HOUSTON, Nov. 8, 2017 /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, 2017.
Third quarter 2017 highlights include:
- Average daily production of 6,200 barrels of oil equivalent
("Boe") per day ("Boe/d")
- Production volumes comprised of 72% liquids
- Operational and drilling efficiencies gained momentum
J. Russell Porter, Gastar's
President and CEO, commented, "Following an initiative to
re-evaluate operating practices in order to optimize well results
while also reducing drilling and completion costs, we have made
numerous operational refinements that appear to be having a
positive impact. We have reduced the average number of days
needed to drill a well from approximately 19 days to 11 days.
Further, we have eliminated certain drilling difficulties, which
has both lowered costs and created operating efficiencies.
With drilling time now nearly half of what it was previously, we
can effectively execute our drilling plan with only one rig and
expect to continue drilling with one rig into 2018."
"We have substantially improved our well completion processes
and design. Our improved "Gen 3" completion design appears to
be generating better initial well performance, although it is still
too early to accurately draw any firm conclusions. Our first Gen 3
well, the Bagwell 1808 24-1H, a
Meramec well in Kingfisher County,
Oklahoma, commenced flow back on September 21, 2017 and based on early performance
appears to be on track with our Meramec type curve. Since we
resumed completion operations on September
3, 2017, we have completed 5 wells using the new Gen 3
design, with most of them on flow back for less than 30 days.
Compared to wells completed with the previous design, these Gen 3
wells are producing significantly more total fluid volumes in the
initial flow back stage with hydrocarbon volumes increasing."
"We expect that our drilling program to delineate the Meramec
and Osage formations across our
acreage position will remain active through next year. To
date, we have drilled a total of 24 gross Meramec and 16 gross
Osage wells and have participated
in numerous third-party wells across our STACK Play acreage.
With the continuing success of our program and that of offset
operators in the STACK Play, we intend to continue to focus on the
STACK to create value for our shareholders. Currently we are
actively evaluating opportunities to divest our WEHLU asset, a
Hunton formation producing unit located primarily in Oklahoma County, Oklahoma. If we are
successful in divesting WEHLU, we intend to redeploy those proceeds
into our core operations in the higher value STACK Play
acreage. We believe that the potential sale of our WEHLU
assets would provide us with ample liquidity to execute our current
one-rig drilling program through 2018."
Financial Review
Net loss attributable to Gastar's common stockholders for the
third quarter of 2017 was $15.9 million, or a loss of $0.08 per share, compared to a third quarter 2016
net loss of $3.8 million, or a
loss of $0.03 per share.
Adjusted net loss attributable to common stockholders (non-GAAP),
which excludes non-cash and unusual items, for the third quarter of
2017 was $11.2 million, or a loss of
$0.05 per share, compared to an
adjusted net loss attributable to common stockholders of
$10.7 million, or a loss of
$0.08 per share, for the third
quarter 2016. (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
third quarter of 2017 was $10.4
million compared to adjusted EBITDA of $7.2 million for the third quarter of 2016
and $9.8 million for the second
quarter of 2017. (See the accompanying reconciliation of the
non-GAAP financial adjusted EBITDA at the end of this news
release.)
Total Company revenues were $15.3
million in the third quarter of 2017, an 18% increase from
$13.0 million in the third
quarter of 2016 and a 32% decrease from $22.6 million in the second quarter of
2017. The reduction in revenues from the second quarter to
the third quarter of 2017 primarily resulted from the change in
mark to market value for outstanding commodity derivative
contracts.
Revenues from oil, condensate, natural gas and natural gas
liquids ("NGLs"), before the effects of commodity derivatives
contracts, totaled $18.2 million in
the third quarter of 2017, a 26% increase from $14.5 million in the third quarter of 2016 and a
6% increase from $17.3 million in the
second quarter of 2017. The increase from third quarter of
2016 in oil, condensate, natural gas and NGLs revenues primarily
resulted from an 18% increase in equivalent product pricing and a
6% increase in equivalent production volumes. The increase
from second quarter 2017 revenues was due to a 3% increase in
equivalent product pricing and a 2% increase in equivalent
production volumes.
Commodity hedges were in place for approximately 48% of our oil
and condensate production, 70% of our natural gas production and
18% of our NGLs production for the third quarter of 2017.
