Investor Day Presentation New York, NY May 14, 2014 E XPANDING 2014 Gastar Exploration Inc. O UR H ORIZONS 1
Table of Contents 1. Company Overview 2. Asset & Operations Overview i. Marcellus and Utica ii. Hunton 3. Financial Overview ______________________________________________________________ Appendices 2014 Gastar Exploration…
COMPANY OVERVIEW 2014 Gastar Exploration Inc. 4
Gastar Overview Gastar Exploration Inc. is a Houston-based independent energy company engaged in the exploration, development and production of oil, natural gas, condensate and natural gas liquids. Currently developing…
Gastar Exploration: Expanding our Horizons World-class position in the liquids-rich Marcellus Shale High-Quality Resource Significant Utica potential under Marcellus Shale leasehold Base Strong early drilling results in the Hunton…
Operational Execution Provides Next Step Up Key Milestones June 2013 August 2013 November 2013 Acquired 157,000 Sold 76,000 non-core Acquired 24,000 acres from CHK for acres in OK for 62 acres in WEHLU for 69 million million 178…
Asset Overview Q1 2014 Net Production by Region Marcellus Shale Utica Dry Gas Rich Gas Play Mid-Continent 11,400 net acres(2) 60,100 net acres(1) 3.3 MBoe/d 34% Appalachia 6.4 MBoe/d 66% Hunton Limestone Oil Play 128,500 net…
Premier Position in the Marcellus and Utica Gastars acreage position lies near leading players in the basin Appalachia Overview Marcellus and Utica Map Acreage prospective in both the Utica Marcellus wet gas core and the Dry Gas…
Hunton: First Mover Advantage Asset Overview Hunton Asset Map Large, contiguous position in core of Hunton play, with multiple horizontal potential 128,500 net acres OKLAHOMA 130 MMBOE of net resource potential in Hunton Deep…
Proven Track Record of Growth Significant reserves and production growth through acquisitions and the drill bit Proved Reserves by Type MMBoe 60.0 43% 40.0 1% 30% 20.0 7% 34% 56% 27% 17% 15% 63% 14% 18% 50% 59% 66% 0.0…
Balanced Portfolio Liquids production expected to increase to 42% in 2014 Proved Reserves by Product MMBoe 60.0 40.0 45% 28% 20.0 23% 55% 0.8% 0.7% 72% 77% 99.2% 99.3% 0.0 2009 2010 2011 2012 2013 Gas Liquids Total…
F&D Metrics Drill Bit F&D (Excludes Land, G&G and Acquisitions) Net Adds Drilling Capital Total F&D (MBOE) (MM) (/BOE) YE 2011 12,858 65.8 5.12 YE 2012 12,632 120.6 9.55 YE 2013 17,212 92.2 5.35 Three Year Average 6.67 Total…
Capital Budget Focused on Liquids ( in millions) Area Capital 2014 Capital Investment Mid-Continent 85 Capitalized Appalachia 55 Costs 9MM Infrastructure 7 5% Land Appalachia Land 36 36MM 55MM 19% 28% Capitalized Costs(1) 9…
2013 & 2014 Capital Budget Capex Budget by Type D&C Capex Budget by Area Gross Wells Drilled (2) Other Texas Mid-Continent 5% -2% 11 Land 16% Mid-Continent Appalachia 44% 58% 2013 Drilling & Appalachia Completions 19…
Horizontal Drilling Expertise Horizontal drilling experience Drilled 57 Marcellus wells Decreased Marcellus drill time to 16 days Transferring Marcellus experience and expertise to Hunton Microseismic 13 sq. mi. Microseismic…
ASSET & OPERATIONS OVERVIEW 2014 Gastar Exploration Inc. 17
MARCELLUS AND UTICA 2014 Gastar Exploration Inc. 18
Marcellus Shale Activity concentrated in ultra liquids-rich portion of the play 60,100 net acres with Marcellus exposure(1) Marcellus Activity Map Marshall & Wetzel Counties, W. Va. 22,800 (11,400 net) acres (27% HBP) prospective…
Marshall/Wetzel Acreage Timeline Gastar Acreage 2010 Gastar Acreage 2014 Marshall County Marshall County OHIO OHIO Continuing to block up acreage through trades Legend Legend and lease acquisition Gastar Acreage Trade…
