HOUSTON, Nov. 3, 2016 /PRNewswire/ -- Gastar
Exploration Inc. (NYSE MKT: GST) ("Gastar" or the "Company") today
reported financial and operating results for the three and nine
months ended September 30, 2016.
Net loss attributable to Gastar's common stockholders for the
third quarter of 2016 was $3.8 million, or a loss of $0.03 per share. This compares to a third
quarter 2015 net loss of $191.8 million, or a loss of $2.47 per share. Adjusted net loss
attributable to common stockholders for the third quarter of 2016
was $10.7 million, or a loss of
$0.08 per share, excluding the impact
of a $10.1 million litigation
settlement benefit, a $3.1 million
loss resulting from the mark-to-market of outstanding hedge
positions and other special items, as compared to a third quarter
2015 adjusted net loss of $13.9
million, or a loss of $0.18
per share, excluding the impact of a $182.0
million non-cash, pre-tax ceiling test impairment charge, a
$4.5 million gain resulting from the
mark-to-market of outstanding hedge positions and other special
items. (See the accompanying reconciliation of net loss to net loss
excluding special items at the end of this news release.)
Adjusted earnings before interest, income taxes, depreciation,
depletion and amortization ("adjusted EBITDA") for the third
quarter of 2016 was $7.2 million
compared to adjusted EBITDA of $14.3 million for the third quarter of 2015
and $6.8 million for the second
quarter of 2016. (See the accompanying reconciliation of net
loss to adjusted EBITDA, a non-GAAP number, at the end of this news
release.)
Total Company revenues were $13.0
million in the third quarter of 2016, a 54% decline from
$28.4 million in the third quarter of
2015 and a 7% increase from $12.2
million in the second quarter of 2016. On April 8, 2016, Gastar sold substantially all of
its producing assets and proved reserves and a significant portion
of its undeveloped acreage in the Appalachian Basin (the
"Appalachian Basin Sale"). Excluding the Appalachian Basin in
earlier periods for comparative purposes, revenues from the sale of
oil, condensate, natural gas and natural gas liquids ("NGLs"),
before the effects of commodity derivatives contracts, were
$14.5 million in the third quarter of
2016, a 7% decline from $15.5 million
in the third quarter of 2015 and a 4% decrease from $15.0 million in the second quarter of
2016. The reduction from third quarter of 2015 in oil,
condensate, natural gas and NGLs revenues (excluding the impact of
hedging activities) primarily resulted from a 9% decrease in
weighted average realized equivalent prices offset by a 3% increase
in equivalent production volumes. The decrease from second quarter
2016 revenues was due to a 5% decrease in equivalent production
volumes offset by a 2% increase in equivalent product pricing.
Excluding the impact of the Appalachian Basin production and the
effects of commodity derivatives contracts, revenues from liquids
(oil, condensate and NGLs) represented approximately 83% of total
production revenues in the third quarter of 2016, compared to 86%
in the third quarter of 2015 and 88% in the second quarter of
2016.
We had hedges in place covering approximately 61% of our oil and
condensate production, 57% of our natural gas production and 56% of
our NGLs production for the third quarter of 2016. Commodity
derivative contracts settled during the period resulted in a
$1.6 million increase in revenue for
the third quarter of 2016, compared to a $6.8 million increase in revenue for the third
quarter of 2015 and a $565,000
increase in revenue for the second quarter of 2016.
We continue to maintain an active hedging program covering a
portion of estimated future production for October 2016 to December
2018, which is reported in our periodic filings with the
U.S. Securities and Exchange Commission ("SEC").
Average daily production for the third quarter of 2016 was 5,900
barrels of oil equivalent ("Boe") per day ("Boe/d") as compared to
13,600 Boe/d in the third quarter of 2015 and 6,400 Boe/d in the
second quarter of 2016. Third quarter 2015 and second quarter 2016
includes average daily production of 7,900 Boe/d and 194 Boe/d,
respectively, attributable to our properties in the Appalachian
Basin. Excluding the Appalachian Basin, oil, condensate and NGLs as
a percentage of production volumes were 69% in the third quarter of
2016 compared to 74% in the third quarter of 2015 and 71% for the
second quarter of 2016.
The following table provides a summary of Gastar's total net
production volumes and overall average commodity prices for the
three and nine months ended September 30,
2016 and 2015:
|
|
For the Three
Months Ended
September 30,
|
|
|
For the Nine
Months Ended
September 30,
|
|
|
|
2016(1)
|
|
|
2015
|
|
|
2016(1)
|
|
|
2015
|
|
|
|
(In thousands,
except per unit amounts)
|
|
Net
Production:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and condensate
(MBbl)
|
|
|
242
|
|
|
|
330
|
|
|
|
837
|
|
|
|
1,066
|
|
Natural gas
(MMcf)
|
|
|
1,009
|
|
|
|
3,490
|
|
|
|
5,232
|
|
|
|
10,360
|
|
NGLs (MBbl)
|
|
|
128
|
|
|
|
338
|
|
|
|
616
|
|
|
|
854
|
|
Total net production
(MBoe)
|
|
|
539
|
|
|
|
1,249
|
|
|
|
2,325
|
|
|
|
3,646
|
|
Net Daily
production:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and condensate
(MBbl/d)
|
|
|
2.6
|
|
|
|
3.6
|
|
|
|
3.1
|
|
|
|
3.9
|
|
Natural gas
(MMcf/d)
|
|
|
11.0
|
|
|
|
37.9
|
|
|
|
19.1
|
|
|
|
37.9
|
|
NGLs
(MBbl/d)
|
|
|
1.4
|
|
|
|
3.7
|
|
|
|
2.2
|
|
|
|
3.1
|
|
Total net daily
production (MBoe/d)
|
|
|
5.9
|
|
|
|
13.6
|
|
|
|
8.5
|
|
|
|
13.4
|
|
Average sales price
per unit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and condensate per
Bbl, including impact of hedging activities
(2)
|
|
$
|
47.19
|
|
|
$
|
44.84
|
|
|
$
|
43.85
|
|
|
$
|
48.30
|
|
Oil and condensate per
Bbl, excluding impact of hedging activities
|
|
$
|
42.55
|
|
|
$
|
38.89
|
|
|
$
|
36.41
|
|
|
$
|
42.94
|
|
Natural gas per Mcf,
including impact of hedging activities (2)
|
|
$
|
2.76
|
|
|
$
|
1.57
|
|
|
$
|
1.86
|
|
|
$
|
1.93
|
|
Natural gas per Mcf,
excluding impact of hedging activities
|
|
$
|
2.48
|
|
|
$
|
0.99
|
|
|
$
|
1.60
|
|
|
$
|
1.36
|
|
NGLs per Bbl,
including impact of hedging activities (2)
|
|
$
|
15.01
|
|
|
$
|
10.64
|
|
|
$
|
10.55
|
|
|
$
|
14.32
|
|
NGLs per Bbl,
excluding impact of hedging activities
|
|
$
|
13.22
|
|
|
$
|
2.35
|
|
|
$
|
8.28
|
|
|
$
|
5.94
|
|
Average sales price
per Boe, including impact of hedging activities
(2)
|
|
$
|
29.96
|
|
|
$
|
19.11
|
|
|
$
|
22.77
|
|
|
$
|
22.95
|
|
Average sales price
per Boe, excluding impact of hedging activities
|
|
$
|
26.92
|
|
|
$
|
13.68
|
|
|
$
|
18.91
|
|
|
$
|
17.81
|
|
|
|
(1)
|
The three and nine
months ended September 30, 2016 reflect the impact of the
Appalachian Basin Sale completed on April 8, 2016.
