HOUSTON, March 15, 2018 /PRNewswire/ -- Gastar
Exploration Inc. (NYSE American: GST) ("Gastar" or the "Company")
today reported financial and operating results for the three and
twelve months ended December 31,
2017.
Fourth quarter 2017 highlights
- Average daily production of 6,900 barrels of oil equivalent
("Boe") per day ("Boe/d"), a 17% increase over fourth quarter 2016
and an 11% increase over third quarter 2017
- STACK Play production, which excludes West Edmund Hunton Lime
Unit ("WEHLU") production, averaged 4,000 Boe/d, a 48% increase
over fourth quarter 2016 and an 18% increase over third quarter
2017
Full-Year 2017 Highlights
- Gastar's year-end 2017 U.S. Securities and Exchange Commission
("SEC") proved reserves increased 68% to 42.9 million barrels of
oil equivalent ("MMBoe"), as previously reported.
- Successful drilling optimization program reduced days to drill
by 36% from first half of 2017.
- Positioned company to become a pure-play Oklahoma STACK Play
operator with the sale of its WEHLU acreage, which closed in
February 2018.
Michael Gerlich, Gastar's Chief
Financial Officer, commented, "We ended 2017 with a solid fourth
quarter and strong momentum entering 2018. Fourth quarter
revenues, before the effects of our commodity derivatives, were up
substantially over the fourth quarter of 2016, driven by a 17%
increase in production and an 18% increase in product
pricing."
"We achieved numerous other objectives during the year,
including operational improvements and significant reserve growth,
particularly across our STACK Play acreage which increased 184%
year-over-year. With the capital restructuring in March 2017 and the recent closing of our WEHLU
asset divestiture, we are better positioned to focus on building
shareholder value."
Financial Review
Net loss attributable to Gastar's common stockholders for the
fourth quarter of 2017 was $16.6 million, or a loss of $0.08 per share, compared to a fourth quarter
2016 net loss of $8.2 million,
or a loss of $0.06 per
share. Adjusted net loss attributable to common stockholders
(non-GAAP), which excludes non-cash and unusual items, improved to
$6.6 million, or a loss of
$0.03 per share for the fourth
quarter of 2017, compared to an adjusted net loss attributable to
common stockholders of $7.5 million,
or a loss of $0.06 per share, for the
fourth quarter 2016 and an adjusted net loss attributable to common
stockholders of $11.2 million, or
$0.08 per share, for the third
quarter of 2017. (See the accompanying reconciliation of the
non-GAAP financial measure adjusted net loss at the end of this
news release.)
Adjusted earnings before interest, income taxes, depreciation,
depletion and amortization ("adjusted EBITDA") (non-GAAP) for the
fourth quarter of 2017 increased 46% to $15.5 million compared to adjusted EBITDA of
$10.6 million for the fourth
quarter of 2016 and up 49% sequentially from $10.4 million for the third quarter of 2017. (See
the accompanying reconciliation of the non-GAAP financial adjusted
EBITDA at the end of this news release.)
Revenues from oil, condensate, natural gas and natural gas
liquids ("NGLs"), before the effects of commodity derivatives
contracts, totaled $23.7 million in
the fourth quarter of 2017, a 38% increase from $17.2 million in the fourth quarter of 2016 and a
30% increase from $18.2 million in
the third quarter of 2017. The increase from the fourth
quarter of 2016 in oil, condensate, natural gas and NGLs revenues
primarily resulted from an 18% increase in equivalent product
pricing and a 17% increase in equivalent production volumes.
The increase from third quarter 2017 revenues was due to a 17%
increase in equivalent product pricing and an 11% increase in
equivalent production volumes.
Commodity derivatives were in place for approximately 88% of our
oil and condensate production, 68% of our natural gas production
and 33% of our NGLs production for the fourth quarter of
2017. Commodity derivative contracts settled during the
period resulted in a $1.7 million
increase in revenue compared to a $1.8
million increase in revenues in the fourth quarter of
2016. For details on Gastar's current hedging position,
please see our Annual Report on Form 10-K for the year ended
December 31, 2017 filed today with
the SEC.