Marshall & Wetzel Production Overview Williams operational issues resolved late 2013 Consistent production and excess takeaway capacity Gross Marcellus Production 2014 Gastar Exploration Inc. 21
Infrastructure Overview OHIO WEST VIRGINIA Good access to takeaway Improved run-time Marshall No restrictions going forward Processing Monroe Fort Beeler capacity 520 MMBtu/d Total system capacity growing to +1 BCF/d Central…
Marshall & Wetzel Operated Drilling Overview Gastar has completed 57 gross (27 net) wells to date Average pad drilling time reduced to 16 days per well Enhanced completions on all future Marcellus wells Historical Operated Marshall &…
Liquids-Rich Window of Marshall & Wetzel Counties High Btu gas and condensate yields OHIO W. VIRGINIA Marshall Co. Marcellus Wells Producing 57 PUDS 38 3040 Bbls/MMcf condensate (Q4: 30 Bbls) Future Drilling Locations 76 2014…
GST Marcellus Log Analysis CORELAB MARCELLUS RESULTS Low Water Saturation: Less than 9.3% High Porosity Average:13.1% High TOC Average:12% Excellent Permeability: 8.73E-04 mD High Gas Saturation: 85% 2014 Gastar Exploration…
Marcellus Drilling Zone Targeting Gamma Ray Resistivity Bulk Density Example of Well bore entering the target zone Gamma Ray 500-600 API 2014 Gastar Exploration Inc. 28
Horizontal Cased Hole Logging Example provided by Schlumberger Stage 5 Stage Stage Stage Stage 1 4 3 2 Gastar is currently testing horizontal cased hole logging to target like-stress regimes within our horizontal Marcellus…
Addison 3H Example of high stress rock not High Stress being accessed Low Stress by proppant. 14 High stress zones + 15 Low stress zones = 29 zones 29 perf intervals could have been used Actual perf intervals 19…
Utica Overview Overview Utica Activity Map The Utica formation underlies Gastars core OHIO GPOR 2 wells Hess 1 well Marcellus position in Marshall and Wetzel IP: 2945 Mmcfe/d IP: 25 Mmcfe/d Counties Dry gas GPOR 1 well…
Point Pleasant Activity Map 2014 Gastar Exploration Inc. 33
Gastars Utica Position in Marshall & Wetzel Counties Undrilled Utica Locations: Marshall Co. Utica Wells OHIO W. VIRGINIA Future Drilling Locations 79* 2014 Drilling Gross Net Future Locations 118 59(1) Blake Utica Test (5000…
Utica/Point Pleasant Type Log High porosity 6-12% Thickness +/- 74 Type log: 5 miles to West of Gastars acreage 2014 Gastar Exploration Inc. 35
Gastars Utica Acreage is the Core of the Core Point Pleasant Shale Porosity Cross-Section VERY HIGH PRESSRURE, HIGH RATE GAS WINDOW Lexington Shelf (High Porosity, TOC, Carbonate Content) 2014 Gastar Exploration Inc. 36
Point Pleasant Paleography Gastar Acreage on Flanks of Lexington Platform Lexington Shelf Region Depositional environment: Debris flows associated with high porosity High TOC High Carbonate content 2014 Gastar…
Point Pleasant Gross Isopach Thickness Gastars Utica acreage in same thickness window as recent successful GPOR wells IRONS 4H IP: 30.3 MMcf/d GST SIMMS & BLAKE TESTS Eclipse Tippens 6H IP: 23.2 MMcf/d GST MHR…
Top of Point Pleasant SSTVD Structure Structure is very benign in Point Pleasant over west acreage GST SIMMS & East Marcellus BLAKE TESTS acreage appears GST East acreage covers prospective in the GST a structural feature…
Lead Mine Anticline Uplift Schematic Multiple pay zones in Gastar east acreage The uplift thrust allows for source rocks to be juxtaposed next to reservoir rocks 2014 Gastar Exploration Inc. 40