|
(2)
|
The impact of hedging
includes only the gain (loss) on commodity derivative contracts
settled during the periods presented.
|
Lease operating expenses ("LOE") were $5.2 million for the third quarter of 2016,
compared to $5.2 million in the third
quarter of 2015 and $4.6 million in
the second quarter of 2016. Excluding the Appalachian Basin,
LOE increased $716,000, or 17%, to
$5.0 million for the third quarter of
2016 from the third quarter of 2015 due to a $1.2 million increase in controllable LOE
partially associated with higher water disposal costs related to
flush production of new wells offset by a $499,000 decrease in workover expense. LOE in the
third quarter increased $533,000 or
12% from the second quarter of 2016 primarily due to the second
quarter 2016 benefitting from $588,000 of insurance proceeds benefit. LOE
per Boe of production as reported was $9.59 in the third quarter of 2016 versus
$4.17 in the third quarter of 2015
and $7.86 in the second quarter of
2016, including workover costs. Excluding the Appalachian
Basin and workover expense, LOE per Boe for the third quarter of
2016 was $8.30 compared to
$6.23 for the third quarter of 2015
and $8.36 per Boe for the second
quarter of 2016.
Depreciation, depletion and amortization ("DD&A") expense
was $5.2 million in the third quarter
of 2016, down 66% from $15.4 million
in the third quarter of 2015 and 7% from $5.6 million in the second quarter of 2016.
The DD&A rate for the third quarter of 2016 was $9.70 per Boe compared to $12.32 per Boe for the third quarter of 2015 and
$9.59 per Boe in the second quarter
of 2016. The decrease in DD&A expense for third quarter 2016
from the comparable period in 2015 was the result of a 57% decrease
in production resulting from the completion of the Appalachian
Basin Sale coupled with a lower DD&A rate due to impairment
charges incurred in 2015 and the first quarter of 2016 and the
credit to the full cost pool for the net proceeds from the
Appalachian Basin Sale.
General and administrative ("G&A") expense was $3.9 million in the third quarter of 2016
compared to $4.7 million in the third
quarter of 2015 and $6.3 million in
the second quarter of 2016. G&A expense for the third quarter
of 2016 included $810,000 of non-cash
stock-based compensation expense, versus $1.2 million in the third quarter of 2015 and
$702,000 in the second quarter of
2016. Excluding stock-based compensation expense,
non-recurring acquisition and divestment costs and allowance for
bad debt, adjusted cash G&A expense for the third and second
quarter of 2016 was $3.0 million and
$3.4 million, respectively.
Operations Review and Update
Mid-Continent
The following table provides a summary of Gastar's Mid-Continent
production volumes and average commodity prices for the three and
nine months ended September 30, 2016
and 2015:
|
|
For the Three
Months Ended September 30,
|
|
|
For the Nine
Months Ended September 30,
|
|
Mid-Continent
|
|
2016(1)
|
|
|
2015
|
|
|
2016(1)
|
|
|
2015
|
|
Net
Production:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and condensate
(MBbl)
|
|
|
242
|
|
|
|
274
|
|
|
|
790
|
|
|
|
875
|
|
Natural gas
(MMcf)
|
|
|
997
|
|
|
|
805
|
|
|
|
2,917
|
|
|
|
2,491
|
|
NGLs (MBbl)
|
|
|
128
|
|
|
|
111
|
|
|
|
380
|
|
|
|
320
|
|
Total net production
(MBoe)
|
|
|
537
|
|
|
|
520
|
|
|
|
1,656
|
|
|
|
1,611
|
|
Net Daily
Production:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and condensate
(MBbl/d)
|
|
|
2.6
|
|
|
|
3.0
|
|
|
|
2.9
|
|
|
|
3.2
|
|
Natural gas
(MMcf/d)
|
|
|
10.8
|
|
|
|
8.7
|
|
|
|
10.6
|
|
|
|
9.1
|
|
NGLs
(MBbl/d)
|
|
|
1.4
|
|
|
|
1.2
|
|
|
|
1.4
|
|
|
|
1.2
|
|
Total net daily
production (MBoe/d)
|
|
|
5.8
|
|
|
|
5.6
|
|
|
|
6.0
|
|
|
|
5.9
|
|
Average sales price
per unit(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and condensate
(per Bbl)
|
|
$
|
42.56
|
|
|
$
|
44.45
|
|
|
$
|
37.87
|
|
|
$
|
48.54
|
|
Natural gas (per
Mcf)
|
|
$
|
2.48
|
|
|
$
|
2.67
|
|
|
$
|
2.06
|
|
|
$
|
2.76
|
|
NGLs (per
Bbl)
|
|
$
|
13.22
|
|
|
$
|
10.28
|
|
|
$
|
12.79
|
|
|
$
|
13.16
|
|
Average sales price
per Boe(1)
|
|
$
|
26.98
|
|
|
$
|
29.80
|
|
|
$
|
24.63
|
|
|
$
|
33.27
|
|
|
|
(1)
|
Excludes the
impact of hedging activities.
|
Third quarter 2016 net production from the Mid-Continent area
increased 3% compared to the third quarter 2015 and was down 5%
when compared to the second quarter of 2016. Third quarter 2016
Mid-Continent production consisted of approximately 45% oil, 31%
natural gas and 24% NGLs.
