Gastar Exploration (GST)
Posted: Mon Nov 04, 2013 10:08 pm
Gastar reported decent results for Q3. Production was above my forecast (most important), but their realized natural gas price was lower than I expected.
I have updated my forecast model and posted it under the Watch List Tab. My Fair Value Estimate went up 40 cents to $6.00/share, primarily because I adjusted the CFPS multiple to use only 2013 + 2014 CFPS. I will tweak the forecast after listening to their CC.
Note that Gastar's production will be down in Q4 because they sold their East Texas properties to Cubic Energy early in October. Revenues will be just a bit lower than in Q3 because the mix is shifting each quarter to more crude oil. East Texas was almost all gas. More than 65% of forecast revenues are from liquid sales as GST gets a lot more oily going forward.
The main thing to watch on GST is drilling results on their Oklahoma drilling program. If all goes well, their Hunton horizontal drilling program will carry this stock a lot higher for us. Early results look very promising.
The production forecast in the model is my SWAG, since the company has not provided any guidance.
Best news is that they have more than enough liquidity to fund their 2014 drilling program and keep paying their nice monthly dividends on the pfd stock. For those of you new to GST, the dividends are tax free since this company has no accumulated earnings and profits for Federal Income Tax purposes. They just reduce your basis.
I have updated my forecast model and posted it under the Watch List Tab. My Fair Value Estimate went up 40 cents to $6.00/share, primarily because I adjusted the CFPS multiple to use only 2013 + 2014 CFPS. I will tweak the forecast after listening to their CC.
Note that Gastar's production will be down in Q4 because they sold their East Texas properties to Cubic Energy early in October. Revenues will be just a bit lower than in Q3 because the mix is shifting each quarter to more crude oil. East Texas was almost all gas. More than 65% of forecast revenues are from liquid sales as GST gets a lot more oily going forward.
The main thing to watch on GST is drilling results on their Oklahoma drilling program. If all goes well, their Hunton horizontal drilling program will carry this stock a lot higher for us. Early results look very promising.
The production forecast in the model is my SWAG, since the company has not provided any guidance.
Best news is that they have more than enough liquidity to fund their 2014 drilling program and keep paying their nice monthly dividends on the pfd stock. For those of you new to GST, the dividends are tax free since this company has no accumulated earnings and profits for Federal Income Tax purposes. They just reduce your basis.