The following table provides a summary of Gastar's total net
production volumes and overall average commodity prices for the
three and twelve months ended December 31,
2017 and 2016:
|
|
For the Three
Months Ended December 31,
|
|
|
For the Years
Ended December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Net
Production:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and condensate
(MBbl)
|
|
|
312
|
|
|
|
269
|
|
|
|
1,118
|
|
|
|
1,105
|
|
Natural gas
(MMcf)
|
|
|
1,048
|
|
|
|
913
|
|
|
|
3,795
|
|
|
|
6,145
|
|
NGLs (MBbl)
|
|
|
148
|
|
|
|
123
|
|
|
|
527
|
|
|
|
739
|
|
Total production
(MBoe)
|
|
|
634
|
|
|
|
544
|
|
|
|
2,277
|
|
|
|
2,869
|
|
Net Daily
Production:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and condensate
(MBbl/d)
|
|
|
3.4
|
|
|
|
2.9
|
|
|
|
3.1
|
|
|
|
3.0
|
|
Natural gas
(MMcf/d)
|
|
|
11.4
|
|
|
|
9.9
|
|
|
|
10.4
|
|
|
|
16.8
|
|
NGLs
(MBbl/d)
|
|
|
1.6
|
|
|
|
1.3
|
|
|
|
1.4
|
|
|
|
2.0
|
|
Total daily production
(MBoe/d)
|
|
|
6.9
|
|
|
|
5.9
|
|
|
|
6.2
|
|
|
|
7.8
|
|
Average sales price
per unit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and condensate per
Bbl, including impact of hedging
activities(1)
|
|
$
|
58.12
|
|
|
$
|
51.89
|
|
|
$
|
54.27
|
|
|
$
|
45.80
|
|
Oil and condensate per
Bbl, excluding impact of hedging
activities
|
|
$
|
53.77
|
|
|
$
|
46.73
|
|
|
$
|
48.91
|
|
|
$
|
38.92
|
|
Natural gas per Mcf,
including impact of hedging activities(1)
|
|
$
|
2.64
|
|
|
$
|
3.04
|
|
|
$
|
2.75
|
|
|
$
|
2.04
|
|
Natural gas per Mcf,
excluding impact of hedging activities
|
|
$
|
2.51
|
|
|
$
|
2.69
|
|
|
$
|
2.66
|
|
|
$
|
1.77
|
|
NGLs per Bbl,
including impact of hedging activities(1)
|
|
$
|
30.83
|
|
|
$
|
18.16
|
|
|
$
|
24.49
|
|
|
$
|
11.81
|
|
NGLs per Bbl,
excluding impact of hedging activities
|
|
$
|
29.20
|
|
|
$
|
17.51
|
|
|
$
|
22.49
|
|
|
$
|
9.81
|
|
Average sales price
per Boe, including impact of hedging activities(1)
|
|
$
|
40.13
|
|
|
$
|
34.83
|
|
|
$
|
36.90
|
|
|
$
|
25.06
|
|
Average sales price
per Boe, excluding impact of hedging activities
|
|
$
|
37.39
|
|
|
$
|
31.56
|
|
|
$
|
33.64
|
|
|
$
|
21.31
|
|
_____________________________
|
(1)
|
The impact of hedging
includes only the gain (loss) on commodity derivative contracts
settled during the periods presented.
|
Average daily production for the full-year 2016 includes
production of 1,800 Boe/d from our Appalachian Basin assets
substantially all of which were sold in April 2016. Fourth
quarter 2017 Mid-Continent equivalent production consisted of
approximately 72% liquids, comprised of 49% oil and 23% NGLs, up 1%
from fourth quarter 2016 production and in line with third quarter
2017.
In the Mid-Continent area, lease operating expenses ("LOE") per
Boe of production were $9.14 in the
fourth quarter of 2017 versus $8.67
in the fourth quarter of 2016 and $10.80 in the third quarter of 2017, including
workover costs. Excluding workover expense, LOE per Boe for
the fourth quarter of 2017 was $8.64
as compared to $7.09 per Boe in the
fourth quarter of 2016 and $8.80 per
Boe for the third quarter of 2017.
General and administrative ("G&A") expense was $4.4 million in the fourth quarter of 2017
compared to $3.6 million in the
fourth quarter of 2016 and $4.1
million in the third quarter of 2017. G&A expense for
the fourth quarter of 2017 included $1.9
million of non-cash stock-based compensation expense, versus
$773,000 in the fourth quarter of
2016 and $1.8 million in the third
quarter of 2017.
Liquidity and Capital Budget
Gastar's capital expenditures in the fourth quarter of 2017
totaled $36.9 million, comprised of
$29.1 million for drilling,
completions and infrastructure costs, $5.0
million for unproved acreage extensions, renewals and
additions and $2.8 million of other
capitalized costs. For all of 2017, capital expenditures,
excluding acquisitions and divestments, totaled $131.4 million.
As previously reported, the Company has approved a 2018 capital
budget of approximately $115 million
comprised of $69.5 million for a
one‑rig STACK operated drilling and completion program,
$15.7 million for STACK non-operated
drilling and completion costs, $18.2
million in leasing costs and $11.6
million for capitalized interest and administration
costs. We expect approximately 86% of the 2018 capital budget
to be operated. We plan to fund our 2018 capital budget
through existing cash balances, internally generated cash flow from
operating activities, net cash proceeds from the WEHLU Sale and
possible future property sales.