On October 20, 2016, Gastar
announced it had executed a definitive agreement with an investor
(the "Development Agreement") to jointly develop up to 60 Gastar
operated drilling program wells in 20 well tranches (the "Drilling
Program") in the STACK Play in Kingfisher
County, Oklahoma. The Drilling Program targets the
Meramec and Osage formations
within the Mississippi Lime on a contract area within three
townships covering approximately 18,000 undeveloped net mineral
acres under leases held by Gastar. The Company will be the operator
of all wells jointly developed.
Gastar also announced on October 20,
2016 that it had entered into a purchase and sale agreement
to divest certain non-core leasehold interests primarily in
northeast Canadian County,
Oklahoma (the "South STACK Acreage") for approximately
$71.0 million (of which up to
$10.0 million is contingent upon the
satisfaction of certain conditions), subject to certain
adjustments. The transaction is expected to close on or
before November 18, 2016, with a
property sale effective date of August
1, 2016. Assuming completion of this divestment, pro
forma Mid-Continent area net acreage at September 30, 2016 would be approximately 81,400
net surface acres, including Development Agreement acreage, with
approximately 1,000 net STACK locations identified.
J. Russell Porter, Gastar's
President and CEO, commented, "As commodity prices have improved
throughout the year, we have focused on enhancing liquidity and
positioning the Company to resume a more active drilling
program. Through asset sales of non-core acreage, which we
expect to close this month, and our successful equity offering last
May, we will have raised in excess of $100
million this year in net available capital to help fund the
delineation and development of our core acreage in the heart of the
STACK Play. Our objectives are to add substantial value to
our core acreage by de-risking the various STACK formations across
our acreage through drilling, which should grow production and
reserves as well as reduce future lease renewal costs by increasing
the percentage of our acreage that is held by production
("HBP")."
"In order to meet these objectives, we have entered into a
Development Agreement whereby the investor earns only an interest
in the well bores drilled, with Gastar retaining both the right to
offset formation locations and to book offsetting proved
undeveloped locations at its full original working interest. The
drilling of up to 60 wells will substantially increase our HBP
acreage across the various STACK formations. Specifically, if
a Drilling Program well location is prospective for all five STACK
zones, we currently project it could hold as many as five
additional Meramec, four Osage,
four Woodford, four Oswego and two Hunton well locations."
"We have already drilled the first five wells of the initial 20
well tranche and by year end we could have up to seven Drilling
Program wells drilled and completed. We also plan to increase
our operated drilling activity outside the Drilling Program area to
test the STACK formations. We have one Osage test well and one Oswego test well in
early stages of flow back, in addition to our two earlier Meramec
formation test wells drilled," said Porter.
We currently have two rigs operating on our Mid-Continent
acreage under the Development Agreement. We have now drilled
and completed a third operated Meramec well, the Ingle 29-1H, which
began initial flow back in October 2016. In addition to our
three completed Meramec wells, we have two Meramec wells awaiting
completion and two Meramec wells currently being drilled. In
September 2016, we brought on
production our first operated Osage formation test well, the McGee 29 1-H,
and our first Oswego formation test well, the Tomahawk 7-1H.
It is too early in the flow back process to determine ultimate
production performance for these wells.
As of November 3, 2016, we had
production and drilling operations at various stages on the
following operated STACK wells on our acreage:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Production
Averages(3)
|
|
|
|
|
|
|
|
|
|
Well
Name
|
|
Current
Working
Interest(1)
|
|
|
Approx.
Lateral Length
(in
feet)
|
|
|
Peak
Production
Rates(2) (BOE/d)
|
|
|
BOE/d
|
|
|
%
Oil
|
|
|
Date of
First
Production or Status
|
|
Approx. Gross
Costs to Drill &
Complete ($ millions)
|
|
|
Included in
Development
Agreement
|
Meramec
Completions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Holiday Road
2-1H(5)
|
|
|
78.3%
|
|
|
|
4,300
|
|
|
654
|
|
|
508
|
|
|
75%
|
|
|
4/11/2016
|
|
$
|
4.1
|
|
|
No
|
Ingle
29-1H(4)
|
|
|
82.5%
|
|
|
|
4,800
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
10/22/2016
|
|
$
|
4.5
|
|
|
Yes
|
Geis
31-1H(4)
|
|
|
53.7%
|
|
|
|
4,600
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
WOC
|
|
$
|
4.5
|
|
|
Yes
|
Katy
21-1H(4)
|
|
|
67.9%
|
|
|
|
4,900
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
WOC
|
|
$
|
4.5
|
|
|
Yes
|
Lily
28-1H(4)(5)
|
|
|
61.3%
|
|
|
|
4,700
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
Drilling
|
|
$
|
4.5
|
|
|
Yes
|
Mott
19-1H(4)
|
|
|
44.3%
|
|
|
|
4,200
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
Drilling
|
|
$
|
4.5
|
|
|
Yes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Osage
Completions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
McGee
29-1H(5)
|
|
|
81.0%
|
|
|
|
4,200
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
9/25/2016
|
|
$
|
4.4
|
|
|
No
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oswego
Completions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tomahawk
7-1H
|
|
|
79.3%
|
|
|
|
4,200
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
9/24/2016
|
|
$
|
2.7
|
|
|
No
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Current estimated
working interest. Working interest subject to change based on
final force pooling orders or Development Agreement
activity.
|
(2)
|
Represents highest
daily gross Boe rate. N/A indicates that the well has not yet
reached its peak production rate.
|
(3)
|
Represents average
gross production for the most current five days through October 26,
2016.
|
(4)
|
Working interest
reflected is our total current working interest before Development
Agreement impact.
|
(5)
|
Excludes one-time
fishing or coring costs.
|
To further assess the potential of other Mid-Continent STACK
Play formations, to date in 2016 we have participated in the
completion of four gross (0.5 net) non-operated Meramec Shale
wells, one gross (0.2 net) non-operated well targeting the Osage
Shale, four gross (0.4 net) non-operated wells targeting the Oswego
Limestone formation and one gross (0.04 net) non-operated
Woodford Shale
well.