Commodity derivative contracts settled during the period resulted
in a $1.8 million increase in revenue
compared to a $1.6 million increase
in revenues in the third quarter of 2016.
The following table provides a summary of Gastar's overall
average commodity prices for the three and nine months ended
September 30, 2017 and 2016:
|
|
For the Three
Months
Ended September
30,
|
|
|
For the Nine
Months
Ended
September
30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
Average sales price
per unit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and condensate per
Bbl, including impact of hedging activities
(1)
|
|
$
|
51.77
|
|
|
$
|
47.19
|
|
|
$
|
52.78
|
|
|
$
|
43.85
|
|
Oil and condensate per
Bbl, excluding impact of hedging activities
|
|
$
|
46.56
|
|
|
$
|
42.55
|
|
|
$
|
47.03
|
|
|
$
|
36.41
|
|
Natural gas per Mcf,
including impact of hedging activities(1)
|
|
$
|
2.69
|
|
|
$
|
2.76
|
|
|
$
|
2.80
|
|
|
$
|
1.86
|
|
Natural gas per Mcf,
excluding impact of hedging activities
|
|
$
|
2.62
|
|
|
$
|
2.48
|
|
|
$
|
2.71
|
|
|
$
|
1.60
|
|
NGLs per Bbl,
including impact of hedging activities(1)
|
|
$
|
22.55
|
|
|
$
|
15.02
|
|
|
$
|
22.02
|
|
|
$
|
10.55
|
|
NGLs per Bbl,
excluding impact of hedging activities
|
|
$
|
20.64
|
|
|
$
|
13.22
|
|
|
$
|
19.87
|
|
|
$
|
8.28
|
|
Average sales price
per Boe, including impact of hedging
activities(1)
|
|
$
|
34.96
|
|
|
$
|
29.96
|
|
|
$
|
35.65
|
|
|
$
|
22.77
|
|
Average sales price
per Boe, excluding impact of hedging activities
|
|
$
|
31.86
|
|
|
$
|
26.92
|
|
|
$
|
32.19
|
|
|
$
|
18.91
|
|
_____________________________
(1)
|
The impact of hedging
includes only the gain (loss) on commodity derivative contracts
settled during the periods presented.
|
For details on Gastar's current hedging positions, please see
our Form 10-Q for the quarter ended September 30, 2017 filed with the U.S. Securities
and Exchange Commission ("SEC").
Average daily Mid-Continent production for the third quarter of
2017 was 6,200 Boe/d as compared to 5,800 Boe/d in the third
quarter of 2016 and 6,100 Boe/d in the second quarter of 2017.
In the Mid-Continent area, average daily production in the third
quarter of 2017 increased 7% compared to the third quarter of 2016
primarily due to increased well completion activity and
sequentially decreased 2% primarily due to a temporary suspension
of well completion activity while we re-evaluated our operational
processes to optimize our well results. Third quarter 2017
Mid-Continent equivalent production consisted of approximately 72%
liquids, comprised of 49% oil and 23% NGLs, up 4% from third
quarter 2016 production and down 1% from second quarter 2017.
Lease operating expenses ("LOE") per Boe of production were
$10.80 in the third quarter of 2017
versus $9.59 in the third quarter of
2016 and $9.20 in the second quarter
of 2017, including workover costs. Excluding workover
expense, LOE per Boe for the third quarter of 2017 was $8.80 as compared to $8.49 per BOE in the third quarter of 2016 and
$8.49 per Boe for the second quarter
of 2017.
General and administrative ("G&A") expense was $4.1 million in the third quarter of 2017
compared to $3.9 million in the third
quarter of 2016 and $4.6 million in
the second quarter of 2017. G&A expense for the third quarter
of 2017 included $1.8 million of
non-cash stock-based compensation expense, versus $810,000 in the third quarter of 2016 and
$1.2 million in the second quarter of
2017.
Liquidity and Capital Budget
Gastar's net capital expenditures, excluding property sales
proceeds, in the third quarter of 2017 totaled $37.1 million, comprised of $26.8 million for drilling, completions and
infrastructure costs, $7.9 million
for unproved acreage extensions, renewals and additions and
$2.4 million of other capitalized
costs. Based on the current full-year capital budget of
$129.2 million, our fourth quarter
capital expenditures are currently estimated not to exceed
$34.7 million comprised of
$27.3 million for drilling,
completion and infrastructure costs, $4.3
million for lease renewal and extension costs and
$3.2 million of other capitalized
costs.
