GST
Re: GST
Dan,
I know I am responsible for my own actions and unfortunately bought large overweight position in GST-A and GST-B. I agreed with you in your assessment that it should gradually drift back toward par. It has gone dramatically against us since then.
From what I understand, you have a pretty good relationship with Russ Porter. I just wondered if you could opine as to what is causing this overdone (I hope) weakness in these 2 preferreds. I read what you said about the dividend being safe for 2 years.
I know oil and gas are not favorites right now, but with Crude staying in the 45 range and GST's ng hedges, I wonder if you can hazard a guess as to what is happening to these preferreds?
It's not as though oil is 20. This is not just typical post ex date selling here. We are now approaching the panic lows of last Thanksgiving after OPEC said they would not support oil any longer.
I am confused, as the last report you sent clearly puts value on the stock. I understand about the Merramac well and how that would improve the value of the
Hunton assets, but when I see 3 or 4 thousand pop up on the ask time after time, it is disconcerting.
I would appreciate your considered opinion.
Ken
I know I am responsible for my own actions and unfortunately bought large overweight position in GST-A and GST-B. I agreed with you in your assessment that it should gradually drift back toward par. It has gone dramatically against us since then.
From what I understand, you have a pretty good relationship with Russ Porter. I just wondered if you could opine as to what is causing this overdone (I hope) weakness in these 2 preferreds. I read what you said about the dividend being safe for 2 years.
I know oil and gas are not favorites right now, but with Crude staying in the 45 range and GST's ng hedges, I wonder if you can hazard a guess as to what is happening to these preferreds?
It's not as though oil is 20. This is not just typical post ex date selling here. We are now approaching the panic lows of last Thanksgiving after OPEC said they would not support oil any longer.
I am confused, as the last report you sent clearly puts value on the stock. I understand about the Merramac well and how that would improve the value of the
Hunton assets, but when I see 3 or 4 thousand pop up on the ask time after time, it is disconcerting.
I would appreciate your considered opinion.
Ken
Re: GST
Gastar has more than enough liquidity to fund growth and pay dividends on the pfd through the end of 2016 even if oil and gas prices stay where they are today.
At our luncheon in Houston on September 4, Russ Porter was asked about the dividends on the pfd and he said they have no intention of not paying the dividends, primarily because they know it would crush the common stock price.
My valuation of GST has nothing in it for the Meramec or Woodford zones that both have significant upside. I spent most of the day (Saturday) working on a special report on Newfield Exploration (NFX) for OilPrice.com. Newfield has drilled a lot of STACK wells just SW of Gastar's acreage block and they are getting GREAT results. I am sure GST is on Newfield's "radar screen" and they are eager to see the results of GST's Meramec well, which BTW should reach TD this month. Take a look at Gastar's current presentation (on their website) and you can see the well results NFX is getting in the Meramec.
On September 9th at the CEO Energy-Power Conference in New York City, Lee Boothby, Newfield's CEO told participants why they should invest in NFX. 80% of Newfield's presentation was focused on their STACK play.
Newfield's strengths derive from their priorities:
• Preserve our strong balance sheet and liquidity - Current Debt/EBITDA = ~2.0X
• Continue to high-grade capital investments - Substantially all capital expenditures are now allocated to the Anadarko Basin
• Well results in STACK continue to improve
1. We are rapidly “production-delineating” our acreage as we push to get our leasehold held by production
2. Consistent commercial results are being realized across the acreage
3. The acceleration of STACK allows us to minimize lease renewal cost through higher value drilling investments. By year end 2015, about 60% of our acreage in STACK will be held by production, and all our acreage will be HBP by the end of next year. With this increased activity, we now expect that our fourth quarter production from the Anadarko Basin will average about 71,000 barrels of oil equivalent per day net, and we expect to deliver strong and economic growth from SCOOP and STACK in 2016
4. Our STACK wells are oil wells, averaging about 80% black oil in the first 30 days of production
5. We are rapidly lowering our well costs. This is particularly impressive in STACK, where we're not yet in full field development. Recent wells have been drilled in as few as 12 days, and our recent completed well costs are averaging about $7.9 million including facilities
6. The Anadarko Basin provides potential in multiple geologic horizons. To date, we have successfully tested the Upper and Lower Meramec as well as the Woodford. There are other prospective zones that we plan to test in the coming months. To date, about 70% of our STACK wells have been drilled and completed in the Meramec shale
Conclusion:
> I currently see ZERO risk of Gastar suspending dividends on their preferred stock
> GST common stock is grossly undervalued, as are many other small-caps. Small-caps always get hammered when commodity prices go down. They have less analysts' coverage and a lot of hedge funds cannot own stocks under $5.00.
> VERY IMPORTANT: Gastar recently had its credit facility redetermination and the facility was extended for another year. BANKS ONLY DO THIS AFTER THEY HAVE TAKEN A VERY HARD LOOK AT THE COMPANY. Energy banks have certified reservoir engineers take a hard look at their clients. Credit facilities are based on "proven reserves".
