Quarterly / Earnings Reports | First Quarter (1Q) Update | Drilling Activity | Drilling Program-Rig Count

Gastar STACK Production Up +38%; Exit Hunton Lime Asset

emailEmail    |    printPrint    |    bookmarkBookmark
   |    Wednesday,May 16,2018

[Summary: Gastar reported its Q1 2018 results.

The company recently became a pure Oklahoma STACK Play operator with the sale of the West Edmund Hunton Lime Unit assets, which closed February 28, 2018.

Highlights:

- Q1 2018 STACK production of 5,500 BOEPD (up +38% from 4Q17 and up +125% YOY)

  • Total average daily production increased 7% over fourth quarter 2017 total production and 30% over first quarter 2017 total production.
  • one rig  drilling program.
  • spud 3 net wells and completed 2.7 net wells.
  • current leasehold position of 69,700 net acres (68% HBP)
  • net loss $19.1 million

Currently, Gastar is running one rig in its STACK Play acreage. During the first quarter of 2018, the Company spud four gross (3.7 net) operated Osage wells, completed three gross (2.7 net) Osage operated wells and participated in numerous third-party wells across its 67,900 net acre core STACK Play acreage position. This highly contiguous position is approximately 84% operated and 68% held by production.

During the second quarter of 2018, the Company expects to spud between three and four gross Osage operated wells and two gross Meramec operated wells on its acreage.]

 

 

 

 

 

 

ORIGINAL RELEASE:

Gastar Exploration Inc. (NYSE American: GST) ("Gastar" or the "Company") today reported financial and operating results for the three months ended March 31, 2018.

First quarter 2018 highlights

  • Became a pure Oklahoma STACK Play operator with the sale of the West Edmund Hunton Lime Unit ("WEHLU") assets, which closed February 28, 2018.
  • STACK Play average daily production, excluding WEHLU, was 5,500 barrels of oil equivalent ("Boe") per day ("Boe/d"), a 38% increase over fourth quarter 2017 STACK Play production and a 125% increase over first quarter 2017 STACK Play production.
  • Total average daily production increased 7% over fourth quarter 2017 total production and 30% over first quarter 2017 total production.

Michael Gerlich, Gastar's Senior Vice President and Chief Financial Officer, commented, "We achieved strong production growth during the quarter from our STACK Play acreage reflecting the efficient and effective pace of our drilling and completion program, as well as improved production performance from our new completion design with increased frack stages. First quarter production volumes were boosted by higher working interests in operated wells under forced pooling, resulting in volumes exceeding our guidance. Our growing production volumes coupled with improved oil pricing generated higher revenues."

Financial Review

Net loss attributable to Gastar's common stockholders for the first quarter of 2018 was $19.1 million, or a loss of $0.09 per share, compared to a first quarter 2017 net loss of $22.3 million, or a loss of $0.14 per share. Adjusted net loss attributable to common stockholders (non-GAAP), which excludes non-cash and unusual items, was $12.3 million, or a loss of $0.06 per share, for the first quarter of 2018, compared to $9.6 million, or a loss of $0.06 per share, for the first quarter 2017 and $6.6 million, or $0.03 per share, for the fourth quarter of 2017. (See the accompanying reconciliation of the non-GAAP financial measure adjusted net loss at the end of this news release.)

Adjusted earnings before interest, income taxes, depreciation, depletion and amortization ("adjusted EBITDA") (non-GAAP) for the first quarter of 2018 increased 14% to $12.0 million compared to $10.6 million for the first quarter of 2017 and decreased 22% sequentially from $15.5 million for the fourth quarter of 2017. The sequential decline in adjusted EBITDA was due to the sale of WEHLU during the first quarter of 2018, loss on realized hedges and higher operating costs. (See the accompanying reconciliation of the non-GAAP financial adjusted EBITDA at the end of this news release.)

Revenues from oil, condensate, natural gas and natural gas liquids ("NGLs"), before the effects of commodity derivatives contracts, totaled $26.4 million in the first quarter of 2018, a 52% increase from $17.4 million in the first quarter of 2017 and an 11% increase from $23.7 million in the fourth quarter of 2017. The increase from the first quarter of 2017 in oil, condensate, natural gas and NGLs revenues primarily resulted from a 17% increase in equivalent product pricing and a 30% increase in equivalent production volumes. The increase from fourth quarter 2017 revenues was due to a 7% increase in equivalent product pricing and a 7% increase in daily equivalent production volumes. First quarter 2018 oil, condensate and NGLs revenues were net of transportation, treating and gathering costs of $933,000 pursuant to current authoritative accounting guidance.

Commodity derivatives were in place for approximately 79% of our oil and condensate production, 69% of our natural gas production and 33% of our NGLs production for the first quarter of 2018. Commodity derivative contracts settled during the first quarter of 2018 resulted in a $2.2 million decrease in revenue compared to a $1.9 million increase in revenues in the first quarter of 2017. For details on Gastar's current hedging position, please see our Quarterly Report on Form 10-Q for the quarter ended March 31, 2018 filed today with the United States Securities and Exchange Commission (the "SEC").

