EXHIBIT 99.1
Gastar Exploration Reports Second Quarter 2007
Financial and Operational Results
HOUSTON--(BUSINESS WIRE)--Aug. 14, 2007--Gastar Exploration Ltd.
(AMEX:GST) and (TSX:YGA) today reported financial and operational
results for the three and six months ended June 30, 2007.
Net income attributable to common shares for the second quarter of
2007 was $4.4 million, or $0.02 per basic and diluted share, compared
to a net loss of $6.7 million, or $0.04 per basic and diluted share,
for the second quarter of 2006. Net income for the second quarter of
2007 included a gain on the sale of unproved natural gas and oil
properties of $38.9 million, which was partially offset by a non-cash
full cost ceiling impairment of natural gas and oil properties of
$28.5 million. The second quarter 2006 net loss included a charge for
litigation settlement expense of $1.2 million. Excluding the effect of
these items in both years, Gastar would have incurred a second quarter
loss of $6.0 million, or $0.03 per share, for 2007, compared to a loss
of $5.5 million, or $0.03 per share, for the second quarter of 2006.
Total revenues for the three months ended June 30, 2007 were
approximately $8.0 million, compared to $6.7 million for the
comparable period in 2006. Of the 19% increase in revenues, 76% was
attributable to increases in production resulting from the
commencement of production of natural gas from new wells in East Texas
in 2007, and 24% was attributable to increases in natural gas prices.
Net cash flows provided by operating activities for the three months
ended June 30, 2007 were $5.4 million, compared to $5.5 million for
the comparable period in 2006. Weighted average shares of common stock
outstanding on a basic and diluted basis increased 21% to 201.9
million shares for the second quarter of fiscal 2007 compared to the
year earlier-period.
Average daily production for the second quarter of 2007 was 15.1
million cubic feet of natural gas equivalents per day (MMcfe/d), an
increase of 14%, compared to 13.2 MMcfe/d for the second quarter of
2006 and a 7% increase over production levels of 14.1 MMcfe/d for the
first quarter of 2007. Lease operating expense (LOE) was $1.5 million
both for the second quarter of 2007 and for the same period of 2006.
LOE per Mcfe decreased to $1.10 per Mcfe during the second quarter of
2007 from $1.21 per Mcfe for the comparable period in 2006. The
decrease in LOE per Mcfe was primarily due to higher production
volumes and lower ad valorem taxes, which were partially offset by
unexpected workover costs in East Texas.
In May 2007, the Company sold a portion of its undeveloped natural
gas and oil acreage in the Hilltop area of East Texas for
approximately $68.2 million, before transaction costs, resulting in a
gain on the sale of $38.9 million. In the second quarter of 2007, a
$28.5 million non-cash full cost ceiling impairment of natural gas and
oil properties was recorded. The weighted average natural gas price
used for the June 30, 2007 ceiling impairment evaluation was $5.75 per
Mcf, held constant, as compared to $6.31 for the March 31, 2007
similar evaluation, when there was no impairment. There was no
impairment recorded for the three months ended June 30, 2006. The
second quarter 2006 loss included $1.2 million of litigation expense.
J. Russell Porter, Gastar's Chairman, President and CEO, stated,
"During the second quarter, we participated in the drilling of 2 gross
(1.1 net) wells in our deep Bossier gas play of East Texas, with a
100% success rate. In early August, we announced our best East Texas
well initial production rate to date - the Donelson #3, which is
currently producing at a gross sales rate of approximately 20 MMcf/d.
We are drilling a horizontal Knowles Limestone well, the Lone Oak
Ranch #4, after encouraging results from a vertical Knowles Limestone
well, the John Parker #3.
"While not reflected in our financial statements, in Australia the
production pilot program on PEL 238 is progressing well, and we expect
to receive the initial probable (2P) reserve certification from our
independent engineering firm, Netherland Sewell & Associates, by the
end of the year. We are currently drilling a six-well corehole program
designed to increase 2P reserve certification by year-end or the first
quarter of 2008. A Memorandum of Understanding signed with Macquarie
Generation provides the framework for a potentially substantial market
for gas from this project. Our joint venture group has also been
approached by other potential gas buyers for sizable volume
commitments.
"For the balance of 2007, we will drill at least one additional
deep Bossier well, likely an offset to the Donelson #3 well, and
either one more additional deep Bossier well or another Knowles
Limestone horizontal well, depending on the results of the Lone Oak
Ranch #4. We also anticipate that the Odom #1 re-drill, a lower Yegua
prospect located in Orange County, Texas, will spud during the third
quarter."