In the Mid-Continent, Gastar's net capital expenditures in the
third quarter of 2016 totaled $24.0
million, comprised of $10.6
million for drilling, completions and infrastructure costs,
$12.1 million for unproved acreage
extensions and renewals and $1.3
million for other capitalized costs. Year-to-date 2016
net capital expenditures in the Mid-Continent totaled $47.4 million, which was comprised of
$21.6 million for drilling,
completions and infrastructure costs, $22.5
million for unproved acreage extensions and renewals and
$3.3 million for other capitalized
costs.
For the remainder of 2016, Gastar's capital expenditure budget
is $13.4 million, comprised of
$2.0 million for drilling, completion
and infrastructure costs, $9.9
million for acreage extensions and renewal and $1.5 million for other capitalized costs,
resulting in a total 2016 capital expenditures budget of
$60.8 million.
Appalachian Basin
The following table provides a summary of Gastar's Appalachian
Basin net production volumes and average commodity prices for the
three and nine months ended September 30,
2016 and 2015:
|
|
For the Three
Months Ended September 30,
|
|
|
For the Nine
Months Ended September 30,
|
|
|
|
2016(1)
|
|
|
2015
|
|
|
2016(1)
|
|
|
2015
|
|
Appalachian
Basin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Production:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and condensate
(MBbl)
|
|
|
—
|
|
|
|
56
|
|
|
|
47
|
|
|
|
191
|
|
Natural gas
(MMcf)
|
|
|
12
|
|
|
|
2,685
|
|
|
|
2,315
|
|
|
|
7,869
|
|
NGLs (MBbl)
|
|
|
—
|
|
|
|
226
|
|
|
|
236
|
|
|
|
533
|
|
Total net production
(MBoe)
|
|
|
2
|
|
|
|
730
|
|
|
|
669
|
|
|
|
2,035
|
|
Net Daily
Production:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and condensate
(MBbl/d)
|
|
|
—
|
|
|
|
0.6
|
|
|
|
0.2
|
|
|
|
0.7
|
|
Natural gas
(MMcf/d)
|
|
|
0.1
|
|
|
|
29.2
|
|
|
|
8.4
|
|
|
|
28.8
|
|
NGLs
(MBbl/d)
|
|
|
—
|
|
|
|
2.5
|
|
|
|
0.9
|
|
|
|
2.0
|
|
Total net daily
production (MBoe/d)
|
|
|
—
|
|
|
|
7.9
|
|
|
|
2.4
|
|
|
|
7.5
|
|
Average sales price
per unit (2):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and condensate
(per Bbl)
|
|
$
|
—
|
|
|
$
|
11.64
|
|
|
$
|
11.73
|
|
|
$
|
17.24
|
|
Natural gas (per
Mcf)
|
|
$
|
2.10
|
|
|
$
|
0.49
|
|
|
$
|
1.03
|
|
|
$
|
0.92
|
|
NGLs (per
Bbl)
|
|
$
|
—
|
|
|
$
|
(1.56)
|
|
|
$
|
1.00
|
|
|
$
|
1.60
|
|
Average sales price
per Boe (2)
|
|
$
|
13.00
|
|
|
$
|
2.20
|
|
|
$
|
4.74
|
|
|
$
|
5.58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The three and nine
months ended September 30, 2016 reflect the impact of the
Appalachian Basin Sale completed on April 8, 2016.
|
(2)
|
Excludes the impact
of hedging activities.
|
Liquidity
At September 30, 2016, Gastar had
approximately $46.7 million in
available cash and cash equivalents, $99.6
million in borrowings outstanding and $370,000 in letters of credit issued under its
revolving credit facility.
We were in compliance with all financial covenants under the
revolving credit facility at September 30,
2016. As previously announced, Gastar entered into an
amendment to its revolving credit facility effective October 14, 2016. Under the amendment, the
Company's borrowing base was reaffirmed at $100.0 million, which is the current amount
outstanding under the facility. The revolving credit
facility's debt balance is to be reduced by 20% of any future net
sales proceeds from the sale of the Company's South STACK
Acreage. The next borrowing base redetermination is scheduled
for November 2016.
Upon closing of the sale of the South STACK Acreage, we expect
our liquidity to support our cash requirements for the remainder of
2016 and through 2017, subject to our ability to extend maturities
or refinance our long-term debt by the fourth quarter of 2017, as
described below. In light of our approaching maturities of
our revolving credit facility in November
2017 and our senior secured notes in May 2018, we are continuing to analyze and engage
in discussions regarding various alternatives to either extend our
debt maturities, reduce the level of our long-term debt or
otherwise reduce our future debt service obligations. On a
pro forma basis, as of September 30,
2016, and after payment of 20% of the net sales proceeds
from the sale of the South STACK Acreage to reduce revolving credit
facility debt, Gastar would have a cash position of approximately
$102.4 million.
Guidance for Fourth Quarter and Full-Year 2016
Our guidance for the fourth quarter of and full-year 2016 is
provided in the table below and represents the Company's best
estimate of the range of likely future results. Guidance could be
affected by the factors described below in "Forward Looking
Statements."
Production
|
|
Fourth
Quarter
2016
|
|
Full-Year
2016
|
Net average daily
(MBoe/d)
|
|
5.3 – 5.7
|
|
7.5 – 7.9
|
Liquids
percentage
|
|
70% – 74%
|
|
63% – 67%
|
|
|
|
|
|
Cash Operating
Expenses
|
|
|
|
|
Production taxes (%
of production revenues)
|
|
2.4% –
2.6%
|
|
3.9% –
4.1%
|
Lease operating
($/Boe)
|
|
$8.50 –
$9.25
|
|
$7.10 –
$7.50
|
Transportation,
treating & gathering ($/Boe)
|
|
$0.60 –
$0.65
|
|
$0.55 –
$0.60
|
Cash general &
administrative ($/Boe)
|
|
$5.50 –
$6.00
|
|
$4.30 –
$4.70
|
Conference Call
Gastar has scheduled a conference call for 11:00 a.m.
Eastern Time (10:00 a.m. Central
Time) on Friday, November 4,
2016. 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 November 11 by dialing 1-201-612-7415 and using
the conference ID:13648397.
|
|
|
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 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.
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 what is believed to be the core of the STACK Play, an
area of central Oklahoma which is
home to multiple oil and natural gas-rich reservoirs including the
Meramec, Oswego, Osage, Woodford
and Hunton formations. For more information, visit Gastar's website
at www.gastar.com.