At September 30, 2017, Gastar had
approximately $29.2 million in
available cash and cash equivalents and $412.5 million of principal balance long-term
borrowings outstanding.
Operations Review and Update
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, 2017
and 2016:
|
|
For the Three
Months Ended
September
30,
|
|
|
For the Nine
Months Ended
September 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Net
Production:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and condensate
(MBbl)
|
|
|
278
|
|
|
|
242
|
|
|
|
805
|
|
|
|
790
|
|
Natural gas
(MMcf)
|
|
|
962
|
|
|
|
997
|
|
|
|
2,746
|
|
|
|
2,917
|
|
NGLs (MBbl)
|
|
|
134
|
|
|
|
128
|
|
|
|
379
|
|
|
|
380
|
|
Total net production
(MBoe)
|
|
|
572
|
|
|
|
537
|
|
|
|
1,642
|
|
|
|
1,656
|
|
Net Daily
Production:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and condensate
(MBbl/d)
|
|
|
3.0
|
|
|
|
2.6
|
|
|
|
3.0
|
|
|
|
2.9
|
|
Natural gas
(MMcf/d)
|
|
|
10.5
|
|
|
|
10.8
|
|
|
|
10.1
|
|
|
|
10.6
|
|
NGLs
(MBbl/d)
|
|
|
1.5
|
|
|
|
1.4
|
|
|
|
1.4
|
|
|
|
1.4
|
|
Total net daily
production (MBoe/d)
|
|
|
6.2
|
|
|
|
5.8
|
|
|
|
6.0
|
|
|
|
6.0
|
|
Average sales price
per unit(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and condensate
(per Bbl)
|
|
$
|
46.56
|
|
|
$
|
42.56
|
|
|
$
|
47.03
|
|
|
$
|
37.87
|
|
Natural gas (per
Mcf)
|
|
$
|
2.62
|
|
|
$
|
2.48
|
|
|
$
|
2.71
|
|
|
$
|
2.06
|
|
NGLs (per
Bbl)
|
|
$
|
20.64
|
|
|
$
|
13.22
|
|
|
$
|
19.87
|
|
|
$
|
12.79
|
|
Average sales price
per Boe(1)
|
|
$
|
31.86
|
|
|
$
|
26.98
|
|
|
$
|
32.19
|
|
|
$
|
24.63
|
|
_____________________________
(1)
|
Excludes the impact
of hedging activities
|
During the third quarter of 2017, Gastar commenced flow back on
one gross (0.2 net) operated Meramec well and four gross (2.8 net)
operated Osage wells. For
the first nine months of 2017, Gastar commenced flow back on 14
gross (2.2 net) operated Meramec wells and eight gross (5.8 net)
operated Osage wells.
Subsequent to September 30, 2017
through October 31, 2017, Gastar
commenced flow back on four gross (3.2 net) operated Osage wells.
Guidance for Fourth Quarter 2017 and Full-Year 2017
Our guidance for the fourth quarter of and updated full-year
2017 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
2017
|
|
Full-Year
2017
|
|
|
|
|
|
|
|
Net average daily
(MBoe/d)(1)
|
|
6.2 – 7.0
|
|
6.0 – 6.4
|
|
Liquids percentage
(oil and NGLs)
|
|
72% – 75%
|
|
72% – 75%
|
|
|
|
|
|
|
|
Cash Operating
Expenses
|
|
|
|
|
|
Production taxes (%
of production revenues)
|
|
3.0% –
3.4%
|
|
3.0% –
3.4%
|
|
Direct lease
operating ($/Boe)
|
|
$9.00 –
$9.75
|
|
$9.75 –
$10.25
|
|
Transportation,
treating & gathering ($/Boe)
|
|
$0.78 –
$0.86
|
|
$0.75 –
$0.80
|
|
Cash general &
administrative ($/Boe)
|
|
$4.50 –
$5.00
|
|
$5.00 –
$5.30
|
|
________________
(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 Thursday, November 9,
2017. 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 16 by dialing 1-201-612-7415 and using
the conference ID: 13672652.
