Exhibit 99.1
Gastar Exploration Announces Results of Operations for the Third Quarter Ended
September 30, 2006
HOUSTON--(BUSINESS WIRE)--Nov. 14, 2006--Gastar Exploration Ltd.
(AMEX:GST) (TSX:YGA) reported a net loss for the three months ended
September 30, 2006 of $7.7 million, or $0.05 per basic and diluted
common share, compared to a net loss of $4.6 million, or $0.03 per
basic and diluted common share for the three months ended September
30, 2005. The net loss for 2006 includes a litigation settlement
expense of $465,000. Total revenues for the three months ended
September 30, 2006 were $6.7 million, a decrease of $1.1 million from
revenues of $7.8 million reported for the comparable period in 2005.
This decrease in revenues was primarily attributable to a 34% decrease
in natural gas prices that was partially offset by an increase in
quarterly production. Average daily production for the three months
ended September 30, 2006 was 13.7 million cubic feet of natural gas
equivalents per day ("MMcfed"), a 4% increase over second quarter 2006
(13.2 MMcfed) production and a 25% increase over third quarter 2005
production (11.0 MMcfd).
Gastar reported a net loss for the nine months ended September 30,
2006 of $57.3 million, or $0.34 per basic and diluted common share,
compared to a net loss of $20.9 million, or $0.17 per basic and
diluted common share for the nine months ended September 30, 2005. The
nine month losses for 2006 and 2005 included a non-cash full cost
ceiling impairment of natural gas and oil properties of $37.3 million
and $8.7 million, respectively. The net loss for 2006 includes a
litigation settlement expense of $1.7 million. Total revenues for the
nine months ended September 30, 2006 were $20.0 million, an increase
of $2.5 million from revenues of $17.5 million reported for the
comparable period in 2005. This increase in revenues was primarily
attributable to a 32% increase in production, which was partially
offset by a 15% decline in natural gas prices. Average daily
production for the nine months ended September 30, 2006 was 12.7
MMcfed, compared to 9.6 MMcfed for the comparable 2005 period. EBITDA
for the nine months ended September 30, 2006 was $3.2 million, down
from EBITDA of $7.6 million for the nine months ended September 30,
2005.
J. Russell Porter, Gastar's President and Chief Executive Officer,
made the following comment, "Our results are greatly influenced by the
on-going exploration and evaluation program on our East Texas deep
Bossier assets. We continue to focus our drilling efforts on
exploratory locations designed to test and prove the presence of
multiple Bossier pay sands over a large portion of our acreage. Our
production growth in East Texas in the current quarter was not as
robust as the previous quarter due to delays in getting the multiple
pay zones in the John Parker #1 and Wildman Trust #2 wells fracture
stimulated and on production. The John Parker #1 is expected to be
returned to production by before the end of November and the Wildman
Trust #2 on production by early December. The arrival of a third
drilling rig this month and completion of the 3-D seismic survey in
early 2007 should allow us to move from strictly exploration
activities to a combination of exploration and early development in
the deep Bossier play."
Gastar Exploration Ltd. is an exploration and production company
focused on finding and developing natural gas assets in North America
and Australia. The Company pursues a balanced strategy combining
select higher risk, deep natural gas exploration prospects with lower
risk coal bed methane (CBM) development. The Company owns and controls
exploration and development acreage in the deep Bossier natural gas
play of East Texas and in the deep Trenton-Black River play in the
Appalachian Basin. Gastar's CBM activities are conducted within the
Powder River Basin of Wyoming and upon the approximate 3.0 million
acres controlled by Gastar and its joint development partners in
Australia's Gunnedah Basin and Gippsland Basins, located in New South
Wales and Victoria, respectively.
Safe Harbor Statement and Disclaimer:
This Press Release includes "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Act of 1934. A statement identified by the words
"expects", "projects", "plans", and certain of the other foregoing
statements may be deemed forward-looking statements. Although Gastar
believes that the expectations reflected in such forward-looking
statements are reasonable, these statements involve risks and
uncertainties that may cause actual future activities and results to
be materially different from those suggested or described in this
press release. These include risks inherent in the drilling of natural
gas and oil wells, including risks of fire, explosion, blowout, pipe
failure, casing collapse, unusual or unexpected formation pressures,
environmental hazards, and other operating and production risks
inherent in natural gas and oil drilling and production activities,
which may temporarily or permanently reduce production or cause
initial production or test results to not be indicative of future well
performance or delay the timing of sales or completion of drilling
operations; risks with respect to oil and natural gas prices, a
material decline in which could cause the Company to delay or suspend
planned drilling operations or reduce production levels; and risks
relating to the availability of capital to fund drilling operations
that can be adversely affected by unfavorable drilling results,
production declines and declines in natural gas and oil prices and
other risk factors described in the Company's Annual Report on Form
10-K, as filed on March 31, 2006 with the United States Securities and
Exchange Commission at www.sec.gov and on the System for Electronic
Document Analysis and Retrieval (SEDAR) at www.sedar.com.
The American Stock Exchange and Toronto Stock Exchange have not
reviewed and do not accept responsibility for the adequacy or accuracy
of this release.