Forward Looking Statements
This news release includes "forward looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Forward looking statements give our current
expectations, opinion, belief or forecasts of future events and
performance. A statement identified by the use of forward
looking words including "may," "expects," "projects,"
"anticipates," "plans," "believes," "estimate," "will," "should,"
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 natural gas and oil
drilling and production activities, including risks with respect to
continued low or further declining prices for natural gas and oil
that could result in further downward revisions to the value of
proved reserves or otherwise cause Gastar to further delay or
suspend planned drilling and completion operations or reduce
production levels which would adversely impact cash flow; risks
relating to the availability of capital to fund drilling operations
that can be adversely affected by adverse drilling results,
production declines and continued low or further declining prices
for natural gas and oil; risks regarding Gastar's ability to meet
financial covenants under its indenture or credit agreements or the
ability to obtain amendments or waivers to effect such compliance;
risks of fire, explosion, blowouts, pipe failure, casing collapse,
unusual or unexpected formation pressures, environmental hazards,
and other operating and production risks, 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; delays in
receipt of drilling permits; risks relating to unexpected adverse
developments in the status of properties; borrowing base
redeterminations by our banks; risks relating to the absence or
delay in receipt of government approvals or third-party consents;
risks relating to our ability to integrate acquired assets with
ours and to realize the anticipated benefits from such
acquisitions; and other risks described in Gastar's Annual Report
on Form 10-K, Quarterly Reports on Form 10-Q and other filings with
the SEC, available at the SEC's website at www.sec.gov. Our
actual sales production rates can vary considerably from tested
initial production rates depending upon completion and production
techniques and our primary areas of operations are subject to
natural steep decline rates. By issuing forward looking statements
based on current expectations, opinions, views or beliefs, Gastar
has no obligation and, except as required by law, is not
undertaking any obligation, to update or revise these statements or
provide any other information relating to such statements.
Targeted expectations and guidance for the fourth quarter and
full year of 2016 are based upon the current 2016 planned capital
expenditures budget, which may be subject to revision and
reevaluation dependent upon future developments, including drilling
results, our liquidity position, a further decline in commodity
prices, availability of crews, supplies and production capacity,
weather delays and significant changes in drilling costs.
Unless otherwise stated herein, equivalent volumes of production
are based upon an energy equivalent ratio of six Mcf of natural gas
to each barrel of liquids (oil, condensate and NGLs), which ratio
is not reflective of relative value. Our NGLs are sold as
part of our wet gas subject to an incremental NGLs pricing formula
based upon a percentage of NGLs extracted from our wet gas
production. Our reported production volumes reflect
incremental post-processing NGLs volumes and residual gas volumes
with which we are credited under our sales contracts.
Contacts:
Gastar Exploration Inc.
Michael A. Gerlich, Chief Financial
Officer
713-739-1800 / mgerlich@gastar.com
Investor Relations Counsel:
Lisa Elliott, Dennard▪Lascar
Associates
713-529-6600 / lelliott@dennardlascar.com
- Financial Tables Follow –
GASTAR EXPLORATION
INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
For the Three
Months
Ended September 30,
|
|
|
For the Nine
Months
Ended September 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
|
(in thousands,
except share and per share data)
|
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and
condensate
|
|
$
|
10,306
|
|
|
$
|
12,835
|
|
|
$
|
30,464
|
|
|
$
|
45,772
|
|
Natural gas
|
|
|
2,500
|
|
|
|
3,459
|
|
|
|
8,394
|
|
|
|
14,109
|
|
NGLs
|
|
|
1,695
|
|
|
|
791
|
|
|
|
5,100
|
|
|
|
5,071
|
|
Total oil, condensate,
natural gas and NGLs revenues
|
|
|
14,501
|
|
|
|
17,085
|
|
|
|
43,958
|
|
|
|
64,952
|
|
(Loss) gain on
commodity derivatives contracts
|
|
|
(1,498)
|
|
|
|
11,301
|
|
|
|
(3,991)
|
|
|
|
19,734
|
|
Total
revenues
|
|
|
13,003
|
|
|
|
28,386
|
|
|
|
39,967
|
|
|
|
84,686
|
|
EXPENSES
(BENEFIT):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production
taxes
|
|
|
400
|
|
|
|
655
|
|
|
|
1,469
|
|
|
|
2,317
|
|
Lease operating
expenses
|
|
|
5,166
|
|
|
|
5,214
|
|
|
|
15,829
|
|
|
|
18,475
|
|
Transportation,
treating and gathering
|
|
|
338
|
|
|
|
615
|
|
|
|
1,346
|
|
|
|
1,654
|
|
Depreciation,
depletion and amortization
|
|
|
5,223
|
|
|
|
15,394
|
|
|
|
24,543
|
|
|
|
45,945
|
|
Impairment of oil and
natural gas properties
|
|
|
—
|
|
|
|
181,966
|
|
|
|
48,497
|
|
|
|
282,118
|
|
Accretion of asset
retirement obligation
|
|
|
92
|
|
|
|
131
|
|
|
|
286
|
|
|
|
387
|
|
General and
administrative expense
|
|
|
3,925
|
|
|
|
4,683
|
|
|
|
15,872
|
|
|
|
13,352
|
|
Litigation settlement
benefit
|
|
|
(10,100)
|
|
|
|
—
|
|
|
|
(10,100)
|
|
|
|
—
|
|
Total
expenses
|
|
|
5,044
|
|
|
|
208,658
|
|
|
|
97,742
|
|
|
|
364,248
|
|
INCOME (LOSS) FROM
OPERATIONS
|
|
|
7,959
|
|
|
|
(180,272)
|
|
|
|
(57,775)
|
|
|
|
(279,562)
|
|
OTHER INCOME
(EXPENSE):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(8,178)
|
|
|
|
(7,933)
|
|
|
|
(26,739)
|
|
|
|
(22,430)
|
|
Investment income and
other (expense)
|
|
|
41
|
|
|
|
4
|
|
|
|
(2)
|
|
|
|
10
|
|
LOSS BEFORE PROVISION
FOR INCOME TAXES
|
|
|
(178)
|
|
|
|
(188,201)
|
|
|
|
(84,516)
|
|
|
|
(301,982)
|
|
Provision for income
taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
NET LOSS
|
|
|
(178)
|
|
|
|
(188,201)
|
|
|
|
(84,516)
|
|
|
|
(301,982)
|
|
Dividends on
preferred stock
|
|
|
(3,618)
|
|
|
|
(3,618)
|
|
|
|
(10,855)
|
|
|
|
(10,855)
|
|
NET LOSS ATTRIBUTABLE
TO COMMON
STOCKHOLDERS
|
|
$
|
(3,796)
|
|
|
$
|
(191,819)
|
|
|
$
|
(95,371)
|
|
|
$
|
(312,837)
|
|
NET LOSS PER SHARE OF
COMMON STOCK ATTRIBUTABLE TO COMMON STOCKHOLDERS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.03)
|
|
|
$
|
(2.47)
|
|
|
$
|
(0.92)
|
|
|
$
|
(4.04)
|
|
Diluted
|
|
$
|
(0.03)
|
|
|
$
|
(2.47)
|
|
|
$
|
(0.92)
|
|
|
$
|
(4.04)
|
|
WEIGHTED AVERAGE
SHARES OF COMMON STOCK
OUTSTANDING:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
129,301,817
|
|
|
|
77,628,120
|
|
|
|
104,125,317
|
|
|
|
77,453,251
|
|
Diluted
|
|
|
129,301,817
|
|
|
|
77,628,120
|
|
|
|
104,125,317
|
|
|
|
77,453,251
|
|
GASTAR EXPLORATION
INC.
