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APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd.

Gastar Exploration, Ltd. · Apr 7, 2014 · 59 slides

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Slides

  1. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 1
    IPAA OGIS Presentation New York, NY April 7, 2014 E XPANDING 2014 Gastar Exploration Inc. O UR H ORIZONS 1
  2. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 2
    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…
  3. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 3
    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…
  4. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 4
    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…
  5. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 5
    Asset Overview Q4 2013 Net Production by Region Marcellus Shale Utica Dry Gas Rich Gas Play Mid-Continent 2.4 MBoe/d 11,100 net acres(2) 59,900 net acres(1) 26% Appalachia 6.8 MBoe/d 74% Hunton Limestone Oil Play 126,000 net…
  6. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 6
    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…
  7. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 7
    Hunton: First Mover Advantage Asset Overview Hunton Asset Map Large, contiguous position in core of Hunton play, with multiple horizontal potential 128,000 net acres OKLAHOMA 130 MMBOE of net resource potential in Hunton Deep…
  8. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 8
    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…
  9. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 9
    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…
  10. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 10
    Capital 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 Total…
  11. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 11
    MARCELLUS AND UTICA 2014 Gastar Exploration Inc. 12
  12. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 12
    Marcellus Shale Activity concentrated in ultra liquids-rich portion of the play 59,900 net acres with Marcellus exposure(1) Marcellus Activity Map Marshall & Wetzel Counties, W. Va. 22,200 (11,100 net) acres (27% HBP) prospective…
  13. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 13
    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…
  14. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 14
    Marshall & Wetzel Production Overview Williams operational issues resolved late 2013 Consistent production and excess takeaway capacity Gross Marcellus Production 2014 Gastar Exploration Inc. 15
  15. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 15
    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…
  16. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 16
    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…
  17. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 17
    Marcellus Marshall & Wetzel Counties Economics 8.0 Bcfe EUR (2) Daily Peak Rate 4.2 MMCFD & 210 BCPD 65% Gas (processed) 35% Liquids 42% IRR(1) Cost 7.8MM(2) (5000 lateral) 1.17/Mcfe F&D Costs PV10 6.9MM per well (100% WI)…
  18. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 18
    Marcellus/Utica Gastar Marshall/Wetzel Acreage Target Formations Marcellus Shale Silica-Rich Organic Mudstone Condensate Window Depth: 6500 TVD Thickness: 50 Porosity: 12%15% TOC: 1112 wt. % Overpressured (.65 psi/ft)…
  19. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 19
    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…
  20. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 20
    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…
  21. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 21
    Marcellus/Utica Gastar Marshall/Wetzel Acreage Target Formations Marcellus Shale Silica-Rich Organic Mudstone Condensate Window Depth: 6500 TVD Thickness: 50 Porosity: 12%15% TOC: 1112 wt. % Overpressured (.65 psi/ft)…
  22. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 22
    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…
  23. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 23
    Point Pleasant Activity Map 2014 Gastar Exploration Inc. 24
  24. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 24
    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…
  25. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 25
    Utica/Point Pleasant Type Log High porosity 6-12% Thickness +/- 74 Type log: 5 miles to West of Gastars acreage 2014 Gastar Exploration Inc. 26
  26. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 26
    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. 27
  27. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 27
    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…
  28. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 28
    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…
  29. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 29
    2014 Capital Budget West Virginia 2014 14 gross wells (7 net) 3 gross (1.5 net) Marcellus carry-forward completions 10 gross (5.0 net) Marcellus D&C 1 gross (0.5 net) Utica D&C Net Drilling Locations 106 net Marcellus locations…
  30. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 30
    HUNTON 2014 Gastar Exploration Inc. 31
  31. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 31
    Oklahoma Hunton Limestone Play Current lease position Hunton Activity Map 128,000 net acres; 28% HBP Exposure to over 130 MMBOE of net resource potential, OKLAHOMA primarily oil Primary targets include Lower Hunton and Upper…
  32. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 32
    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. 33
  33. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 33