GASTAR EXPLORATION LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
------------------------- -------------------------
2006 2005 2006 2005
------------ ------------ ------------ ------------
(in thousands, except
share and per share data)
REVENUES $6,680 $7,822 $19,988 $17,496
EXPENSES:
Lease operating,
transportation
and selling
expenses 2,534 2,232 6,622 4,024
Depreciation,
depletion and
amortization 3,633 4,097 11,507 9,063
Impairment of
natural gas and
oil properties - - 37,301 8,697
Accretion of
asset
retirement
obligation 59 35 173 78
Mineral resource
properties 40 29 230 63
General and
administrative
expenses 2,664 1,936 7,038 3,933
Stock option
expense 1,354 524 2,606 2,064
------------ ------------ ------------ ------------
Total
expenses 10,284 8,853 65,477 27,922
------------ ------------ ------------ ------------
LOSS FROM
OPERATIONS (3,604) (1,031) (45,489) (10,426)
OTHER (EXPENSES)
INCOME:
Interest expense (3,998) (3,599) (11,573) (10,707)
Investment
income and
other 372 25 1,391 87
Litigation
settlement
expense (465) - (1,665) -
Foreign exchange
gain (loss) (11) (17) (7) 125
------------ ------------ ------------ ------------
LOSS BEFORE INCOME
TAXES (7,706) (4,622) (57,343) (20,921)
Provision for
income taxes - - - -
------------ ------------ ------------ ------------
NET LOSS $(7,706) $(4,622) $(57,343) $(20,921)
============ ============ ============ ============
NET LOSS PER
SHARE:
Basic and
diluted $(0.05) $(0.03) $(0.34) $(0.17)
============ ============ ============ ============
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING:
Basic and
diluted 167,942,813 132,409,512 166,431,346 121,205,445
============ ============ ============ ============
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2006 2005
------------------- -------------------
(in thousands)
(unaudited)
ASSETS
Current assets $31,437 $69,468
Property and equipment, net 163,317 165,347
Other assets 6,507 5,313
------------------- -------------------
Total assets $201,261 $240,128
=================== ===================
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities $27,055 $13,942
Long-term debt 92,981 90,631
Asset retirement obligation 3,896 3,558
Liability to be settled by
issuance of common shares 4,249 11,221
Shareholders' equity 73,080 120,776
------------------- -------------------
Total liabilities and
shareholders' equity $201,261 $240,128
=================== ===================
GASTAR EXPLORATION LTD.
PRODUCTION, PRICES, OPERATING EXPENSES AND EBITDA
(Unaudited)
For the Three Months For the Six Months
Ended September 30, Ended September 30,
-------------------- --------------------
2006 2005 2006 2005
---------- --------- --------- ----------
Production:
Natural gas (MMcf) 1,234.4 1,008.4 3,410.5 2,614.8
Oil and condensate
(MBbls) 4.8 0.4 7.8 1.6
Total (MMcfe) 1,263.2 1,010.8 3,457.3 2,624.4
Mmcfed per day 13.7 11.0 12.7 9.6
Average sales price:
Natural gas (per Mcf) $5.14 $7.74 $5.70 $6.67
Oil and condensate (per
Bbl) $69.02 $60.31 $68.19 $50.19
EBITDA (in thousands) $(16) $3,109 $3,211 $7,624
EBITDA represents earnings before interest expense, accretion of
asset retirement obligations, depletion, depreciation and amortization
(DD&A), impairment of natural gas and oil properties and provision for
income taxes. We have reported EBITDA because we believe EBITDA is a
measure commonly reported and widely used by investors as an indicator
of a company's operating performance and ability to incur and service
debt. We believe EBITDA assists investors in comparing a company's
performance on a consistent basis without regard to depreciation,
depletion and amortization, impairment of natural gas and oil
properties and exploration expenses, which can vary significantly
depending upon accounting methods. EBITDA is not a calculation based
on U.S. generally accepted accounting principles and should not be
considered an alternative to net income (loss) in measuring our
performance or used as an exclusive measure of cash flow because it
does not consider the impact of working capital growth, capital
expenditures, debt principal reductions and other sources and uses of
cash, which are disclosed in our statements of cash flows. Investors
should carefully consider the specific items included in our
computation of EBITDA. While we have disclosed our EBITDA to permit a
more complete comparative analysis of our operating performance and
debt servicing ability relative to other companies, investors should
be cautioned that EBITDA as reported by us may not be comparable in
all instances to EBITDA as reported by other companies. EBITDA amounts
may not be fully available for management's discretionary use, due to
requirements to conserve funds for capital expenditures, debt service,
preferred stock dividends and other commitments.
A reconciliation of net loss to EBITDA for the periods indicated
is presented below.
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
--------------------- ---------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
(in thousands)
Net loss for the period $(7,706) $(4,622) $(57,343) $(20,921)
Interest expense 3,998 3,599 11,573 10,707
Accretion of asset
retirement obligations 59 35 173 78
Depreciation, depletion
and amortization 3,633 4,097 11,507 9,063
Impairment of natural gas
and oil properties - - 37,301 8,697
Provision for income taxes - - - -
---------- ---------- ---------- ----------
EBITDA $(16) $3,109 $3,211 $7,624
========== ========== ========== ==========
CONTACT: Gastar Exploration Ltd., Houston
J. Russell Porter, 713-739-1800
Fax: 713-739-0458
rporter@gastar.com
www.gastar.com