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
September
30,
|
|
|
December
31,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
(in thousands,
except share data)
|
|
ASSETS
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
46,739
|
|
|
$
|
50,074
|
|
Accounts receivable,
net of allowance for doubtful accounts of $1,953 and $0,
respectively
|
|
|
8,476
|
|
|
|
14,302
|
|
Commodity derivative
contracts
|
|
|
5,240
|
|
|
|
15,534
|
|
Prepaid
expenses
|
|
|
4,694
|
|
|
|
5,056
|
|
Total current
assets
|
|
|
65,149
|
|
|
|
84,966
|
|
PROPERTY, PLANT AND
EQUIPMENT:
|
|
|
|
|
|
|
|
|
Oil and natural gas
properties, full cost method of accounting:
|
|
|
|
|
|
|
|
|
Unproved properties,
excluded from amortization
|
|
|
109,267
|
|
|
|
92,609
|
|
Proved
properties
|
|
|
1,242,667
|
|
|
|
1,286,373
|
|
Total oil and natural
gas properties
|
|
|
1,351,934
|
|
|
|
1,378,982
|
|
Furniture and
equipment
|
|
|
2,615
|
|
|
|
3,068
|
|
Total property, plant
and equipment
|
|
|
1,354,549
|
|
|
|
1,382,050
|
|
Accumulated
depreciation, depletion and amortization
|
|
|
(1,125,881)
|
|
|
|
(1,053,116)
|
|
Total property, plant
and equipment, net
|
|
|
228,668
|
|
|
|
328,934
|
|
OTHER
ASSETS:
|
|
|
|
|
|
|
|
|
Commodity derivative
contracts
|
|
|
3,915
|
|
|
|
9,335
|
|
Deferred charges,
net
|
|
|
616
|
|
|
|
985
|
|
Advances to operators
and other assets
|
|
|
498
|
|
|
|
331
|
|
Other
|
|
|
1,121
|
|
|
|
4,944
|
|
Total other
assets
|
|
|
6,150
|
|
|
|
15,595
|
|
TOTAL
ASSETS
|
|
$
|
299,967
|
|
|
$
|
429,495
|
|
LIABILITIES AND
STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
4,585
|
|
|
$
|
2,029
|
|
Revenue
payable
|
|
|
5,667
|
|
|
|
5,985
|
|
Accrued
interest
|
|
|
10,517
|
|
|
|
3,730
|
|
Accrued drilling and
operating costs
|
|
|
5,250
|
|
|
|
2,010
|
|
Advances from
non-operators
|
|
|
110
|
|
|
|
167
|
|
Commodity derivative
contracts
|
|
|
102
|
|
|
|
—
|
|
Commodity derivative
premium payable
|
|
|
1,750
|
|
|
|
3,194
|
|
Asset retirement
obligation
|
|
|
89
|
|
|
|
89
|
|
Other accrued
liabilities
|
|
|
7,296
|
|
|
|
6,764
|
|
Total current
liabilities
|
|
|
35,366
|
|
|
|
23,968
|
|
LONG-TERM
LIABILITIES:
|
|
|
|
|
|
|
|
|
Long-term
debt
|
|
|
418,620
|
|
|
|
516,476
|
|
Commodity derivative
contracts
|
|
|
—
|
|
|
|
451
|
|
Commodity derivative
premium payable
|
|
|
1,427
|
|
|
|
2,788
|
|
Asset retirement
obligation
|
|
|
5,626
|
|
|
|
5,997
|
|
Total long-term
liabilities
|
|
|
425,673
|
|
|
|
525,712
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
STOCKHOLDERS'
DEFICIT:
|
|
|
|
|
|
|
|
|
Preferred stock,
40,000,000 shares authorized
|
|
|
|
|
|
|
|
|
Series A Preferred
stock, par value $0.01 per share; 10,000,000 shares
designated; 4,045,000 shares
issued and outstanding at September 30, 2016 and December 31, 2015,
respectively, with liquidation preference of $25.00 per
share
|
|
|
41
|
|
|
|
41
|
|
Series B Preferred
stock, par value $0.01 per share; 10,000,000 shares
designated; 2,140,000 shares
issued and outstanding at September 30, 2016 and December 31, 2015,
respectively, with liquidation preference of $25.00 per
share
|
|
|
21
|
|
|
|
21
|
|
Common stock, par
value $0.001 per share; 550,000,000 and 275,000,000 shares
authorized at September 30, 2016 and December 31, 2015,
respectively; 131,725,215 and 80,024,218 shares issued and
outstanding at September 30, 2016 and December 31, 2015,
respectively
|
|
|
132
|
|
|
|
80
|
|
Additional paid-in
capital
|
|
|
626,379
|
|
|
|
571,947
|
|
Accumulated
deficit
|
|
|
(787,645)
|
|
|
|
(692,274)
|
|
Total stockholders'
deficit
|
|
|
(161,072)
|
|
|
|
(120,185)
|
|
TOTAL LIABILITIES AND
STOCKHOLDERS' DEFICIT
|
|
$
|
299,967
|
|
|
$
|
429,495
|
|
GASTAR EXPLORATION
INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
For the Nine
Months Ended
September 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
(in
thousands)
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(84,516)
|
|
|
$
|
(301,982)
|
|
Adjustments to
reconcile net loss to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation,
depletion and amortization
|
|
|
24,543
|
|
|
|
45,945
|
|
Impairment of oil and
natural gas properties
|
|
|
48,497
|
|
|
|
282,118
|
|
Stock-based
compensation
|
|
|
3,145
|
|
|
|
3,927
|
|
Mark to market of
commodity derivatives contracts:
|
|
|
|
|
|
|
|
|
Total loss (gain) on
commodity derivatives contracts
|
|
|
3,991
|
|
|
|
(19,734)
|
|
Cash settlements of
matured commodity derivatives contracts, net
|
|
|
10,690
|
|
|
|
17,913
|
|
Cash premiums paid for
commodity derivatives contracts
|
|
|
(565)
|
|
|
|
(45)
|
|
Amortization of
deferred financing costs
|