|
|
|
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 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; 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 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. In addition,
production information from our recently completed wells completed
using our Gen 3 design is preliminary based on limited flow back
history and therefore may not be fully indicative of sustained
production rates or predictive of ultimate hydrocarbon
recoveries. 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 2017 are based upon the current 2017 planned capital
expenditures budget, which may be subject to revision and
reevaluation dependent upon future developments, including changes
in commodity prices, drilling results, our liquidity position,
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,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
(in thousands,
except share and per share data)
|
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and
condensate
|
|
$
|
12,952
|
|
|
$
|
10,306
|
|
|
$
|
37,886
|
|
|
$
|
30,464
|
|
Natural gas
|
|
|
2,519
|
|
|
|
2,500
|
|
|
|
7,452
|
|
|
|
8,394
|
|
NGLs
|
|
|
2,757
|
|
|
|
1,695
|
|
|
|
7,527
|
|
|
|
5,100
|
|
Total oil and
condensate, natural gas and NGLs revenues
|
|
|
18,228
|
|
|
|
14,501
|
|
|
|
52,865
|
|
|
|
43,958
|
|
Gain (loss) on
commodity derivatives contracts
|
|
|
(2,896)
|
|
|
|
(1,498)
|
|
|
|
3,782
|
|
|
|
(3,991)
|
|
Total
revenues
|
|
|
15,332
|
|
|
|
13,003
|
|
|
|
56,647
|
|
|
|
39,967
|
|
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production
taxes
|
|
|
721
|
|
|
|
400
|
|
|
|
1,675
|
|
|
|
1,469
|
|
Lease operating
expenses
|
|
|
6,178
|
|
|
|
5,166
|
|
|
|
16,396
|
|
|
|
15,829
|
|
Transportation,
treating and gathering
|
|
|
436
|
|
|
|
338
|
|
|
|
1,187
|
|
|
|
1,346
|
|
Depreciation,
depletion and amortization
|
|
|
6,059
|
|
|
|
5,223
|
|
|
|
16,762
|
|
|
|
24,543
|
|
Impairment of natural
gas and oil properties
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
48,497
|
|
Accretion of asset
retirement obligation
|
|
|
62
|
|
|
|
92
|
|
|
|
171
|
|
|
|
286
|
|
General and
administrative expense
|
|
|
4,067
|
|
|
|
3,925
|
|
|
|
12,482
|
|
|
|
15,872
|
|
Litigation settlement
benefit
|
|
|
—
|
|
|
|
(10,100)
|
|
|
|
—
|
|
|
|
(10,100)
|
|
Total
expenses
|
|
|
17,523
|
|
|
|
5,044
|
|
|
|
48,673
|
|
|
|
97,742
|
|
INCOME (LOSS) FROM
OPERATIONS
|
|
|
(2,191)
|
|
|
|
7,959
|
|
|
|
7,974
|
|
|
|
(57,775)
|
|
OTHER (EXPENSE)
INCOME:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(10,159)
|
|
|
|
(8,178)
|
|
|
|
(29,744)
|
|
|
|
(26,739)
|
|
Loss on early
extinguishment of debt
|
|
|
—
|
|
|
|
—
|
|
|
|
(12,172)
|
|
|
|
—
|
|
Investment income and
other (expense)
|
|
|
51
|
|
|
|
41
|
|
|
|
166
|
|
|
|
(2)
|
|
LOSS BEFORE PROVISION
FOR INCOME TAXES
|
|
|
(12,299)
|
|
|
|
(178)
|
|
|
|
(33,776)
|
|
|
|
(84,516)
|
|
Provision for income
taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
NET LOSS
|
|
|
(12,299)
|
|
|
|
(178)
|
|
|
|
(33,776)
|
|
|
|
(84,516)
|
|
Dividends on preferred
stock
|
|
|
(1,206)
|
|
|
|
—
|
|
|
|
(8,443)
|
|
|
|
(3,618)
|
|
Undeclared cumulative
dividends on preferred stock
|
|
|
(2,412)
|
|
|
|
(3,618)
|
|
|
|
(2,412)
|
|
|
|
(7,237)
|
|
NET LOSS ATTRIBUTABLE
TO COMMON STOCKHOLDERS
|
|
$
|
(15,917)
|
|
|
$
|
(3,796)
|
|
|
$
|
(44,631)
|
|
|
$
|
(95,371)
|
|
NET LOSS PER SHARE OF
COMMON STOCK ATTRIBUTABLE TO
COMMON STOCKHOLDERS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.08)
|
|
|
$
|
(0.03)
|
|
|
$
|
(0.23)
|
|
|
$
|
(0.92)
|
|
Diluted
|
|
$
|
(0.08)
|
|
|
$
|
(0.03)
|
|
|
$
|
(0.23)
|
|
|
$
|
(0.92)
|
|
WEIGHTED AVERAGE
SHARES OF COMMON STOCK
OUTSTANDING:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
209,072,232
|
|
|
|
129,301,817
|
|
|
|
190,745,688
|
|
|
|
104,125,317
|
|
Diluted
|
|
|
209,072,232
|
|
|
|
129,301,817
|
|
|
|
190,745,688
|
|
|
|
104,125,317
|
|
GASTAR EXPLORATION
INC.
