Exhibit 99.1
Gastar Exploration Reports Third Quarter 2007
Financial and Operational Results
HOUSTON--(BUSINESS WIRE)--Nov. 7, 2007--Gastar Exploration Ltd.
(AMEX:GST) (TSX:YGA) today reported financial and operational results
for the three and nine months ended September 30, 2007.
Net loss for the third quarter of 2007 was $5.5 million, or $0.03
per share, compared to a net loss of $7.7 million, or $0.05 per share,
for the third quarter of 2006. The third quarter 2006 net loss
included a charge for litigation settlement expense of $465,000.
Revenues for the third quarter of 2007 increased 46% to
approximately $9.8 million, compared to revenues of $6.7 million for
the comparable period in 2006. The increase in revenue was primarily
due to increased natural gas production from new wells in East Texas,
partially offset by a 10% decrease in natural gas prices, mainly
related to Wyoming production.
Net cash flows provided by operating activities for the three
months ended September 30, 2007 were $5.5 million, compared to a cash
loss of $2.3 million for the comparable period in 2006.
Weighted average shares of common stock outstanding on a basic and
diluted basis increased 23% to 207.1 million shares for the third
quarter of fiscal 2007 compared to the year-earlier period.
Average daily production for the third quarter of 2007 was 22.7
million cubic feet of natural gas equivalent per day (MMcfe/d) -- an
increase of 66%, compared to 13.7 MMcfe/d for the third quarter of
2006 -- and a 50% increase over production levels of 15.1 MMcfe/d for
the second quarter of 2007, due to three East Texas wells being
brought on at high initial production rates. The average realized
price for natural gas in the third quarter of 2007 was $4.65 per Mcf
compared to $5.14 per Mcf in the third quarter of 2006.
Lease operating expense (LOE) was $1.7 million for both the third
quarter of 2007 and 2006. LOE per Mcfe decreased 40% to $0.81 per Mcfe
during the third quarter of 2007 from $1.35 per Mcfe for the
comparable period in 2006 and decreased 26% from $1.10 per Mcfe for
the second quarter of 2007. The decrease in LOE per Mcfe was primarily
due to higher production volumes combined with lower ad valorem taxes
and lower fixed costs associated with natural gas treatment plants in
East Texas.
J. Russell Porter, Gastar's Chairman, President and CEO, stated,
"We are making excellent progress toward further delineating the value
of our East Texas and Australian assets. In East Texas the accumulated
drilling and production data is helping us to improve drilling
results, and we are now beginning to utilize our new 3-D seismic data
to better identify future drilling locations.
"One of our best Deep Bossier wells to date, the Donelson #3, is
maintaining a solid production rate at approximately 13.7 MMcf/d. We
are currently drilling an offset well based on the new 3-D data, the
Wildman Trust #3, which should reach the Deep Bossier formation in
mid-December. Due to the success of our first horizontal Knowles
Limestone well, the Lone Oak Ranch ("LOR") #4, we have secured a
second rig which is currently drilling the LOR #3, another horizontal
well targeting the Knowles Limestone formation that is expected to
reach total depth in early December.
"In the fourth quarter we expect production levels will be
slightly lower than what we averaged in the third quarter due to the
natural decline in peak production from the new East Texas wells
brought on in July and August. In addition, Wyoming production was
curtailed during October due to low natural gas prices being realized
in the area. We should see improvement in production volumes compared
to the third quarter in the first quarter of 2008 as we complete the
Wildman Trust #3 and the LOR #3, assuming these come on production as
expected," added Porter.
"In Australia, we received the initial proved and probable (2P)
gas reserve certification from our independent engineering firm,
Netherland Sewell & Associates, for PEL 238 in New South Wales. A
total 59 Bcf were certified, including 21 Bcf of gross proved (1P)
reserves (6.6 Bcf net), although the evaluated acreage covers less
than 1 percent of the acreage. These reserve estimates are made under
the Society of Petroleum Engineers standards, and none of these yet
meets the definition of proved reserves under SEC guidelines,
primarily due to the early status of negotiations for contracts for
infrastructure and gas sales. This is just the first step toward
defining the value of our extensive acreage position in New South
Wales. Our ongoing nine-well pilot program is continuing to perform
well, and we are currently drilling a six-well corehole program
designed to increase 2P reserve certification by mid-2008."
Nine Month Results:
For the nine months ended September 30, 2007, Gastar reported a
net loss of $12.1 million, or $0.06 per share, compared to a net loss
of $57.3 million, or $0.34 per share, for the nine months ended
September 30, 2006. Results for the nine 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 nine 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 $1.7 million. Excluding the effect of these items in both
years, Gastar would have incurred a loss of $17.5 million, or $0.09
per share, for the nine months of 2007, compared to a loss of $18.4
million, or $0.11 per diluted share, for the same period in 2006.
Revenues for the nine months ended September 30, 2007 were $25.2
million, compared to revenues of $20.0 million for the comparable
period in 2006. Average daily production for the nine months of 2007
was 17.3 MMcfe/d, up 37% from 12.7 MMcfe/d for the nine months of
2006.
