Gastar Exploration

[dan_s]

7:04AM Gastar Exploration provides update on results of 2012 operations; co is on track to achieve its guidance target of 38 gross (17.5 net) operated horizontal Marcellus wells on production by year-end (GST) 0.89 : Co provided an update on results of its 2012 operating activities.

Marcellus Shale
Gastar currently has 34 gross (15.5 net) operated horizontal Marcellus Shale wells on production in Marshall County, West Virginia and is on track to achieve its guidance target of 38 gross (17.5 net) operated horizontal Marcellus wells on production by year-end. Gastar also has 19 operated horizontal Marcellus wells in various stages of drilling or awaiting completion, of which four gross (2.0 net) wells are expected to be on production by year end. Based on a third party engineer's estimate of our 34 producing operated wells, our average operated Marcellus 5,000-foot horizontal lateral well EUR has been confirmed and increased modestly from 6.4-6.5 Bcfe, of which 34% is liquids, while current estimated gross drilling and completion costs have decreased from $7.3-7.0 mln.

Mid-Continent Oil Play
Gastar's first non-operated well in the Mid-Continent began flow-back operations on October 5, 2012. Based on a recent 30 day average, the well is producing at a stabilized daily gross rate of ~84 barrels of oil, 428 barrels of completion fluids and 94 Mcf of 1,496 Btu natural gas, yielding ~105 barrels of oil equivalent per day after processing. To date, ~19% of the completion fluids from the 13-stage fracture stimulation have been recovered. Drilling and completion costs on the well to date are approximately $4.8 gross ($3.0 net) mln.

Oil and Gas Reserve Additions
Gastar expects to report a 50% to 60% year-over-year increase in total proved reserve volumes for 2012 based on third-party evaluations of reserves in Appalachia, East Texas and the Mid-Continent. Gastar expects to report its complete reserve volume and valuation results for the year-end 2012 in mid-February 2013. Approximately 28% of the 2012 year-end total is expected to be attributable to NGLs, oil and condensate, and 72% to natural gas. Co expects its reserve replacement ratio for FY12 to be approximately 500% of 2012 production. Co is increasing its guidance of estimated average daily total net production in Q4 of 2012 from the previous guidance of 38-40 MMcfe per day to 42-43 MMcfe per day as a result of placing wells on production earlier, shallower decline on existing wells coupled with less third-party pipeline and processing facility downtime.