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
September
30,
|
|
|
December
31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
(in thousands, except share and
per
share data)
|
|
ASSETS
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
29,229
|
|
|
$
|
71,529
|
|
Accounts receivable,
net of allowance for doubtful accounts of $1,953,
respectively
|
|
|
40,353
|
|
|
|
26,883
|
|
Commodity derivative
contracts
|
|
|
4,400
|
|
|
|
6,212
|
|
Prepaid
expenses
|
|
|
1,167
|
|
|
|
755
|
|
Total current
assets
|
|
|
75,149
|
|
|
|
105,379
|
|
PROPERTY, PLANT AND
EQUIPMENT:
|
|
|
|
|
|
|
|
|
Oil and natural gas
properties, full cost method of accounting:
|
|
|
|
|
|
|
|
|
Unproved properties,
excluded from amortization
|
|
|
135,945
|
|
|
|
67,333
|
|
Proved
properties
|
|
|
1,303,165
|
|
|
|
1,253,061
|
|
Total natural gas and
oil properties
|
|
|
1,439,110
|
|
|
|
1,320,394
|
|
Furniture and
equipment
|
|
|
3,031
|
|
|
|
2,622
|
|
Total property, plant
and equipment
|
|
|
1,442,141
|
|
|
|
1,323,016
|
|
Accumulated
depreciation, depletion and amortization
|
|
|
(1,147,774)
|
|
|
|
(1,131,012)
|
|
Total property, plant
and equipment, net
|
|
|
294,367
|
|
|
|
192,004
|
|
OTHER
ASSETS:
|
|
|
|
|
|
|
|
|
Restricted
cash
|
|
|
370
|
|
|
|
—
|
|
Commodity derivative
contracts
|
|
|
416
|
|
|
|
1,638
|
|
Deferred charges,
net
|
|
|
—
|
|
|
|
676
|
|
Advances to operators
and other assets
|
|
|
100
|
|
|
|
102
|
|
Other
|
|
|
405
|
|
|
|
405
|
|
Total other
assets
|
|
|
1,291
|
|
|
|
2,821
|
|
TOTAL
ASSETS
|
|
$
|
370,807
|
|
|
$
|
300,204
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
11,411
|
|
|
$
|
8,867
|
|
Revenue
payable
|
|
|
16,428
|
|
|
|
6,690
|
|
Accrued
interest
|
|
|
7,271
|
|
|
|
3,515
|
|
Accrued drilling and
operating costs
|
|
|
12,100
|
|
|
|
2,615
|
|
Advances from
non-operators
|
|
|
1,589
|
|
|
|
3,504
|
|
Commodity derivative
contracts
|
|
|
326
|
|
|
|
338
|
|
Commodity derivative
premium payable
|
|
|
1,337
|
|
|
|
1,654
|
|
Asset retirement
obligation
|
|
|
—
|
|
|
|
89
|
|
Other accrued
liabilities
|
|
|
2,791
|
|
|
|
2,462
|
|
Total current
liabilities
|
|
|
53,253
|
|
|
|
29,734
|
|
LONG-TERM
LIABILITIES:
|
|
|
|
|
|
|
|
|
Long-term
debt
|
|
|
333,593
|
|
|
|
404,493
|
|
Commodity derivative
contracts
|
|
|
129
|
|
|
|
—
|
|
Commodity derivative
premium payable
|
|
|
34
|
|
|
|
969
|
|
Asset retirement
obligation
|
|
|
4,574
|
|
|
|
5,443
|
|
Total long-term
liabilities
|
|
|
338,330
|
|
|
|
410,905
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY:
|
|
|
|
|
|
|
|
|
Preferred stock, par
value $0.01 per share, 40,000,000 shares authorized
|
|
|
|
|
|
|
|
|
8.625% Series A
Cumulative Preferred stock, 10,000,000 shares designated; 4,045,000 shares issued and
outstanding at September 30, 2017 and December 31, 2016, respectively, with
liquidation preference of $25.00
per share
|
|
|
41
|
|
|
|
41
|
|
10.75% Series B
Cumulative Preferred stock, 10,000,000 shares designated; 2,140,000 shares issued and outstanding
at September 30, 2017 and
December 31, 2016, respectively, with liquidation
preference of $25.00 per
share
|
|
|
21
|
|
|
|
21
|
|
Common stock, par
value $0.001 per share; 550,000,000 and 800,000,000
