Gastar

[dan_s]

If you own Gastar, you should go to the NFX website and look at slides 6 and 7 of their q3 presentation.

Look at the well results for:
Ruhl XL
Harrison SXL
Ruzek XL

These wells are very close to GST leasehold.

[cmm3rd]

Thanks, Dan.

I found that comparing the Q3 NFX presentation slides 6-7 to Gastar's October presentation (below) slides 12-16 was helpful in understanding the relative location of NFX's three wells you mentioned and GST's acreage and some GST well locations.

http://files.shareholder.com/downloads/ ... on_VF2.pdf

Gastar's slides 12-16 are additionally worth reviewing as they show 7 GST wells (in addition to Deep River 30-1H and Holiday Road #2-1H) that are shown to be in various stages: Geis 31-1H (WOC), Lilly 28-1H (drilling), Mott 19-1H (drilling), Ingle 29-1H (completing), Katy 21-1H (WOC), Tomahawk 7-1H (Flowback) and McGee 29-1H (Flowback).

Dan, about when (ballpark) would you expect GST to announce results and production information regarding Holiday Road (beyond what we have) and any of the additional seven wells listed?

[dan_s]

Gastar should have well results on 4 new wells.

HOUSTON, Oct. 24, 2016 /PRNewswire/ -- Gastar Exploration Inc. (NYSE MKT: GST) ("Gastar") announced today that it will release its third quarter 2016 results on Thursday, November 3, 2016 after the market closes. In conjunction with the release, Gastar has scheduled a conference call for 11:00 a.m. Eastern Time (10:00 a.m. Central Time) on Friday, November 4, 2016. Investors may participate in the call either by phone or audio webcast.

By Phone:

Dial 1-412-902-0030 at least 10 minutes before the call. A telephone replay will be available through November 11 by dialing 1-201-612-7415 and using the conference ID: 13648397.

By Webcast:

Visit the Investor Relations page of Gastar's website at www.gastar.com under "Events & Presentations." Please log on a few minutes in advance to register and download any necessary software. A replay will be available shortly after the call.

For more information, please contact Donna Washburn at Dennard-Lascar Associates at 713-529-6600 or e-mail dwashburn@dennardlascar.com.

[wilmawatts]

Yeah the Newfield slide was worth looking at.

Thx for pointing out.

Trivia:

The Daisy Bradford #3 well that discovered the East Texas field came in at 6,800 b/d before it quickly fell back to 500 b/d. That was in 1930. Oil sold at $1 bbl before falling to 15 cents

The Newfield wells are coming in at 1,500 b/d. Selling oil at $50 bbl.

Lots of wealth being created.

[ericfp]

GST reported tonight. I am surprised they did not report well results, I assume Russ will say something on the call tomorrow (I am hoping he will). Also the fact that guidance is not higher is troubling with so many wells coming online. Anyone have any thoughts or comments?

[ddlopata084]

They reported current average boed for holiday road for the first time at 654 peak and 508 latest average with 75% oil cut. Not a fantastic well but perhaps better than many feared. This is the only recent well that's been online long enough to clean up. I suspect next quarter we will see quite a few more reports for new well production as all the new wells clean up.

[dan_s]

Term of this JV are outstanding for GST: On October 20, 2016, Gastar announced it had executed a definitive agreement with an investor (the "Development Agreement") to jointly develop up to 60 Gastar operated drilling program wells in 20 well tranches (the "Drilling Program") in the STACK Play in Kingfisher County, Oklahoma. The Drilling Program targets the Meramec and Osage formations within the Mississippi Lime on a contract area within three townships covering approximately 18,000 undeveloped net mineral acres under leases held by Gastar. The Company will be the operator of all wells jointly developed.

This sale is the most important news as it guarantees survival: Gastar also announced on October 20, 2016 that it had entered into a purchase and sale agreement to divest certain non-core leasehold interests primarily in northeast Canadian County, Oklahoma (the "South STACK Acreage") for approximately $71.0 million (of which up to $10.0 million is contingent upon the satisfaction of certain conditions), subject to certain adjustments. The transaction is expected to close on or before November 18, 2016, with a property sale effective date of August 1, 2016. Assuming completion of this divestment, pro forma Mid-Continent area net acreage at September 30, 2016 would be approximately 81,400 net surface acres, including Development Agreement acreage, with approximately 1,000 net STACK locations identified.

J. Russell Porter, Gastar's President and CEO, commented, "As commodity prices have improved throughout the year, we have focused on enhancing liquidity and positioning the Company to resume a more active drilling program. Through asset sales of non-core acreage, which we expect to close this month, and our successful equity offering last May, we will have raised in excess of $100 million this year in net available capital to help fund the delineation and development of our core acreage in the heart of the STACK Play. Our objectives are to add substantial value to our core acreage by de-risking the various STACK formations across our acreage through drilling, which should grow production and reserves as well as reduce future lease renewal costs by increasing the percentage of our acreage that is held by production ("HBP")."

