Gastar (GST) valuation increased

[dan_s]

An updated Net Income & Cash Flow Forecast model for Gastar Exploration Ltd. (GST) has been posted under the Watch List Tab.

My Fair Value Estimate has been increased to $7.55/share (with potential to go a lot higher).

Increasing crude oil production, primarily from their Hunton Limestone Oil play in central Oklahoma gives this small-cap a lot of upside. Over the last few months Gastar shored up their balance sheet and they now have the liquidity to aggressively drill in Oklahoma. GST now has close to 100 low-risk (PUD) development drilling locations in this play. Horizontal wells should produce at high initial rates and level off in the 200-300 boepd range (~85% crude oil). Most of the wells in the play will reach payout in less than a year at today's oil prices. IRRs on this project are over 100%. Improving natural gas and NGL prices will also give revenues a nice boost.

If you are seeking high yield, a recommend Gastar's Series A and Series B pfd stocks. Both are rock solid and they pay monthly dividends. Annual yields are 9% to 10%.