> IMO Gastar has some extremely valuable acreage blocks, that can be sold for big gains over what their book value is today. What they have in West Virginia is worth more than double the current market cap of the company. Go look at what Gulfport recently paid ($12,500/acre) for Utica Shale leasehold that is not as good as what Gastar has.
At our luncheon in Houston on September 4, Russ Porter was asked about the dividends on the pfd and he said they have no intention of not paying the dividends, primarily because they know it would crush the common stock price.
My valuation of GST has nothing in it for the Meramec or Woodford zones that both have significant upside. I spent most of the day (Saturday) working on a special report on Newfield Exploration (NFX) for OilPrice.com. Newfield has drilled a lot of STACK wells just SW of Gastar's acreage block and they are getting GREAT results. I am sure GST is on Newfield's "radar screen" and they are eager to see the results of GST's Meramec well, which BTW should reach TD this month. Take a look at Gastar's current presentation (on their website) and you can see the well results NFX is getting in the Meramec.
On September 9th at the CEO Energy-Power Conference in New York City, Lee Boothby, Newfield's CEO told participants why they should invest in NFX. 80% of Newfield's presentation was focused on their STACK play.
Newfield's strengths derive from their priorities:
• Preserve our strong balance sheet and liquidity - Current Debt/EBITDA = ~2.0X
• Continue to high-grade capital investments - Substantially all capital expenditures are now allocated to the Anadarko Basin
• Well results in STACK continue to improve
1. We are rapidly “production-delineating” our acreage as we push to get our leasehold held by production
2. Consistent commercial results are being realized across the acreage
3. The acceleration of STACK allows us to minimize lease renewal cost through higher value drilling investments. By year end 2015, about 60% of our acreage in STACK will be held by production, and all our acreage will be HBP by the end of next year. With this increased activity, we now expect that our fourth quarter production from the Anadarko Basin will average about 71,000 barrels of oil equivalent per day net, and we expect to deliver strong and economic growth from SCOOP and STACK in 2016
4. Our STACK wells are oil wells, averaging about 80% black oil in the first 30 days of production
5. We are rapidly lowering our well costs. This is particularly impressive in STACK, where we're not yet in full field development. Recent wells have been drilled in as few as 12 days, and our recent completed well costs are averaging about $7.9 million including facilities
6. The Anadarko Basin provides potential in multiple geologic horizons. To date, we have successfully tested the Upper and Lower Meramec as well as the Woodford. There are other prospective zones that we plan to test in the coming months. To date, about 70% of our STACK wells have been drilled and completed in the Meramec shale
Conclusion:
> I currently see ZERO risk of Gastar suspending dividends on their preferred stock
> GST common stock is grossly undervalued, as are many other small-caps. Small-caps always get hammered when commodity prices go down. They have less analysts' coverage and a lot of hedge funds cannot own stocks under $5.00.
> VERY IMPORTANT: Gastar recently had its credit facility redetermination and the facility was extended for another year. BANKS ONLY DO THIS AFTER THEY HAVE TAKEN A VERY HARD LOOK AT THE COMPANY. Energy banks have certified reservoir engineers take a hard look at their clients. Credit facilities are based on "proven reserves".
> IMO Gastar has some extremely valuable acreage blocks, that can be sold for big gains over what their book value is today. What they have in West Virginia is worth more than double the current market cap of the company. Go look at what Gulfport recently paid ($12,500/acre) for Utica Shale leasehold that is not as good as what Gastar has.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: GST
dan, there is one thing that keeps bothering me; why did outfits like nfx et al not buy up the leases that gst has now and you are praising? could it be they know something we don't which might result in a bad result for that well they just spudded at meramec?
Re: GST
GST has owned the leases in Oklahoma for several years. They acquired them for their Hunton potential. The STACK play is only two years old. I never heard of the Meramec until last year.
Successful drilling in the Meramec near Gastar's leasehold is all less than a year old. See Gastar's lastest presentation on their website and you can see where it is an which companies are drilling them.
Successful drilling in the Meramec near Gastar's leasehold is all less than a year old. See Gastar's lastest presentation on their website and you can see where it is an which companies are drilling them.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: GST
Yes, GST did get a lot of this acreage in the Chesapeake settlement. After the sale of some of it their basis is near zero.
I cannot recall who they sold it do, but Newfield does have adjoining leasehold and they have drilled some very good Meramec wells that are direct offsets to GST leasehold.
I cannot recall who they sold it do, but Newfield does have adjoining leasehold and they have drilled some very good Meramec wells that are direct offsets to GST leasehold.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: GST sr unsecured note/dan
a couple of questions on the sr unsecured note. It is currently a ccc note, not investment grade selling at 65 +- 35 below par 8+ % payable twice a year
what happens when this comes due in 18 can it ever get changed from a ccc rated note
what happens when this comes due in 18 can it ever get changed from a ccc rated note
Re: GST
I'm afraid I can't help you with the note due in 2018. If oil and gas prices aren't a lot higher by then, we won't have much to worry about because the entire U.S. energy sector will be gone by then. Regarding the notes, call Mike Gerlich at GST. He is the CFO and an EPG member. He will be able to answer all of your questions.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group