|
|
3,812
|
|
|
|
2,652
|
|
Accretion of asset
retirement obligation
|
|
|
286
|
|
|
|
387
|
|
Settlement of asset
retirement obligation
|
|
|
(87)
|
|
|
|
(80)
|
|
Loss on sale of furniture and equipment
|
|
|
97
|
|
|
|
-
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
3,861
|
|
|
|
22,552
|
|
Prepaid
expenses
|
|
|
362
|
|
|
|
1,472
|
|
Accounts payable and
accrued liabilities
|
|
|
7,656
|
|
|
|
(289)
|
|
Net cash provided by
operating activities
|
|
|
21,772
|
|
|
|
54,836
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Development and
purchase of oil and natural gas properties
|
|
|
(43,175)
|
|
|
|
(121,074)
|
|
Reimbursements from
(advances to) operators
|
|
|
211
|
|
|
|
(2,325)
|
|
Acquisition of oil and
natural gas properties - refund
|
|
|
1,149
|
|
|
|
—
|
|
Proceeds from sale of
oil and natural gas properties
|
|
|
77,499
|
|
|
|
47,866
|
|
Payments to
non-operators
|
|
|
(57)
|
|
|
|
(1,820)
|
|
Proceeds from sale
(purchase) of furniture and equipment
|
|
|
80
|
|
|
|
(51)
|
|
Net cash provided by
(used in) investing activities
|
|
|
35,707
|
|
|
|
(77,404)
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Proceeds from
revolving credit facility
|
|
|
-
|
|
|
|
75,000
|
|
Repayment of revolving
credit facility
|
|
|
(100,370)
|
|
|
|
(40,000)
|
|
Proceeds from issuance
of common stock, net of issuance costs
|
|
|
44,815
|
|
|
|
—
|
|
Dividends on preferred
stock
|
|
|
(3,618)
|
|
|
|
(10,855)
|
|
Deferred financing
charges
|
|
|
(930)
|
|
|
|
(804)
|
|
Tax withholding
related to restricted stock and performance based unit award
vestings
|
|
|
(711)
|
|
|
|
(1,430)
|
|
Net cash (used in)
provided by financing activities
|
|
|
(60,814)
|
|
|
|
21,911
|
|
NET DECREASE IN CASH
AND CASH EQUIVALENTS
|
|
|
(3,335)
|
|
|
|
(657)
|
|
CASH AND CASH
EQUIVALENTS, BEGINNING OF PERIOD
|
|
|
50,074
|
|
|
|
11,008
|
|
CASH AND CASH
EQUIVALENTS, END OF PERIOD
|
|
$
|
46,739
|
|
|
$
|
10,351
|
|
NON-GAAP FINANCIAL INFORMATION AND RECONCILIATION
We use both GAAP and certain non-GAAP financial measures to
assess performance. Generally, a non-GAAP financial measure
is a numerical measure of a company's performance, financial
position or cash flows that either excludes or includes amounts
that are not normally excluded or included in the most directly
comparable measure calculated and presented in accordance with
GAAP. Our management believes that these non-GAAP measures
provide useful supplemental information to investors in order that
they may evaluate our financial performance using the same measures
as management. These non-GAAP financial measures should not
be considered as a substitute for, or superior to, measures of
financial performance prepared in accordance with GAAP. In
evaluating these measures, investors should consider that the
methodology applied in calculating such measures may differ among
companies and analysts. A reconciliation is provided below
outlining the differences between these non-GAAP measures and their
most directly comparable financial measure calculated in accordance
with GAAP.
Reconciliation of
Net Loss to Net Loss Excluding Special Items:
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended
September 30,
|
|
|
For the Nine
Months Ended
September 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
|
(in thousands,
except share and per share data)
|
|
NET LOSS ATTRIBUTABLE
TO COMMON STOCKHOLDERS
|
|
$
|
(3,796)
|
|
|
$
|
(191,819)
|
|
|
$
|
(95,371)
|
|
|
$
|
(312,837)
|
|
SPECIAL
ITEMS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Losses (gains) related
to the change in mark to market value for outstanding commodity
derivatives contracts
|
|
|
3,134
|
|
|
|
(4,511)
|
|
|
|
12,974
|
|
|
|
(986)
|
|
Impairment of oil and
natural gas properties
|
|
|
—
|
|
|
|
181,966
|
|
|
|
48,497
|
|
|
|
282,118
|
|
Non-recurring general
and administrative costs related to acquisition of
assets
|
|
|
71
|
|
|
|
481
|
|
|
|
470
|
|
|
|
481
|
|
Non-recurring
severance costs related to property divestments
|
|
|
—
|
|
|
|
—
|
|
|
|
677
|
|
|
|
—
|
|
Allowance for bad
debt
|
|
|
—
|
|
|
|
—
|
|
|
|
1,953
|
|
|
|
—
|
|
Litigation settlement
benefit
|
|
|
(10,100)
|
|
|
|
—
|
|
|
|
(10,100)
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED NET LOSS
ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
|
$
|
(10,691)
|
|
|
$
|
(13,883)
|
|
|
$
|
(40,900)
|
|
|
$
|
(31,224)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED NET LOSS PER
SHARE OF COMMON STOCK ATTRIBUTABLE TO COMMON
STOCKHOLDERS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.08)
|
|
|
$
|
(0.18)
|
|
|
$
|
(0.39)
|
|
|
$
|
