GST...what's up?????

[bobs]

Any thoughts???

[dan_s]

GST up on VERY HEAVY volume on Friday. It is possible that a "Big Fish" has some scouts in the field getting well results from folks on the ground.

1. The asset sale that Gastar announced earlier is a big step in getting the debt holders off their back.
2. The joint venture they announced should prove up a lot more STACK leasehold. However, it will not add a lot of production because Gastar has such a small revenue interest in each well until "payout" is reached. I think this JV is more bullish for the preferred stock and debt holders than it is for the common stock holders. Why?, because it will prove up more P2 and P3 reserves.

[wilmawatts]

Newfield needs to buy these guys

[dan_s]

Let me be clear that if NFX or some other company buys Gastar, the common stock holders will not get much. It is the debt holders and preferred stock holders that will get taken out at par. Today, GST is not worth much when you subtract the debt and preferred stock.

[wilmawatts]

makes sense

would you sell your GST and replace with GST/PA?

or just sell GST and buy NFX or DVN? Or buy something else like CPE or REI in the Permian

what is the strategy if you had GST you bought at $3 a share and it was still in your account?

[dan_s]

The upside for GST is:
1. Oil price go above $60/bbl, making their STACK leasehold more valuable. "A rising tide lifts all boats".
2. Their JV drilling program proves up large blocks of leasehold, which can be solid to pay off their debt.

It is now my understanding that Gastar intends to start paying dividends on their preferred stock "in kind" with common stock early in 2017.

The $71 million asset sale that Gastar announced definitely takes Chapter 11 off the table. They should survive as long as oil prices do not pull back again. Russ Porter has done a great job getting the company past a very rough patch.

What you buy or sell is always up to you. NFX, DVN, CPE and REI all look good to me.

[wilmawatts]

" It is the debt holders and preferred stock holders that will get taken out at par. "

If I am not mistaken the preferred stock holders also get the accrued non-paid dividends, which probably will not be insignificant here

Any other GST owners with an opinion here on strategy? Just curious, we all make our own call on trading.

[cviller]

Today's volume seems to be taking place mostly on upticks. I don't think the stock dividends will be paid until April.

[bobs]

The pfd B seems to always trade at a discount compared to the A and therefore I feel that would probably be the better of the 2 if one was to switch from the common and/or buy the/a pfd. The accumulated common to be paid out is not insignificant from a dilution standpoint but the common could way more than double if price of oil goes way up and the acreage gets proved up. I suspect that both pfds could only go up 50% +/- from here.
However I've been wrong too often on GST in the past.

[ericfp]

I have been buying the common. I own the preferred A & B also but when the preferred crossed 13 I concentrated my buying in the common. I believe we will see over 3 dollars again therefore the common had more appeal to me at a dollar. My personal belief is that oil will be over $60 a barrel by February next year.

[dan_s]

If WTI moves over $60 and Gastar reports good well results a lot of small-cap stocks will move up, including GST.

[wilmawatts]

Thanks guys for the feedback and strategy. I have limit orders in on GSTA and if they fill I then sell GST to 'offset' the buy. In an IRA account so no wash sale issues, not sure there would be anyway but I am not a tax guy.

Also really like Newfield for a lower risk, lower reward, play in the STACK. Dan's latest report worth reading, just reiterates why I like it which is probably why it was fun to read