STACK Play in Oklahoma

[dan_s]

Credit Suisse just sent out an update on STACK. In the report they highlight the activity of CLR, DVN, MRO, NFX and XEC. MRO has completed several wells near Gastar's leasehold, which could really help GST prove up their assets. Details on those wells should be in MRO's Q3 report. A lot of the leasehold that MRO got from PayRock is within the focus areas of Gastar. In my opinion, Devon Energy (DVN) may have the most upside from positive industry results in STACK, but all four of our Sweet 16 companies have a lot of upside in SCOOP/STACK. Send me an e-mail if you'd like to get the full report. - dmsteffens@comcast.net

Highlights of the CS report on STACK

Lower Well Costs, Downspacing & Extensional Tests
■ Bottom Line: (1) We expect continued progress on cost reductions in
STACK wells in 3Q. (2) There are important extensional tests on MRO’s
PayRock acreage which also have read-through to NFX. (3) Down-spacing
tests could increase the inventory for the group versus our models.
■ Eastward into Canadian County: This quarter we should get well results
from MRO from its PayRock acquisition, potentially moving the Meramec
further east into Canadian County where NFX also has exposure. There
have not been very many completions in this area.
■ Downspacing: The industry is testing up to 10-14 wells per 1280 acre
(long lateral) section, across two zones in the Meramec. We note most of
the downspacing tests are in the very core of the play and may not be fully
applicable across all the acreage. However, successful downspacing could
increase the industry's risked inventory estimates. We are least assertive in
terms of the number of wells drilled in our NAV drilling model for DVN, then
MRO.
■ Blue Sky: At 2Q, we put some of the “blue sky” into our base case TP's.
Across US E&P, more of the “blue sky” upside from here likely resides in
the Permian. That said, there is still some blue sky upside for our STACK
exposed coverage. If natural gas prices rise, there are also good returns in
the SCOOP gas-condensate window. The Springer oil play in the SCOOP
is also a potential source of upside.

[cmm3rd]

Thanks, Dan, for the update. According to MRO's website, they will report Q3 on Nov. 2 after the close.

[dan_s]

If you own Gastar, read this > http://seekingalpha.com/article/4012498 ... lling#alt2

I talked to a fund manger in NYC two weeks ago. He purchased $50 million of GST debt a few months ago and the price has doubled. There is definitely some big hitters with large stakes in Gastar.