Net cash flows provided by operating activities for the nine
months ended September 30, 2007 were $11.2 million, (excluding $38.9
million of gain on sale and a $5.0 million litigation settlement
accrual) compared to $415,000 for the comparable period in 2006
(including the payment of $1.7 million of litigation settlement
expense).
Gastar Exploration Conference Call
Gastar Exploration's management team will hold a conference call
today, Wednesday, November 7, at 2:00 p.m. Eastern Time (1:00 p.m.
Central), to discuss these results. To participate in the call, dial
(303) 262-2141 at least 10 minutes before the conference call begins
and ask for the Gastar Exploration conference call. A replay of the
call will be available approximately two hours after the call ends and
will be accessible until November 14, 2007. To access the replay, dial
(303) 590-3000 and enter the pass code 11100386 #.
Investors, analysts and the general public can listen to the
conference call over the Internet by accessing Gastar's Web site at
http://www.gastar.com. To listen to the live call on the Web, please
visit Gastar's Web site at least 10 minutes early to register,
download and install any necessary audio software. An archive will be
available shortly after the call. For more information, please contact
Donna Washburn at DRG&E at (713) 529-6600 or e-mail dmw@drg-e.com.
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 over 7 million gross (2.9 million net) acres controlled
by Gastar and its joint development partners in Australia's Gunnedah
Basin (PEL 238, PAL 2, PEL 433 and PEL 434) 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.
The SEC has generally permitted oil and gas companies, in their
filings with the SEC, to disclose only proved reserves that, under SEC
definitions and guidelines, a company has demonstrated by actual
production or conclusive formation tests to be economically and
legally producible under existing economic and operating conditions.
We use the terms in this announcement such as "2P" or "probable"
reserves, or other descriptions of volumes of hydrocarbons that the
SEC's guidelines would prohibit us from including in our filings with
the SEC. We also have included in this announcement information
concerning reserves attributed to our Australian coal bed methane
pilot program that are categorized as "proved" under the definitions
and guidelines set by the Society of Petroleum Engineers that would
not be so categorized under SEC definitions and guidelines. All of
these volumes and estimates are by their nature more speculative than
estimates of proved reserves under SEC definitions and guidelines and
accordingly are subject to substantially greater risk of being
actually realized by us.
GASTAR EXPLORATION LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
------------------------- -------------------------
2007 2006 2007 2006
------------ ------------ ------------ ------------
(in thousands, except share and per share data)
REVENUES $ 9,775 $ 6,680 $ 25,246 $ 19,988
EXPENSES:
Production taxes 256 345 770 1,111
Lease operating
expenses 1,700 1,702 4,909 4,408
Transportation
and treating 426 487 1,088 1,103
Depreciation,
depletion and
amortization 6,625 3,633 16,409 11,507
Impairment of
natural gas and
oil properties - - 28,514 37,301
Accretion of
asset
retirement
obligation 77 59 215 173
Mineral resource
properties 15 40 (108) 230
General and
administrative
expenses 3,193 4,018 9,897 9,644
Litigation
settlement
expense - 465 4,972 1,665
------------ ------------ ------------ ------------
Total expenses 12,292 10,749 66,666 67,142
------------ ------------ ------------ ------------
LOSS FROM
OPERATIONS (2,517) (4,069) (41,420) (47,154)
OTHER (EXPENSES)
INCOME:
Interest expense (4,100) (3,998) (11,781) (11,573)
Investment
income and
other 1,084 372 2,219 1,391
Gain on sale of
unproved
natural gas and
oil properties - - 38,872 -
Foreign exchange
gain (loss) 7 (11) 9 (7)
------------ ------------ ------------ ------------
LOSS BEFORE INCOME
TAXES (5,526) (7,706) (12,101) (57,343)
Provision for
income taxes - - - -
------------ ------------ ------------ ------------
NET LOSS $ (5,526) $ (7,706) $ (12,101) $ (57,343)
============ ============ ============ ============
NET LOSS PER
SHARE:
Basic and
diluted $ (0.03) $ (0.05) $ (0.06) $ (0.34)
============ ============ ============ ============
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING:
Basic and
diluted 207,098,570 167,942,813 201,389,892 166,431,346
============ ============ ============ ============
PRODUCTION AND PRICES
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
--------------------- ---------------------
2007 2006 2007 2006
---------- ---------- ---------- ----------
Production:
Natural gas (MMcf) 2,085 1,234 4,696 3,411
Oil (MBbls) 1 5 7 8
Total (MMcfe) 2,092 1,263 4,736 3,457
MMcfe per day 22.7 13.7 17.3 12.7
Average sales prices:
Natural gas (per Mcf) $ 4.65 $ 5.14 $ 5.29 $ 5.70
Oil (per Bbl) $ 74.34 $ 69.02 $ 61.01 $ 68.19
CONTACT: Gastar Exploration Ltd.
Michael Gerlich, Vice President and CFO, 713-739-1800
mgerlich@gastar.com
or
Investor Relations Counsel:
DRG&E
Lisa Elliott, 713-529-6600
lelliott@drg-e.com
Anne Pearson, 713-529-6600
apearson@drg-e.com