"In order to meet these objectives, we have entered into a Development Agreement whereby the investor earns only an interest in the well bores drilled, with Gastar retaining both the right to offset formation locations and to book offsetting proved undeveloped locations at its full original working interest. The drilling of up to 60 wells will substantially increase our HBP acreage across the various STACK formations. Specifically, if a Drilling Program well location is prospective for all five STACK zones, we currently project it could hold as many as five additional Meramec, four Osage, four Woodford, four Oswego and two Hunton well locations."

"We have already drilled the first five wells of the initial 20 well tranche and by year end we could have up to seven Drilling Program wells drilled and completed. We also plan to increase our operated drilling activity outside the Drilling Program area to test the STACK formations. We have one Osage test well and one Oswego test well in early stages of flow back, in addition to our two earlier Meramec formation test wells drilled," said Porter.

We currently have two rigs operating on our Mid-Continent acreage under the Development Agreement. We have now drilled and completed a third operated Meramec well, the Ingle 29-1H, which began initial flow back in October 2016. In addition to our three completed Meramec wells, we have two Meramec wells awaiting completion and two Meramec wells currently being drilled. In September 2016, we brought on production our first operated Osage formation test well, the McGee 29 1-H, and our first Oswego formation test well, the Tomahawk 7-1H. It is too early in the flow back process to determine ultimate production performance for these wells.
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A year ago, Gastar was all but dead in the water. Russ has done a good job.

[wilmawatts]

Agreed Dan, Russ has done enough to keep the boat sailing forward in a hurricane.

[bobs]

I listened to the CC and would like input from the many of us that follow GST.
I have a bunch of the common which is way underwater and I don't see a recovery until/if Q1 CC has good news.
I have a bunch of the pfds which are up some and assuming oil recovers somewhat I think they will continue to move up.
Wishful thinking??

[cviller]

I also have a bunch of the common which is way underwater and a bunch of the pfds which are up some. Wish I knew enough to do other than share your pain. The ceo does seem to be a hell of a deal maker, though, and he's going to drill 60 wells in the joint venture plus others separately, so unless oil prices crater I would guess GST will prove up enough reserves to get a decent price in a sale. I'm hanging on.

[bearcatbob]

The issue is simple. What will the price of crude be next year?

[wilmawatts]

I'm in the same boat. Talking to Dan a few months ago he said this was real risky. I like Russ and I like the play. I think Dan mentioned, or someone at the EPG meeting, that if I wanted to stay in it sell the stock to buy the preferred, still risky but better odds.

I did that to an extent, probably should have done that more. Hard to 'lose' by selling the GST, but just tell myself I still am in the game with the same bet with GST/A with an updated basis. I like the STACK, if you listen to NFX or DVN or Marathon you cant help but be impressed with the potential. FWIW

[dan_s]

Keep in mind that the JV drilling program only gives 20% working interest in each new well to Gastar until "Payout". This means the drilling program will not generate much production growth for GST. That said, I do think the JV was the best way to go.

My guess (and that is all it is) is that Russ' plan is to prove up enough acreage to attract a takeover bid. A takeover will payoff all of the debt and preferred stock at par, but may not leave much for the common stock. Obviously, this all depends on the success of the drilling program and commodity prices.

The recent asset sale means the company will survive unless the drilling program really sucks (highly unlikely) or commodity prices tank again (unlikely). I have followed Gastar for a long time and I admire Russ and Mike for their ability to fight through tough times. Just "living" through these cycles is hard for small-caps.

[ericfp]

The cash on cash return of the JV is very big for GST, granted not in absolute terms but as a measure of return of cash it is huge. For 10% of the cost of a well they immediately get 20% of the production, then once the "return" is generated for the investor GST gets a larger piece of the production. The way I understand it is that basically GST get's 50% of the ultimate EUR from the well for only 10% of the cost of the well; pretty savvy.

I own both Preferred and the common. I agree the preferred is the safest way to play GST, but the common could have a lot of upside based upon the resource potential that is on their land. What happens if they don't sell and the investor under the JV hits their target or oil climbs faster; then this becomes a cash generating machine.

The common has it's issues for sure, but the CEO owns 2,000,000 shares and the CFO has nearly a million shares. Also Russ had gifted his kids (if I remember right) 150,000 shares in a trust. I can't see him being OK with being taken out at $2 (although with oil where it is at I understand he may not have a choice) I think the CEO and CFO have a lot of incentive to get the common higher.

[dan_s]

Yes, the JV terms are very good for Gastar.