(0.40)
|
|
Diluted
|
|
$
|
(0.08)
|
|
|
$
|
(0.18)
|
|
|
$
|
(0.39)
|
|
|
$
|
(0.40)
|
|
WEIGHTED AVERAGE
SHARES OF COMMON STOCK
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
129,301,817
|
|
|
|
77,628,120
|
|
|
|
104,125,317
|
|
|
|
77,453,251
|
|
Diluted
|
|
|
129,301,817
|
|
|
|
77,628,120
|
|
|
|
104,125,317
|
|
|
|
77,453,251
|
|
Reconciliation of
Cash Flows before Working Capital Changes
and as Adjusted for Special Items:
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended
September 30,
|
|
|
For the Nine
Months Ended
September 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
|
(in thousands,
except share and per share data)
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(178)
|
|
|
$
|
(188,201)
|
|
|
$
|
(84,516)
|
|
|
$
|
(301,982)
|
|
Adjustments to
reconcile net loss to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation,
depletion and amortization
|
|
|
5,223
|
|
|
|
15,394
|
|
|
|
24,543
|
|
|
|
45,945
|
|
Impairment of oil and
natural gas properties
|
|
|
—
|
|
|
|
181,966
|
|
|
|
48,497
|
|
|
|
282,118
|
|
Stock-based
compensation
|
|
|
810
|
|
|
|
1,154
|
|
|
|
3,145
|
|
|
|
3,927
|
|
Mark to market of
commodity derivatives contracts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loss (gain) on
commodity derivatives contracts
|
|
|
1,498
|
|
|
|
(11,301)
|
|
|
|
3,991
|
|
|
|
(19,734)
|
|
Cash settlements of
matured commodity derivatives contracts, net
|
|
|
1,109
|
|
|
|
6,505
|
|
|
|
10,690
|
|
|
|
17,913
|
|
Cash premiums paid for
commodity derivatives contracts
|
|
|
—
|
|
|
|
—
|
|
|
|
(565)
|
|
|
|
(45)
|
|
Amortization of
deferred financing costs
|
|
|
987
|
|
|
|
916
|
|
|
|
3,812
|
|
|
|
2,652
|
|
Accretion of asset
retirement obligation
|
|
|
92
|
|
|
|
131
|
|
|
|
286
|
|
|
|
387
|
|
Settlement of asset
retirement obligation
|
|
|
(87)
|
|
|
|
—
|
|
|
|
(87)
|
|
|
|
(80)
|
|
Loss on sale of
assets
|
|
|
—
|
|
|
|
—
|
|
|
|
97
|
|
|
|
—
|
|
Cash flows from
operations before working capital changes
|
|
|
9,454
|
|
|
|
6,564
|
|
|
|
9,893
|
|
|
|
31,101
|
|
Dividends on preferred
stock
|
|
|
—
|
|
|
|
(3,618)
|
|
|
|
(3,618)
|
|
|
|
(10,855)
|
|
Non-recurring general
and administrative costs related to acquisition of
assets
|
|
|
71
|
|
|
|
481
|
|
|
|
470
|
|
|
|
481
|
|
Non-recurring
severance costs related to property divestments
|
|
|
—
|
|
|
|
—
|
|
|
|
677
|
|
|
|
—
|
|
Allowance for bad
debt
|
|
|
—
|
|
|
|
—
|
|
|
|
1,953
|
|
|
|
—
|
|
Litigation settlement
benefit
|
|
|
(10,100)
|
|
|
|
—
|
|
|
|
(10,100)
|
|
|
|
—
|
|
Adjusted cash flows
from operations
|
|
$
|
(575)
|
|
|
$
|
3,427
|
|
|
$
|
(725)
|
|
|
$
|
20,727
|
|
Reconciliation of
Net Loss to Adjusted Earnings Before Interest, Income Taxes,
Depreciation, Depletion
and Amortization ("Adjusted EBITDA"):
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended September 30,
|
|
|
For the Nine
Months Ended September 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
|
(in thousands,
except share and per share data)
|
|
NET LOSS ATTRIBUTABLE
TO COMMON STOCKHOLDERS
|
|
$
|
(3,796)
|
|
|
$
|
(191,819)
|
|
|
$
|
(95,371)
|
|
|
$
|
(312,837)
|
|
Interest
expense
|
|
|
8,178
|
|
|
|
7,933
|
|
|
|
26,739
|
|
|
|
22,430
|
|
Depreciation,
depletion and amortization
|
|
|
5,223
|
|
|
|
15,394
|
|
|
|
24,543
|
|
|
|
45,945
|
|
Impairment of oil and
natural gas properties
|
|
|
—
|
|
|
|
181,966
|
|
|
|
48,497
|
|
|
|
282,118
|
|
EBITDA
|
|
|
9,605
|
|
|
|
13,474
|
|
|
|
4,408
|
|
|
|
37,656
|
|
Dividends on preferred
stock
|
|
|
3,618
|
|
|
|
3,618
|
|
|
|
10,855
|
|
|
|
10,855
|
|
Accretion of asset
retirement obligation
|
|
|
92
|
|
|
|
131
|
|
|
|
286
|
|
|
|
387
|
|
Losses (gains) related
to the change in mark to market value for outstanding commodity
derivatives contracts
|
|
|
3,134
|
|
|
|
(4,511)
|
|
|
|
12,974
|
|
|
|
(986)
|
|
Non-cash stock
compensation expense
|
|
|
810
|
|
|
|
1,154
|
|
|
|
3,145
|
|
|
|
3,927
|
|
Investment income and
other
|
|
|
(41)
|
|
|
|
(4)
|
|
|
|
2
|
|
|
|
(10)
|
|
Non-recurring general
and administrative costs related to acquisition of
assets
|
|
|
71
|
|
|
|
481
|
|
|
|
470
|
|
|
|
481
|
|
Non-recurring
severance costs related to property divestments
|
|
|
—
|
|
|
|
—
|
|
|
|
677
|
|
|
|
—
|
|
Allowance for bad
debt
|
|
|
—
|
|
|
|
—
|
|
|
|
1,953
|
|
|
|
—
|
|
Litigation settlement
benefit
|
|
|
(10,100)
|
|
|
|
—
|
|
|
|
(10,100)
|
|
|
|
—
|
|
ADJUSTED
EBITDA
|
|
$
|
7,189
|
|
|
$
|
14,343
|
|
|
$
|
24,670
|
|
|
$
|
52,310
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/gastar-exploration-announces-third-quarter-2016-results-300357130.html
SOURCE Gastar Exploration Inc.