First Half Results
For the six months ended June 30, 2007, Gastar reported a net loss
attributable to common shares of $6.6 million, or $0.03 per basic and
diluted share, compared to a net loss of $49.6 million, or $0.30 per
basic and diluted share, for the six months ended June 30, 2006.
Results for the first six months of 2007 included a gain on the sale
of unproved natural gas and oil properties of $38.9 million, a
non-cash full cost ceiling impairment of natural gas and oil
properties of $28.5 million and a $5.0 million litigation settlement
expense. Results for the first six months of 2006 included a non-cash
full cost ceiling impairment of natural gas and oil properties of
$37.3 million and a charge for litigation settlement expense of $1.2
million. Excluding the effect of these items in both years, Gastar
would have incurred a loss of $12.0 million, or $0.06 per share, for
the first six months of 2007, compared to a loss of $11.1 million, or
$0.07 per diluted share, for the same period in 2006.
Total revenues for the six months ended June 30, 2007 were $15.5
million, compared to $13.3 million for the comparable period in 2006.
Average daily production for the six months ended June 30, 2007 was
14.6 MMcfe/d, up 21% from 12.1 MMcfe/d for the six months ended June
30, 2006. Net cash flows provided by operating activities for the six
months ended June 30, 2007 were $5.7 million, compared to $2.7 million
for the comparable period in 2006.
About Gastar Exploration
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 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. For more information, visit our web site
at www.gastar.com.
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 news
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 27, 2007 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 news release.
GASTAR EXPLORATION LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
------------------------- --------------------------
2007 2006 2007 2006
------------ ------------ ------------ -------------
(in thousands, except per share data)
REVENUES $7,956 $6,684 $15,471 $13,307
EXPENSES:
Production taxes 220 366 514 766
Lease operating
expenses 1,514 1,450 3,209 2,706
Transportation
and treating 339 312 662 616
Depreciation,
depletion and
amortization 5,443 3,565 9,784 7,874
Impairment of
natural gas and
oil properties 28,514 - 28,514 37,301
Accretion of
asset
retirement
obligation 72 57 138 114
Mineral resource
properties (136) 33 (123) 190
General and
administrative
expenses 3,519 3,107 6,704 5,626
Litigation
settlement
expense - 1,200 4,972 1,200
------------ ------------ ------------ -------------
Total
expenses 39,485 10,090 54,374 56,393
------------ ------------ ------------ -------------
LOSS FROM
OPERATIONS (31,529) (3,406) (38,903) (43,086)
OTHER (EXPENSES)
INCOME:
Interest expense (3,738) (3,816) (7,681) (7,575)
Investment
income and
other 772 492 1,135 1,020
Gain on sale of
unproved
natural gas and
oil properties 38,872 - 38,872 -
Foreign exchange
gain 3 3 2 4
------------ ------------ ------------ -------------
INCOME (LOSS)
BEFORE INCOME
TAXES 4,380 (6,727) (6,575) (49,637)
Provision for
income taxes - - - -
------------ ------------ ------------ -------------
NET INCOME (LOSS) $4,380 $(6,727) $(6,575) $(49,637)
============ ============ ============ =============
NET INCOME (LOSS)
PER SHARE:
Basic and
diluted $0.02 $(0.04) $(0.03) $(0.30)
============ ============ ============ =============
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING:
Basic and
diluted 201,918,634 166,513,762 198,488,244 165,663,086
============ ============ ============ =============
PRODUCTION AND PRICES
For the Three Months For the Six Months
Ended June 30, Ended June 30,
------------------------- --------------------------
2007 2006 2007 2006
------------ ------------ ------------ -------------
Production:
Natural gas
(MMcf) 1,357.7 1,182.8 2,610.8 2,176.2
Oil (MBbls) 2.4 2.8 5.6 3.0
Total (MMcfe) 1,372.2 1,199.3 2,644.3 2,194.2
MMcfe per day 15.1 13.2 14.6 12.1
Average sales
prices:
Natural gas (per
Mcf) $5.75 $5.49 $5.80 $6.02
Oil (per Bbl) $63.06 $67.29 $58.49 $66.87
CONTACT: Gastar Exploration Ltd., Houston
Vice President and CFO
Michael Gerlich, 713-739-1800
mgerlich@gastar.com
or
Investor Relations Counsel:
DRG&E
Lisa Elliott, 713-529-6600
lelliott@drg-e.com
or
Anne Pearson, 713-529-6600
apearson@drg-e.com