shares authorized at September 30, and
December 31, 2016, respectively;
218,946,763 and 150,377,870 shares issued and
outstanding at September 30,
2017 and December 31, 2016, respectively
|
|
|
219
|
|
|
|
150
|
|
Additional paid-in
capital
|
|
|
817,627
|
|
|
|
644,306
|
|
Accumulated
deficit
|
|
|
(838,684)
|
|
|
|
(784,953)
|
|
Total stockholders'
equity
|
|
|
(20,776)
|
|
|
|
(140,435)
|
|
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
$
|
370,807
|
|
|
$
|
300,204
|
|
GASTAR EXPLORATION
INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
|
For the Nine
Months Ended
September
30,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
(in
thousands)
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(33,776)
|
|
|
$
|
(84,516)
|
|
Adjustments to
reconcile net loss to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation,
depletion and amortization
|
|
|
16,762
|
|
|
|
24,543
|
|
Impairment of natural
gas and oil properties
|
|
|
—
|
|
|
|
48,497
|
|
Stock-based
compensation
|
|
|
3,990
|
|
|
|
3,145
|
|
Total (gain) loss on
commodity derivatives contracts
|
|
|
(3,782)
|
|
|
|
3,991
|
|
Cash settlements of
matured commodity derivative contracts, net
|
|
|
5,602
|
|
|
|
10,690
|
|
Cash premiums paid for
commodity derivatives contracts
|
|
|
—
|
|
|
|
(565)
|
|
Amortization of
deferred financing costs and debt discount
|
|
|
8,218
|
|
|
|
3,812
|
|
Accretion of asset
retirement obligation
|
|
|
171
|
|
|
|
286
|
|
Settlement of asset
retirement obligation
|
|
|
—
|
|
|
|
(87)
|
|
Loss on sale of
furniture and equipment
|
|
|
—
|
|
|
|
97
|
|
Loss on early
extinguishment of debt
|
|
|
12,172
|
|
|
|
—
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(13,466)
|
|
|
|
3,861
|
|
Prepaid
expenses
|
|
|
(412)
|
|
|
|
362
|
|
Accounts
payable and accrued liabilities
|
|
|
13,657
|
|
|
|
7,656
|
|
Net cash provided by
operating activities
|
|
|
9,136
|
|
|
|
21,772
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Development and
purchase of oil and natural gas properties
|
|
|
(81,906)
|
|
|
|
(43,175)
|
|
(Acquisition of)
refund for oil and natural gas properties
|
|
|
(54,462)
|
|
|
|
1,149
|
|
Proceeds from sale of
oil and natural gas properties
|
|
|
28,798
|
|
|
|
77,499
|
|
Application of
proceeds from non-operators
|
|
|
(1,915)
|
|
|
|
(57)
|
|
(Advances to)
reimbursements from operators
|
|
|
(22)
|
|
|
|
211
|
|
(Purchase) sale of
furniture and equipment
|
|
|
(409)
|
|
|
|
80
|
|
Net cash (used in)
provided by investing activities
|
|
|
(109,916)
|
|
|
|
35,707
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Proceeds from term
loan
|
|
|
250,000
|
|
|
|
—
|
|
Proceeds from
convertible notes
|
|
|
200,000
|
|
|
|
—
|
|
Repayment of senior
secured notes
|
|
|
(325,000)
|
|
|
|
—
|
|
Repayment of revolving
credit facility
|
|
|
(84,630)
|
|
|
|
(100,370)
|
|
Loss on early
extinguishment of debt
|
|
|
(7,011)
|
|
|
|
—
|
|
Proceeds from issuance
of common shares, net of issuance costs
|
|
|
56,366
|
|
|
|
44,815
|
|
Dividends on preferred
stock
|
|
|
(19,298)
|
|
|
|
(3,618)
|
|
Deferred financing
charges
|
|
|
(10,991)
|
|
|
|
(930)
|
|
Increase in restricted
cash
|
|
|
(370)
|
|
|
|
—
|
|
Tax withholding
related to restricted stock and PBU vestings
