GST

[cmm3rd]

Is anyone aware of any news re Gastar? It's up on higher than normal volume.

[cmm3rd]

Upon searching, I assume it is the Oil and Gas Investor article about the STACK posted yesterday by par putt in the DVN thread. Gastar is discussed, and Russ is quoted. http://www.oilandgasinvestor.com/stacke ... ma-1349456

[wilmawatts]

Yeah I had the same question. Chart looks pretty good recently

Now we need some results to support the move

[dan_s]

Based on the high level of trading volume, it is probably a fund that has some knowledge of Gastar's well results. It is not difficult for a "scout" to obtain well results in an area. When I was at Hess we used 3rd party scouts all the time to gather information on areas we were interested in. "Scouts" are landmen that have knowledge of the area and lots of contacts with rig hands. Buy them a few beers and they will tell you anything.

It is critical to Gastar's survival that this year's nine well program be successful. It should be since they have a lot of geological information within the area. They have a lot of Hunton wells in their northern block. The Hunton is below the other STACK zones, so they have logs telling them the thickness and depth of the zones they are drilling now. By now, Gastar should have completing info on at least two wells and maybe up to five wells (see slide 11 of their September presentation for locations of each well). I have been told that the logs on the first well (an Osage test) looked very good with over 500 feet of pay, but until the well is completed you don't know for sure.

IMO the best way to play Gastar is the preferred stock. Why? Because if the nine well program is successful, the company becomes a Screaming Takeover Target. The acquiring company will need to take out the debt and preferred stock at par. Even if the company is not acquired, they will need to catch up on the dividends. When that happens, the preferred stock should move back toward par. Both the A and B series preferred stock is "cumulative" and they can only suspend the dividends for a year.

[cviller]

Dan, I believe they plan to pay the preferred dividends in April with shares. Would those be additional preferred shares or common shares? Thanks.

[dan_s]

Common stock.

[wilmawatts]

Oklahoma officials told me last week the highest priority legislatively is to amend the well density rules to allow 18,000 foot laterals in the STACK and SCOOP. Currently spacing limits wells to much less horizontal distance, I think they said 6,000 or 8,000 feet max currently

If the companies can drill in the STACK horizontally for 18,000 feet, all things considered, I am told they will be minting money. More money than they already are. And GST might make it past their leverage problems. We will see

[dan_s]

I went to Tulsa University and spent the first 20 years of my career in Oklahoma. It is an extremely friendly state for oil & gas companies because the industry is the backbone of the state's economy. Plus, it has a lot of existing infrastructure. SCOOP/STACK is in a great location. They get premium pricing for oil up there.

Crap like bans on fracing may happen in New York or California, but it will not happen in Texas, Oklahoma or North Dakota. People are smarter in the middle of the country.