove up that leasehold. Higher oil prices should also increase the bids.

I know many of you did not like the dilution of the equity raise, BUT it was a much better move than seeking Chapter 11 protection, which would have taken the common stock to zero.

I still believe the preferred stock is the best way to play Gastar. If their drilling program is successful and oil moves over $60/bbl, the company may be able to catch up on the deferred dividend payments. If they are able to sell South Stack and pay off a lot of debt, the preferred stock price should spike. Also, if Gastar is taken over by a large-cap the preferred stock should move to par ($25).

Gastar is not out of the woods yet. Their bankers still need to work with them. Higher oil & gas prices will definitely help on that front.

[Chena47]

Any insight on how their latest well is doing? Thanks

[dan_s]

No news on the Holiday Road well. I did not ask about it because they really should not share that info unless they put it out in a press release. Right now they are hoping the additional common stock is sold. If so, they may mention the Holiday Road well in a press release.

[wilmawatts]

I would expect they will know if the additional shares sold pretty quickly now. And the well has been online cleaning up for some time since we last heard I think.