November 21, 2005
via U.S. Mail
J. Russell Porter
Chief Executive Officer and President
Gastar Exploration Ltd.
1331 Lamar Street
Suite 1080
Houston, Texas 77010
Re: Gastar Exploration Ltd.
Amendment No. 1 to Registration Statement on
Form S-1
File No. 333-127498
Filed October 13, 2005
Dear Mr. Porter:
We have reviewed your engineering responses and have the
following comments. Where indicated, we think you should revise
your
document in response to these comments. If you disagree, we will
consider your explanation as to why our comment is inapplicable or
a
revision is unnecessary. Please be as detailed as necessary in
your
explanation. In some of our comments, we may ask you to provide
us
with information so we may better understand your disclosure.
After
reviewing this information, we may raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We
look forward to working with you in these respects. We welcome
any
questions you may have about our comments or on any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
- -
Engineering Comments
Management`s Discussion and Analysis of Financial Condition and
Results of Operations, page 22
Business Environment, page 29
1. You state that your Deep Bossier production is generally priced
on
Katy Hub prices less gathering, processing and transportation
fees.
Please tell us the basis for this price determination and tell us
the
reduction in price actually received for natural gas due to these
fees.
2. Regarding response number 30 of your response letter dated
November
14, 2005 we do not agree that it is appropriate to reduce gas
prices
in order to compensate for disclosing lower than actual operating
costs. This does not appear to be in agreement with Rule 4-10(a)
of
Regulation S-X which requires that reserves be determined at
current
costs and prices. Tell us the basis for lowering the prices to
compensate for higher costs or alternatively revise your document
and
your reserves calculations, if necessary, to use current prices
and
costs and to disclose total future costs in SMOG and actual costs
per
unit in your document.
3. Regarding response number 30 of your response letter dated
November
14, 2005, you state that the reserve report contains certain non-
recurring costs not expected to continue. However, this would
tend to
raise the operating costs but you have significantly lower costs
in
the reserve report than in the filing. We do not understand how
this
portion of your response helps to clarify our comment. Please
explain
this further to us.
4. Please reconcile response number 31 of your response letter
dated
November 11, 2005 with response number 48 of your response letter
dated October 13, 2005 concerning CO2 volumes in the Hilltop
reserves.
5. Please reconcile response number 32 of your response letter
dated
November 11, 2005 with response number 30 of your response letter
dated November 30, 2005 as they appear to contradict each other
relating to the gas processing costs of the Hilltop field.
6. We do not understand your response number 33 of your response
letter dated November 11, 2005. From the production graph
provided
for the Kaufman 1 well in your November 14, 2005 response,
production
in December 2004 was approximately 15 MMCFD, not 9.5 MMCFD as you
state. Production increased to around 23 MMCFD temporarily but
quickly declined to 15 MMCFD in February 2005. From the same
graph
production is now less than 5 MMCFD. However, this is based on
gas
at the wellhead and must also be corrected for CO2 volumes. Our
comment was based on the graph of historical and projected
production
of proved developed producing Texas properties (Exhibit GEL 003)
and
was not based on just one well. Please better clarify your
response.
7. We reiterate our prior comments 35, 36, 37, 38 and 39. For
each
comment provide specific details as to how these proved
undeveloped
locations were demonstrated to be classified as proved reserves.
For
each field or project area provide a base map indicating the
proved
undeveloped locations, the proved developed producing and non-
producing wells, the nearest producing wells or area if there is
no
production in the specific project area, the location of any
pressure
monitoring and water level monitoring wells and their data over
time.
Provide specific details and facts on how pressure communication
and
reservoir continuity to producing areas were demonstrated for each
project area. Provide specific information as how each project
area
is served with pipelines to transport your share of the gas and
the
agreements or documentation with the pipeline companies to access
their pipelines. We may have additional comments.
8. Regarding response number 37 of your response letter dated
November
11, 2005 please provide the written agreement or memo of
understanding
that you have with Cantera Natural Gas that documents that Cantera
is
building a sales line into the area and that you will be provided
access to it.
Closing Comments
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested supplemental information.
Detailed cover letters greatly facilitate our review. Please
understand that we may have additional comments after reviewing
your
amendment and responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have
made.
We will consider a written request for acceleration of the
effective date of the registration statement as a confirmation of
the
fact that those requesting acceleration are aware of their
respective
responsibilities under the Securities Act of 1933 and the
Securities
Exchange Act of 1934 as they relate to the proposed public
offering of
the securities specified in the above registration statement. We
will
act on the request and, pursuant to delegated authority, grant
acceleration of the effective date.
We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement. Please allow
adequate time after the filing of an amendment for further review
before submitting a request for acceleration. Please provide this
request at least two business days in advance of the requested
effective date.
You may contact Ryan Milne at (202) 551-3688 or in his
absence,
April Sifford, Accounting Branch Chief at (202) 551-3684 if you
have
comments on the financial statements and related matters. You may
contact James Murphy, Petroleum Engineer, at (202) 551-3703 if you
have questions regarding the engineering comments. Please contact
Mellissa Campbell Duru, at (202) 551-3757, or Tangela Richter,
Branch
Chief at (202) 551-3685 with any other questions.
Sincerely,
H. Roger Schwall
Assistant Director
cc: via facsimile
T. Mark Kelly, Esq.
Vinson & Elkins L.L.P.
(713) 758-2346 (fax)
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Mr. Porter
Gastar Exploration Ltd.
November 21, 2005
page 4
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-7010
DIVISION OF
CORPORATION FINANCE
MAIL STOP 7010