Utica Marshall & Wetzel Counties Economics 15.0 Bcfe EUR(1) Daily Peak Rate 20 MMCFD 100% Gas (dry) 34% IRR(1) Cost 12.0MM(2) (5,000 lateral) 0.97/Mcfe F&D Costs PV10 8.0MM per well (100% WI) Est. Average Daily Rate…
2014 Capital Budget West Virginia 2014 12 gross wells (6 net) 10 gross (5.0 net) Marcellus D&C 2 gross (1.0 net) Utica D&C Net Drilling Locations 106 net Marcellus locations on existing acreage 59 net Utica locations on existing…
HUNTON 2014 Gastar Exploration Inc. 43
Oklahoma Hunton Limestone Play Hunton Activity Map Current lease position 128,500 net acres; 28% HBP Exposure to over 130 MMBOE of net resource Stevens 1-36H OKLAHOMA Flowback potential, primarily oil Primary targets include…
Gastar/Husky AMI Horizontal Well Activity Lower Hunton Gastar / Husky AMI Activity Map OKLAHOMA Encouraging Results Leading to Full Scale Development 2014 Gastar Exploration Inc. 45
Gastar/Husky Mid-Continent Drilling Overview Gastar/Husky Wells Last 5-Days Working First Total Cost IP or Peak Cum Prod Avg Rate EUR Well Name County Interest Production (MM) Rate (Boe/d) % Oil (Mboe)(1) % Oil (Boe/d) % Oil…
Performance Type Curve Comparison Gastar/Husky AMI JV Drilling Program (Based on Wright 12/31/13 Reserves) BOPDE 1,000 100 SCHOOL LAND (6) THRASHER (2) STEVENS (7) HENLEY (5) 10 GRITZ (4) BLEDSOE (3) HUNTSBERGER…
Lower Hunton Drilling in Progress Well Name County Working Interest Status Total Cost (MM) AMI WELLS JETT 1-12H KINGFISHER 47.4% FLOWBACK 6.7 LIEBHART 1-31H KINGFISHER 47.8% FLOWBACK 5.7 CORONADO 1-3H KINGFISHER 30.2% FLOWBACK 5.5…
Gastar/Husky AMI Lower Hunton Horizontal Oil Play Economics 436 MBOE EUR Peak daily Rate 400 BO & 1,250 MCF 36% Gas (processed; 56% unprocessed) 64% Liquids 67% IRR(1) Cost 5.4MM (4,200 lateral) 14.24/BOE F&D Cost (processed)…
Hunton Cumulative Oil Majority of wells produced < 25 MBO Drainage is minor Low production and well control makes the Hunton an excellent candidate for horizontal development Very few horizontal wells Play is still in early…
Hunton Schematic Drilling focus is updip pinch out: Woodford Shale is source rock and trap Canadian County/WEHLU prospective in the upper and lower Hunton Kingfisher County prospective in lower Hunton Target fractured…
Burton Type Log 2014 Gastar Exploration Inc. 52
Hunton Outcrop Model Image from AAPG Explorer 2014 Gastar Exploration Inc. 53
Oklahoma Hunton Limestone Play Hunton Activity Map Stevens 1-36H OKLAHOMA Flowback Coronado 1-3H Gamebird 1-7H Vaverka 1-20H Drilling Jones 1-21H Rosemary 1-3H GST JV wells not producing Farmout activity…
WEHLU Development Previous operator drilled 12 horizontal (RED) and 12 vertical (BLUE) wells Production range: Horizontal 15-205 MBOE Vertical 31-243 MBOE All Horizontals drilled in the upper Hunton (Bois Darc) except 1…
WEHLU Bois dArc Potential (Upper Hunton) WEHLU discovered in 1943 OKLAHOMA Produced 100+ MMBO 80% from Upper Hunton/Bois DArc Potential single well reserves in excess of 250 MBOE No value assigned to southern WEHLU potential…
WEHLU North Cross Section Drilling first 2 Horizontal wells in WEHLU Proven Up-Dip Bois DArc well completed open hole Drilling and complete cost: 3.0MM Chimney Hill well to be drilled and fraced Drilling and Complete…
WEHLU Chimney Hill Potential (Lower Hunton) Chimney Hill has not been developed OKLAHOMA horizontally Targeting both secondary (fractures) and primary porosity No value assigned to southern WEHLU potential Operated well currently…
WEHLU Development 2014 Gastar Exploration Inc. 60
