Exhibit 99.1
Gastar Exploration Announces Results of Operations For the Quarter and
Year Ended December 31, 2006
HOUSTON--(BUSINESS WIRE)--March 27, 2007--Gastar Exploration Ltd.
(AMEX:GST) (TSX:YGA) reported a net loss attributable to common shares
for the three months ended December 31, 2006 of $27.5 million, or
$0.15 per basic and diluted common share, compared to a net loss of
$4.8 million, or $0.03 per basic and diluted common share, for the
three months ended December 31, 2005. The fourth quarter 2006 loss
included an impairment of natural gas and oil properties of $19.0
million and litigation settlement expense of $742,000. Total revenues
for the three months ended December 31, 2006 were $6.8 million, a
decrease of $3.1 million, as compared to revenues of $9.9 million for
the 2005 comparable period. The decrease in 2006 quarterly revenues
was the result of a 35% decrease in prices, which was partially offset
by a 5% increase in production. Average daily production for the three
months ended December 31, 2006 was 13.7 million cubic feet of natural
gas equivalents per day ("MMcfed"), compared to 13.0 MMcfed for the
three months ended December 31, 2005. Average daily production for the
fourth quarter was flat to third quarter 2006 due to delays in the
completion of several Bossier wells. EBITDA, as defined below, for the
three months ended December 31, 2006 was $396,000, down from EBITDA of
$4.7 million for the three months ended December 31, 2005.
Gastar reported a net loss attributable to common shares for the
year ended December 31, 2006 of $84.8 million, or $0.50 per basic and
diluted common share, compared to a net loss of $25.7 million, or
$0.20 per basic and diluted common share, for the year ended December
31, 2005. The net loss for 2006 and 2005 includes impairment of
natural gas and oil properties of $56.3 million and $8.7 million,
respectively. Year end 2006 results also included litigation
settlement expense of $2.4 million. Total revenues for the year ended
December 31, 2006 were $26.8 million, a decrease of $600,000 from
revenues of $27.4 million for the 2005 comparable period. The decrease
in 2006 revenues was the result of a 21% decrease in prices, which was
partially offset by a 23% increase in annual production. Average daily
production for the year ended December 31, 2006 was 12.9 MMcfed,
compared to 10.5 MMcfed for the year ended December 31, 2005. EBITDA
for the year ended December 31, 2006 was $3.6 million, down from $12.3
million for the year ended December 31, 2005.
Total proved reserves as of December 31, 2006 were 31.2 billion
cubic feet of natural gas and 30,000 barrels of oil. The present value
of estimated future cash flows before income taxes as of December 31,
2006, based on the weighted average natural gas and oil prices, after
basis adjustments, of $4.76 per Mcf and $56.59 per barrel, discounted
at 10% per annum, was $40.3 million. Current year reserves were
negatively impacted by a 36% decrease in realized natural gas prices
from year end 2005 and a 10 billion cubic feet equivalent ("Bcfe")
downward revision in Gastar's Powder River Basin coal bed methane
reserves. The Powder River Basin revision was the result of lower gas
prices and basin-wide performance revisions.
J. Russell Porter, Gastar's President and Chief Executive Officer,
made the following comment, "The fourth quarter results for 2006 were
negatively impacted by the downward revision of Powder River Basin
coal bed methane reserves and lower natural gas prices at year-end
resulting in additional non-cash ceiling impairment charges. The
downward revision overshadowed the success of our 2006 East Texas deep
Bossier results. Including positive reserve revisions related to well
performance, our 2006 deep Bossier reserves increased 86% to 21 Bcfe
after production of 2.9 Bcfe. The success of wells drilled in late
2006 and completed in 2007 was not fully recognized in our year-end
reserve estimates. The impact of these recent wells is demonstrated in
our gross sales rate for the East Texas area which has nearly doubled
since year-end. The 3-D seismic survey that was recently delivered for
processing should be available in the second quarter to better define
and high grade our Bossier drilling opportunities in the second half
of 2007."