The following table provides a summary of Gastar's total net production volumes and overall average commodity prices for the three months ended March 31, 2018 and 2017:

   

For the Three Months Ended

March 31,

   
   

2018

   

2017

   
         

Net Production:

                 

Oil and condensate (MBbl)

   

343

     

250

   

Natural gas (MMcf)

   

1,063

     

863

   

NGLs (MBbl)

   

144

     

117

   

Total net production (MBoe)

   

664

     

511

   

Net Daily production:

                 

Oil and condensate (MBbl/d)

   

3.8

     

2.8

   

Natural gas (MMcf/d)

   

11.8

     

9.6

   

NGLs (MBbl/d)

   

1.6

     

1.3

   

Total net daily production (MBoe/d)

   

7.4

     

5.7

   

Average sales price per unit(1):

                 

Oil and condensate per Bbl, including impact of hedging activities (2)

 

$

55.23

   

$

54.53

   

Oil and condensate per Bbl, excluding impact of hedging activities

 

$

61.22

   

$

48.78

   

Natural gas per Mcf, including impact of hedging activities (2)

 

$

2.25

   

$

3.22

   

Natural gas per Mcf, excluding impact of hedging activities

 

$

2.05

   

$

3.00

   

NGLs per Bbl, including impact of hedging activities (2)

 

$

20.28

   

$

24.28

   

NGLs per Bbl, excluding impact of hedging activities

 

$

22.80

   

$

22.11

   

Average sales price per Boe, including impact of hedging activities(1)(2)

 

$

36.53

   

$

37.68

   

Average sales price per Boe, excluding impact of hedging activities(1)

 

$

39.85

   

$

34.00

   
                   

Lease operating expense per Boe

 

$

11.32

   

$

9.92

   
                   

_____________________________

(1)

Average sales price per unit for 2018 are net of transportation, treating and gathering costs, which were previously reported separately as expenses.

(2)

The impact of hedging includes only the gain (loss) on commodity derivative contracts settled during the periods presented.

The following table provides a summary of Gastar's Mid-Continent STACK Play production volumes and average commodity prices, excluding WEHLU which was sold in February 2018, for the three months ended March 31, 2018 and 2017:

   

For the Three Months Ended

March 31,

   
   

2018

   

2017

   

STACK Play (excludes WEHLU)

                 

Net Production:

                 

Oil and condensate (MBbl)

   

261

     

100

   

Natural gas (MMcf)

   

820

     

434

   

NGLs (MBbl)

   

96

     

47

   

Total net production (MBoe)

   

494

     

219

   

Net Daily Production:

                 

Oil and condensate (MBbl/d)

   

2.9

     

1.1

   

Natural gas (MMcf/d)

   

9.1

     

4.8

   

NGLs (MBbl/d)

   

1.1

     

0.5

   

Total net daily production (MBoe/d)

   

5.5

     

2.4

   

Average sales price per unit(1):

                 

Oil and condensate (per Bbl)

 

$

61.23

   

$

48.75

   

Natural gas (per Mcf)

 

$

1.87

   

$

3.02

   

NGLs (per Bbl)

 

$

22.55

   

$

23.54

   

Average sales price per Boe(1)

 

$

39.90

   

$

33.22

   
                   

Lease operating expense per Boe

 

$

10.79

   

$

9.83

   

_____________________________

(1)

Excludes the impact of hedging activities. Average sales price per unit for 2018 are net of transportation, treating and gathering costs, which were previously reported separately as expenses

First quarter 2018 STACK Play, excluding WEHLU, equivalent production was 5.5 MBoe/d as compared to first quarter 2017 and fourth quarter 2017 production of 2.4 and 4.0 MBoe/d, respectively. STACK Play production for the first quarter of 2018 consisted of approximately 72% liquids, comprised of 53% oil and 19% NGLs, in line with fourth quarter 2017 production and up from 67% liquids in the first quarter of 2017.

Total lease operating expenses ("LOE") per Boe of production as reported were $11.32 in the first quarter of 2018 versus $9.93 per Boe in the first quarter of 2017 and $9.14 per Boe in the fourth quarter of 2017, including workover costs per Boe of $1.21, $2.19 and $0.50, respectively. STACK Play LOE per Boe including workover costs for the first quarter of 2018 was $10.79 compared to $9.83 and $9.96 per Boe in the first and fourth quarters, respectively, of 2017. The increase in LOE per Boe was primarily due to higher water production and associated disposal costs related to new producing wells.

General and administrative ("G&A") expense was $9.0 million in the first quarter of 2018 compared to $3.8 million in the first quarter of 2017 and $4.4 million in the fourth quarter of 2017. The increase in G&A expense was primarily due to one-time severance costs. G&A expense for the first quarter of 2018 included $1.7 million of non-cash stock-based compensation expense, versus $996,000 in the first quarter of 2017 and $1.9 million in the fourth quarter of 2017. Excluding non-cash stock based compensation and one-time severance costs, cash G&A expense per Boe for the first quarters of 2018 and 2017 and the fourth quarter 2017 were $5.57, $5.54 and $3.83, respectively, while on a STACK only production basis, first quarter 2018 cash G&A expense was $7.49 per Boe.