    Gastar/Husky Mid-Continent Drilling Overview Gastars Wells in Existing AMI ITD Avg. Daily Working First Total Cost Peak 24 Hr. IP Avg. Prod. Rate (BOEPD) Cum Prod Prod Generic Well Name Well Name County Interest Production (MM)…
  34. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 34
    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…
  35. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 35
    Lower Hunton Drilling in Progress Working Generic Well Name Well Name County Interest First Production MID CON 8H JETT 1-12H KINGFISHER 54.9% 2/1/14 MID CON 9H LIEBHART 1-31H KINGFISHER 47.8% FLOWING BACK MID CON 10H JONES 1-21H…
  36. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 36
    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…
  37. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 37
    Oklahoma Hunton Limestone Play Hunton Activity Map OKLAHOMA GST JV wells not producing Farmout activity JV wells on production Gastar Acreage 2014 Gastar Exploration Inc. 38
  38. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 38
    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)…
  39. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 39
    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…
  40. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 40
    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…
  41. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 41
    WEHLU Bois dArc Horizontal Economics 131 MBOE EUR (processed) 123 MBOE EUR (unprocessed) Peak Daily Rate 165 BO & 231 Mcf 12% Gas (processed; 19% unprocessed) 88% Liquids 33% IRR(1) Cost 3.0MM (3500 lateral) 27.88/BOE F&D Cost…
  42. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 42
    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 test…
  43. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 43
    WEHLU Chimney Hill Horizontal Economics 279 MBOE EUR (processed) 250 MBOE EUR (unprocessed) Peak daily rate 340 BO & 1,360 MCF 25% Gas (processed; 40% unprocessed) 75% Liquids 33% IRR(1) Cost 5.4MM (4,200 lateral) 23.66/BOE F&D…
  44. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 44
    Woodford Activity Woodford Activity Map Woodford relatively unexplored on Gastar acreage OKLAHOMA IPs range from 500 1000+ BOE/D Other operator activity de-risking the play Participating with other operators in wells Gastar…
  45. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 45
    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 Other operator activity de-risking the…
  46. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 46
    2014 Capital Budget Oklahoma 2014 36 gross wells (17.1 net) 27 gross (9.5 net) non-operated AMI Hunton wells 7 gross (5.6 net) operated lower Hunton wells 2 gross (2.0 net) WEHLU Hunton wells (1 upper/1 lower) Net Drilling…
  47. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 47
    FINANCIAL OVERVIEW 2014 Gastar Exploration Inc. 48
  48. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 48
    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)…
  49. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 49
    Liquidity & Pro Forma Credit Statistics Liquidity 250.0 80 (192) 200.0 120 0 150.0 100.0 50.0 32 40 0.0 Cash 12/31/13 Borrowing Base Credit Facility Cashflow 2014 Capex Excess Effective 3/26/14 Outstanding Consensus…
  50. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 50
    Strong Collateral Coverage Collateral Coverage ( in millions) 900 805.8 800 688.7 700 213.3 96.2 600 292.6 million 500 Net Debt 592.5 592.5 592.5 400 300 200 325.0 100 0 Senior Secured Notes Proved PV-10(1)…
  51. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 51
    PDP Hedging Program Volume Hedged in Downside and Upside Price Scenarios Downside Hedge Percentages (PDP) Crude(1) NatGas NGL Lights 2014 102% 98% 57% 2015 92% 41% 2016 94% 18% 2017 78% 2018 32% Upside Hedge Percentages (PDP)…
  52. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 52
    PDP Hedging Program Crude Oil and NGL Liquids Hedging Strategy (Barrels per Day) 3,600 2,988 Bpd 92.51 Avg. Floor(2) 89 Bpd 93/73 Put Spread 200 Bpd 98 Collar 2,400 1,744 Bpd 86.91 Avg. Floor 1,455 Bpd 2,199 Bpd 83.97…
  53. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 53
    PDP Hedging Program (contd) Natural Gas Gas Hedging Strategy (Mmbtu per Day) 36,000 31,877 Mmbtu/d 4.03 Avg. Floor 2,500/d 4.59 Call 10,500/d 24,000 4.00/4.53 Collar 10,890 Mmbtu/d 12,000 4.17 Avg. Floor 18,877/d…
  54. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 54
    Summary Diverse base of assets focused in active unconventional plays in the United States 59,900 net acres in the Marcellus Shale in the Appalachian Basin High-Quality 126,000 net acres in the Hunton Limestone play in Oklahoma…
  55. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 55
    APPENDIX 2014 Gastar Exploration Inc. 56
  56. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 56
    Balance Sheet Assets ( in millions) As of 12/31/2013 Cash and cash equivalents 32.4 Other current assets 22.8 Total current assets 55.2 Total property, plant and equipment, net 517.5 Other assets 17.2 Total assets 589.9…
  57. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 57
    Realized Prices and Cash Profit Margin - Historic Realized Prices (without Hedges) Cash Profit Margin per Boe Total Company Gas (Mcf) Oil (Bbl) NGL (Bbl) BOE Total Company Q4'13 FY 2013 FY 2013 Realized Prices 3.02 70.91 31.59 28.58…
  58. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 58
    Realized Prices and Cash Profit Margin Pro Forma(1) Realized Prices (without Hedges) Cash Profit Margin per Boe Total Company Gas (Mcf) Oil (Bbl) NGL (Bbl) BOE Total Company PF Q4'13 Q4'13 Realized Prices 3.32 80.15 35.27 37.33…
  59. APRIL 2014 IPAA OGIS PRESENTATION – Gastar Exploration, Ltd. – slide 59
    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…

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