|
|
|
(586)
|
|
|
|
(711)
|
|
Net cash provided by
(used in) financing activities
|
|
|
58,480
|
|
|
|
(60,814)
|
|
NET DECREASE IN CASH
AND CASH EQUIVALENTS
|
|
|
(42,300)
|
|
|
|
(3,335)
|
|
CASH AND CASH
EQUIVALENTS, BEGINNING OF PERIOD
|
|
|
71,529
|
|
|
|
50,074
|
|
CASH AND CASH
EQUIVALENTS, END OF PERIOD
|
|
$
|
29,229
|
|
|
$
|
46,739
|
|
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,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
(in thousands,
except share and
per share data)
|
|
|
|
|
|
|
|
|
|
NET LOSS ATTRIBUTABLE
TO COMMON STOCKHOLDERS
|
|
$
|
(15,917)
|
|
|
$
|
(3,796)
|
|
|
$
|
(44,631)
|
|
|
$
|
(95,371)
|
|
SPECIAL
ITEMS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Losses related to the
change in mark to market value for outstanding commodity
derivatives contracts
|
|
|
4,672
|
|
|
|
3,134
|
|
|
|
1,898
|
|
|
|
12,974
|
|
Impairment of oil and
natural gas properties
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
48,497
|
|
Loss on early
extinguishment of debt
|
|
|
—
|
|
|
|
—
|
|
|
|
12,172
|
|
|
|
—
|
|
Non-recurring general
and administrative costs related to acquisition of
assets
|
|
|
—
|
|
|
|
71
|
|
|
|
—
|
|
|
|
470
|
|
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
|
|
$
|
(11,245)
|
|
|
$
|
(10,691)
|
|
|
$
|
(30,561)
|
|
|
$
|
(40,900)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED NET LOSS PER
SHARE OF COMMON STOCK ATTRIBUTABLE TO COMMON
STOCKHOLDERS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.05)
|
|
|
$
|
(0.08)
|
|
|
$
|
(0.16)
|
|
|
$
|
(0.39)
|
|
Diluted
|
|
$
|
(0.05)
|
|
|
$
|
(0.08)
|
|
|
$
|
(0.16)
|
|
|
$
|
(0.39)
|
|
WEIGHTED AVERAGE
SHARES OF COMMON STOCK
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
209,072,232
|
|
|
|
129,301,817
|
|
|
|
190,745,688
|
|
|
|
104,125,317
|
|
Diluted
|
|
|
209,072,232
|
|
|
|
129,301,817
|
|
|
|
190,745,688
|
|
|
|
104,125,317
|
|
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,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
(in thousands,
except share and per share data)
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(12,299)
|
|
|
$
|
(178)
|
|
|
$
|
(33,776)
|
|
|
$
|
(84,516)
|
|
Adjustments to
reconcile net loss to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation,
depletion and amortization
|
|
|
6,059
|
|
|
|
5,223
|
|
|
|
16,762
|
|
|
|
24,543
|
|
Impairment of oil and
natural gas properties
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
48,497
|
|
Stock-based
compensation
|
|
|
1,791
|
|
|
|
810
|
|
|
|
3,990
|
|
|
|
3,145
|
|
Mark to market of
commodity derivatives contracts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total (gain) loss on
commodity derivatives contracts
|
|
|
2,896
|
|
|
|
1,498
|
|
|
|
(3,782)
|
|
|
|
3,991
|
|
Cash settlements of
matured commodity derivatives contracts, net
|
|
|
2,049
|
|
|
|
1,109
|
|
|
|
5,602
|
|
|
|
10,690
|
|
Cash premiums paid for
commodity derivatives contracts
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(565)
|
|
Amortization of
deferred financing costs and debt discount
|
|
|
3,291
|
|
|
|
987
|
|
|
|
8,218
|
|
|
|
3,812
|
|
Accretion of asset
retirement obligation
|
|
|
62
|
|
|
|
92
|
|
|
|
171
|
|
|
|