Capital Budget

Gastar's capital expenditures in the first quarter of 2018 totaled $35.0 million, comprised of $27.6 million for drilling, completions and infrastructure costs, $4.5 million for unproved acreage extensions, renewals and additions and $2.9 million for other capitalized costs.

As previously announced, on February 28, 2018, the Company completed the sale of its interest in WEHLU for $107.5 million, adjusted for the effective date of October 1, 2017and resulting in net cash proceeds of $97.6 million after effective date adjustments, fees and expenses.

Operations Review and Update

Stephen Roberts, Senior Vice President and Chief Operating Officer, commented, "We are pleased with the excellent progress we are making in 2018 to develop and delineate our STACK Play acreage effectively. Our execution of the improved drilling and completion procedures we implemented last year continues to result in lower average well costs. Recently, we further enhanced our well performance utilizing our new Gen. 3.0 completion design by increasing the number of hydraulic fracture stages per well."

"During the first quarter, we focused on drilling wells targeting the Osage formation and are currently using 35-stage completions versus our earlier wells with 25-stage completions. We are encouraged by our early production results as well as the results of similarly drilled and completed wells by offset operators. "

Currently, Gastar is running one rig in its STACK Play acreage. During the first quarter of 2018, the Company spud four gross (3.7 net) operated Osage wells, completed three gross (2.7 net) Osage operated wells and participated in numerous third-party wells across its 67,900 net acre core STACK Play acreage position. This highly contiguous position is approximately 84% operated and 68% held by production.

During the second quarter of 2018, the Company expects to spud between three and four gross Osage operated wells and two gross Meramec operated wells on its acreage.

Guidance for Second Quarter 2018 and Full-Year 2018

Our guidance for the second quarter and full-year 2018, excluding WEHLU results, is presented in the table below and represents the Company's best estimate of the range of likely future results. Guidance could be affected by the factors described below in "Forward Looking Statements."

Production

 

Second Quarter

2018

 

Full-Year 2018

 
           

Net average daily (MBoe/d)(1)

 

5.0 5.6

 

5.3 6.1

 

Liquids percentage

 

70% 74%

 

70% 74%

 
           

Cash Operating Expenses

         

Production taxes (% of production revenues)

 

3.8% 4.4%

 

4.8% 5.4%

 

Direct lease operating ($/Boe)

 

$8.60 $9.30

 

$8.70 $9.30

 

Cash general & administrative ($/Boe)

 

$6.50 $7.10

 

$5.90 $6.60

 

________________

(1)

Based on equivalent of 6 thousand cubic feet (Mcf) of natural gas to one barrel of oil, condensate or NGLs.

Conference Call

Gastar has scheduled a conference call for 10:00 a.m. Eastern Time (9:00 a.m. Central Time) on Friday, May 11, 2018. Investors may participate in the call either by phone or audio webcast.

By Phone:

Dial 1-412-902-0030 at least 10 minutes before the call. A telephone replay will be available through May 25th by dialing 1-201-612-7415 and using the conference ID: 13678944.

   

By Webcast:

Visit the Investor Relations page of Gastar's website at www.gastar.com under "Events & Presentations." Please log on a few minutes in advance to register and download any necessary software. A replay will be available shortly after the call.

For more information, please contact Donna Washburn at Dennard-Lascar Associates at 713-529-6600 or e-mail span class="TTIplink">dwashburn@DennardLascar.com.

About Gastar Exploration

Gastar Exploration Inc. is a pure-play Mid-Continent independent energy company engaged in the exploration, development and production of oil, condensate, natural gas and natural gas liquids in the United States. Gastar's principal business activities include the identification, acquisition and subsequent exploration and development of oil and natural gas properties with an emphasis on unconventional reserves, such as shale resource plays. Gastar holds a concentrated acreage position in the normally pressured oil window of the STACK Play, an area of central Oklahoma which is home to multiple oil and natural gas-rich reservoirs including the Oswego limestone, Meramec and Osage bench formations within the Mississippi Lime, the Woodford shale and Hunton limestone formations. For more information, visit Gastar's website at www.gastar.com.


Search Data From Gastar Exploration Inc Latest Presentations

Key Slides found in this Presentation
Capital & Finance
        Capital Expenditures
        F&D Costs / RRC
        Rates of Return/ IRR
        Operating Costs (LOE)
        Well Economics
Data & Charts
        Peer Comparison
        All Charts
Geology & Geoscience
        Cross Section / Stratigraphy
Land & Legal
        Acreage & Land
        Locations/Inventory
Maps
        Leasehold Map
        All Maps
        Areas of Operations
Portfolio & Operations
        Drilling Program
        Drilling - Wells Drilled
        Key Wells & Discoveries
        Drilling - Wells Completed
        IP Rates
        IP Rates 30-Day
Well Information
        Well Results/Performance
        Well Cost
        Well EUR
        Well Spacing
        Well Results
        Well Lateral Length
        Frac Design - Frac Stages


Related    First Quarter (1Q) Update

ad

STACK News >>>