Gastar

[dan_s]

For those of you in GST. I am working on Southwestern Energy (SWN) today. You should go to the SWN website and take a hard look at slides 7 & 8 in the current SWN investor presentation. Then go look at where GST acreage sits.

I believe what GST holds in this area is worth more than GST's current market cap.

SWN is a leading candidate for our Sweet 16. I believe natural gas prices will be much higher by the end of March.

[bigtex]

Dan it looks like they are in the middle of everything if i read the map right

if they hit good on a stack well, do you think that they may sell that eastern stuff, clean the balance sheet and just become an oil company????

[dan_s]

No, Gastar has more than enough liquidity to ramp up STACK development without selling anything. Russ told me at the luncheon that a two rig development drilling program in Oklahoma is the plan. One drilling the Hunton and one drilling the Meramec.

If the Meramec is proven up under their leasehold, I can see XEC or NFX making a run at Gastar.

[cmm3rd]

If Gastar were bought, would the preferred shares have to be purchased by the buyer at the liquidation preference amount ($25 for pfd A)?

[dan_s]

No, a buyer would not be required to call the preferred stock. However, if they do call it, the price would have to be at par.

1. I do not expect GST to be acquired.
2. If a much larger company does acquire GST, making it a wholly owned subsidiary, the preferred stock will move quickly up to par because of the much higher market cap of the parent.
3. They probably would want to retire it as part of the deal, but they would not be required to do so.

[ddlopata084]

Dan - in 1) above you note that you DO NOT expect Gastar to be acquired. In the past, you have been more positive on their acquisition attractiveness. Has something changed in the environment, or their outlook, or their receptiveness to an offer that makes them less attractive, in your view? Thx.

[dan_s]

Russ Porter does not want to be taken over since he believes GST may be worth $20/share in a few years. However, if a large company makes an offer the board cannot refuse then it could happen. Nothing has changed. I still think GST is a Screaming Buy at this price. The pfd stock is also a Screaming Buy for those interested in High Yield (tax deferred) paid on a monthly basis.

[bigtex]

the MHR woes probably spilling over to gst amazing on the VF board of those that think GST must be bankrupt

[dan_s]

Question: Do you think the gang over on the VF chat room know something that the bankers who recently approved Gastar's $200 million credit facility don't know?

HOUSTON, Aug. 31, 2015 /PRNewswire/ -- Gastar Exploration Inc. (NYSE MKT: GST) ("Gastar") today announced that it has completed its second scheduled borrowing base redetermination of its revolving credit facility for 2015 and, as a result, the borrowing base has been reaffirmed by the lending participants at $200.0 million. Currently, Gastar has drawn $65.0 million under its revolving credit facility, resulting in $135.0 million of unused borrowing capacity. The next scheduled borrowing base redetermination is to occur by May 1, 2016.

Michael A. Gerlich, Gastar's Chief Financial Officer, commented, "Our successful drilling activity in 2015 combined with our strong hedging program allowed us to maintain our borrowing base in a difficult commodity price environment. The available borrowings under this credit facility, along with our cash on hand and internally generated cash flow, will give Gastar more than adequate liquidity to fund our recently expanded 2015 capital expenditures budget and provide for a strong liquidity position as we enter 2016."
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Banks have very good 3rd party engineering firms review a company's asset base before they approve a credit facility of this size. If they didn't, the bank examiners will kill them.

Gastar is going to book a lot of proven reserves at year-end since they have successfully completed a lot of Hunton horizontal wells this year that are producing above the type curve.