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 strategy combining select higher
risk, deep natural gas exploration prospects with lower risk coal bed
methane (CBM) development. The Company owns and operates exploration
and development acreage in the deep Bossier gas play of East Texas.
Gastar's CBM activities are conducted within the Powder River Basin of
Wyoming and on approximately 3.0 million gross acres controlled by
Gastar and its joint development partners in Australia's Gunnedah
Basin, PEL 238, located in New South Wales and the Gippsland Basin, EL
4416, located in Victoria.
Safe Harbor Statement and Disclaimer
This news 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, blowouts, pipe
failure, casing collapse, unusual or unexpected formation pressures,
environmental hazards, and other operating and production risks
inherent in the 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 natural gas and oil 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 adverse 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 SEC at www.sec.gov and on
the System for Electronic Document Analysis and Retrieval (SEDAR) at
www.sedar.com.
The American Stock Exchange and the Toronto Stock Exchange have
not reviewed and do not accept responsibility for the adequacy or
accuracy of this release.
GASTAR EXPLORATION LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended
December 31,
-------------------------------------
2006 2005
------------------ ------------------
(in thousands, except per share data)
REVENUES $26,765 $27,442
EXPENSES:
Lease operating,
transportation and selling
expenses 8,584 6,910
Depreciation, depletion and
amortization 16,332 13,914
Impairment of natural gas
and oil properties 56,280 8,697
Accretion of asset
retirement obligation 234 109
Mineral resource properties 450 65
General and administrative
expenses 13,548 8,710
Litigation settlement
expense 2,407 -
------------------ ------------------
Total expenses 97,835 38,405
------------------ ------------------
LOSS FROM OPERATIONS (71,070) (10,963)
OTHER (EXPENSES) INCOME:
Interest expense (15,599) (15,261)
Investment income and other 1,836 492
Foreign translation (loss)
gain (6) 40
------------------ ------------------
LOSS BEFORE INCOME TAXES (84,839) (25,692)
Provision for income taxes - -
------------------ ------------------
NET LOSS $(84,839) $(25,692)
================== ==================
NET LOSS PER SHARE:
Basic and diluted $(0.50) $(0.20)
================== ==================
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
Basic and diluted 170,015 129,398
================== ==================
PRODUCTION, PRICES AND EBITDA
For the Three
Months Ended For the Years Ended
December 31, December 31,
------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Production:
Natural gas (MMcf) 1,235.8 1,195.2 4,646.3 3,810.0
Oil and condensate (MBbls) 3.8 0.3 11.6 1.9
Total (MMcfe) 1,258.7 1,197.0 4,716.1 3,821.5
Total (MMcfed) 13.7 13.0 12.9 10.5
Average sales price:
Natural gas (per Mcf) $5.31 $8.31 $5.60 $7.18
Oil and condensate (per Bbl) $57.49 $54.03 $64.66 $50.85
EBITDA (in thousands) (1) $396 $4,665 $3,606 $12,289
(1) EBITDA represents earnings before interest expense, accretion of
asset retirement obligations, depletion, depreciation and
amortization, 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 Ended For the Years Ended
December 31, December 31,
------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------
(in thousands)
Net loss for the period $(27,496) $(4,771) $(84,839) $(25,692)
Interest expense 4,027 4,554 15,599 15,261
Accretion of asset retirement
obligations 61 31 234 109
Depletion, depreciation and
amortization 4,825 4,851 16,332 13,914
Impairment of natural gas and
oil properties 18,979 - 56,280 8,697
Provision for income taxes - - - -
--------- --------- --------- ---------
EBITDA $396 $4,665 $3,606 $12,289
========= ========= ========= =========
CONTACT: Gastar Exploration Ltd., Houston
J. Russell Porter, 713-739-1800
FAX: 713-739-0458
E-Mail: rporter@gastar.com
Web Site: www.gastar.com