286
|
|
Settlement of asset
retirement obligation
|
|
|
—
|
|
|
|
(87)
|
|
|
|
—
|
|
|
|
(87)
|
|
Loss on sale of
assets
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
97
|
|
Loss on early
extinguishment of debt
|
|
|
—
|
|
|
|
—
|
|
|
|
12,172
|
|
|
|
—
|
|
Cash flows from
operations before working capital changes
|
|
|
3,849
|
|
|
|
9,454
|
|
|
|
9,357
|
|
|
|
9,893
|
|
Dividends on preferred
stock(1)
|
|
|
(3,618)
|
|
|
|
(3,618)
|
|
|
|
(10,855)
|
|
|
|
(10,855)
|
|
Non-recurring general
and administrative costs related to acquisition of
assets
|
|
|
—
|
|
|
|
71
|
|
|
|
—
|
|
|
|
470
|
|
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
|
|
$
|
231
|
|
|
$
|
(4,193)
|
|
|
$
|
(1,498)
|
|
|
$
|
(7,962)
|
|
________________
(1)
|
Excludes $10.9
million of accumulated dividends for the period April 2016 to
December 2016 declared and paid in January 2017. The three
and nine months ended September 30, 2017 includes accumulated
undeclared and unpaid dividends for preferred stock of $2.4
million. The three and nine months ended September 30, 2016
includes accumulated undeclared and unpaid dividends for preferred
stock of $3.6 million and $7.2 million, respectively.
|
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,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
(in thousands,
except share and
per share data)
|
|
|
|
|
|
|
|
|
|
NET LOSS ATTRIBUTABLE
TO COMMON STOCKHOLDERS
|
|
$
|
(15,917)
|
|
|
$
|
(3,796)
|
|
|
$
|
(44,631)
|
|
|
$
|
(95,371)
|
|
Interest
expense
|
|
|
10,159
|
|
|
|
8,178
|
|
|
|
29,744
|
|
|
|
26,739
|
|
Loss on early
extinguishment of debt
|
|
|
—
|
|
|
|
—
|
|
|
|
12,172
|
|
|
|
—
|
|
Depreciation,
depletion and amortization
|
|
|
6,059
|
|
|
|
5,223
|
|
|
|
16,762
|
|
|
|
24,543
|
|
Impairment of oil and
natural gas properties
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
48,497
|
|
EBITDA
|
|
|
301
|
|
|
|
9,605
|
|
|
|
14,047
|
|
|
|
4,408
|
|
Dividends on preferred
stock
|
|
|
1,206
|
|
|
|
—
|
|
|
|
8,443
|
|
|
|
3,618
|
|
Undeclared cumulative
dividends on preferred stock
|
|
|
2,412
|
|
|
|
3,618
|
|
|
|
2,412
|
|
|
|
7,237
|
|
Accretion of asset
retirement obligation
|
|
|
62
|
|
|
|
92
|
|
|
|
171
|
|
|
|
286
|
|
Losses related to the
change in mark to market value for outstanding commodity
derivatives contracts
|
|
|
4,672
|
|
|
|
3,134
|
|
|
|
1,898
|
|
|
|
12,974
|
|
Non-cash stock-based
compensation expense
|
|
|
1,791
|
|
|
|
810
|
|
|
|
3,990
|
|
|
|
3,145
|
|
Investment income and
other
|
|
|
(51)
|
|
|
|
(41)
|
|
|
|
(166)
|
|
|
|
2
|
|
Non-recurring general
and administrative costs related to acquisition of
assets
|
|
|
—
|
|
|
|
71
|
|
|
|
—
|
|
|
|
470
|
|
Non-recurring
severance costs related to property divestments
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
677
|
|
Allowance for bad
debt
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,953
|
|
Litigation settlement
benefit
|
|
|
—
|
|
|
|
(10,100)
|
|
|
|
—
|
|
|
|
(10,100)
|
|
ADJUSTED
EBITDA
|
|
$
|
10,393
|
|
|
$
|
7,189
|
|
|
$
|
30,795
|
|
|
$
|
24,670
|
|
View original
content:http://www.prnewswire.com/news-releases/gastar-exploration-reports-third-quarter-2017-results-300552316.html
SOURCE Gastar Exploration Inc.