WEHLU South Cross Section Shows untested horizontal potential in southern unit (Zones A,B,C) All terminate up-dip 2014 Gastar Exploration Inc. 61
Woodford Activity Woodford Activity Map Woodford relatively unexplored on Gastar acreage Gastar OKLAHOMA Prospective IPs range from 500 1000+ BOE/D O KLAHOMA Woodford Acreage Other operator activity de-risking the play…
Woodford Model Thin Upper Hunton corresponds with thick Woodford and visa versa Similar to modern day West Texas erosional valley system 2014 Gastar Exploration Inc. 64
Woodford Economics 524 MBOE EUR (1) Peak daily rate 780 BOPDE 75% Oil 20% IRR(1) Cost 12.0MM 22.89/BOE F&D Cost PV10 3.3 million per well Est. Average Daily Rate (BOE/d): 1st 30 Days: 627 2nd 30 Days: 455 3rd 30 Days:…
Meramec/Mississippi Lime Activity Meramec / Miss Lime Activity Map Meramec play geologic model similar to that of the Hunton, i.e. naturally fractured carbonate IPs range from 500 1800+ BOE/D Gastar Other operator activity…
Meramec Economics 593 MBOE EUR (1) Peak daily rate 900 BOPDE 77% Oil 30% IRR(1) Cost 12.0MM 20.24/BOE F&D Cost PV10 6.1 million per well Est. Average Daily Rate (BOE/d): 1st 30 Days: 739 2nd 30 Days: 544 3rd 30 Days:…
FINANCIAL OVERVIEW 2014 Gastar Exploration Inc. 69
Financial Strategy Grow NAV and reserves per share through exploitation of existing assets Target Appropriate Target Net Debt-to-EBITDA < 3.0x Leverage Ratios and Strong interest and dividend coverage (EBITDA-to-Interest 3.0x)…
PDP Hedging Program Crude Oil and NGL Liquids Hedging Strategy (Barrels per Day) 3,600 2,962 Bpd 92.32 Avg. Floor(2) 100 Bpd 93/73 Put Spread 200 Bpd 98 Collar 2,400 1,744 Bpd 86.91 Avg. Floor 1,455 Bpd 2,162 Bpd 83.97…
PDP Hedging Program (contd) Natural Gas Gas Hedging Strategy (Mmbtu per Day) 36,000 31,440 Mmbtu/d 4.03 Avg. Floor 2,500/d 4.59 Call 10,500/d 24,000 4.00/4.60 Collar 10,890 Mmbtu/d 12,000 4.17 Avg. Floor 18,440/d…
Realized Prices and Cost Metrics- Historic Regional Realizations Q1 2014 Production Volumes Marcellus Mid-Con Total Company Oil (MBbls) 67 136 203 Gas (MMcf) 2,413 659 3,072 NGL (MBbls) 108 47 155 MBOE 577 293 870 Revenue…
Cash Profit Margin - Historic Cash Profit Margin per Boe Total Company Q1'14 FY 2013 Price (without Hedges) 44.63 28.58 Hedge (Loss) Benefit (3.86) 1.61 Direct Costs 7.54 5.60 Cash G&A Normalized 3.44 2.88 Cash Profit Before…
Budget Summary Capital Expenditures Deep inventory of high-IRR wells High degree of operational control allows for optionality and opportunistic drilling 75% of 2014 budget expenditures controlled by Gastar Gas-weighted…
Summary Diverse base of assets focused in active unconventional plays in the United States 60,100 net acres in the Marcellus Shale in the Appalachian Basin High-Quality 128,500 net acres in the Hunton Limestone play in Oklahoma…
APPENDIX 2014 Gastar Exploration Inc. 80
Balance Sheet Assets ( in millions) As of 3/31/2014 Cash and cash equivalents 26.9 Other current assets 19.7 Total current assets 46.6 Total property, plant and equipment, net 540.5 Other assets 11.6 Total assets 598.7…
Type Curve Details by Area NAV FactSheet APPALACHIA WEHLU Marcellus Core Utica Dry Lower Hunton Upper Hunton Lower Hunton Woodford Meramac (MIL) Locations Formation Marcellus Utica Hunton Hunton Hunton Woodford Meramac Total Net…
References -Cornell, S. R. 2000. Sequence Stratigraphy and Event Correlations of upper Black River and lower Trenton Group Carbonates of northern New York State and southern Ontario, Canada, unpublished M.S. Thesis, University of…
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