Sweet 16 Growth Portfolio: Our updated Net Income and Cash Flow Forecast model for Gastar Exploration (GST) is now available under the Sweet 16 Tab.
I continue to believe that Gastar's preferred stock is the best way to play this one. GST-PA (on Yahoo Finance) is a $25 par convertible preferred stock with a stated dividend rate of 8.625%. At the current price of $19.70/share the yield is just under 11%. Since GST has no "Earnings & Profits" for Federal Income tax purposes, the dividends on the pfd stock is tax deferred return of capital (just reduces your basis).
Gastar's liquids production is ramping up and the ramp up will accelerate into year end. They will have 22 gross Marcellus wells coming on-line from August through January. Gastar is also going to drill three wells in a new Mid-Continent oil play (I think it is a Mississippian oil play). The first well is now scheduled to spud late in Q3. I do not have any production from this new project in my forecast model.