On February 28, 2018 the Company
completed the previously announced sale of its interest in WEHLU
for $107.5 million, adjusted for the
effective date of October 1, 2017 and
resulting in net cash proceeds of $98.8
million at closing.
Operations Review and Update
Stephen Roberts, Senior Vice
President and Chief Operating Officer, commented, "The new drilling
and completion techniques that we implemented continue to produce
positive results. As compared to the first half of 2017, we
have seen a reduction in the number of days to drill a well from
19.4 to 12.4 days and reduced completion days from seven to
four. Based on efficiency improvements, our current cost per
well is expected to be approximately $4.5
million for Osage wells and
$4.7 million for Meramec wells.
We are particularly pleased with the improvement in production of
our new Gen 3.0 completion design when compared to earlier
generation well completions. We will continue to explore for
ways to improve production performance as we further de-risk and
delineate the Meramec and Osage
formations on our STACK Play acreage throughout 2018."
The following table provides a summary of Gastar's Mid-Continent
production volumes and average commodity prices for the three and
twelve months ended December 31, 2017
and 2016:
|
|
For the Three
Months Ended December 31,
|
|
|
For the Years
Ended December 31,
|
|
Mid-Continent
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Net
Production:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and condensate
(MBbl)
|
|
|
312
|
|
|
|
269
|
|
|
|
1,118
|
|
|
|
1,058
|
|
Natural gas
(MMcf)
|
|
|
1,048
|
|
|
|
901
|
|
|
|
3,794
|
|
|
|
3,818
|
|
NGLs (MBbl)
|
|
|
148
|
|
|
|
123
|
|
|
|
527
|
|
|
|
503
|
|
Total net production
(MBoe)
|
|
|
634
|
|
|
|
542
|
|
|
|
2,277
|
|
|
|
2,198
|
|
Net Daily
Production:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and condensate
(MBbl/d)
|
|
|
3.4
|
|
|
|
2.9
|
|
|
|
3.1
|
|
|
|
2.9
|
|
Natural gas
(MMcf/d)
|
|
|
11.4
|
|
|
|
9.8
|
|
|
|
10.4
|
|
|
|
10.4
|
|
NGLs
(MBbl/d)
|
|
|
1.6
|
|
|
|
1.3
|
|
|
|
1.4
|
|
|
|
1.4
|
|
Total net daily
production (MBoe/d)
|
|
|
6.9
|
|
|
|
5.9
|
|
|
|
6.2
|
|
|
|
6.0
|
|
Average sales price
per unit(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and condensate
(per Bbl)
|
|
$
|
53.77
|
|
|
$
|
46.73
|
|
|
$
|
48.91
|
|
|
$
|
40.12
|
|
Natural gas (per
Mcf)
|
|
$
|
2.51
|
|
|
$
|
2.70
|
|
|
$
|
2.66
|
|
|
$
|
2.21
|
|
NGLs (per
Bbl)
|
|
$
|
29.20
|
|
|
$
|
17.51
|
|
|
$
|
22.49
|
|
|
$
|
13.94
|
|
Average sales price
per Boe(1)
|
|
$
|
37.39
|
|
|
$
|
31.63
|
|
|
$
|
33.64
|
|
|
$
|
26.35
|
|
_____________________________
|
(1)
|
Excludes the impact
of hedging activities
|
Average daily production for the Mid-Continent area includes
production of 2,900 and 3,100 Boe/d, for the quarter and full-year
of 2017 respectively, from WEHLU which was sold on February 28, 2017.
During 2017, Gastar spud a total of 11 gross (3.1 net) operated
Meramec and 17 gross (11.5 net) operated Osage wells; completed 15 gross (3.8 net)
operated Meramec and 16 gross (10.6 net) operated Osage wells and participated in numerous
third-party wells across its 67,000 core STACK Play acreage. This
highly contiguous position is 84% operated and 66% held by
production.
To date in 2018, Gastar spud three gross (2.5 net) operated
Osage wells and completed two
gross (1.8 net) operated Osage
wells.
Guidance for First Quarter 2018 and Full-Year 2018
Our guidance, as previously provided, for the first quarter and
full-year 2018 is presented in the table below and represents the
Company's best estimate of the range of likely future results.
Guidance could be affected by the factors described below in
"Forward Looking Statements."
Production
|
|
First
Quarter
2018
|
|
Full-Year
2018
|
|
|
|
|
|
|
|
Net average daily
(MBoe/d)(1)
|
|
4.7 – 5.0
|
|
5.0 – 6.0
|
|
Liquids
percentage
|
|
71% - 73%
|
|
70% - 74%
|
|
|
|
|
|
|
|
Cash Operating
Expenses
|
|
|
|
|
|
Production taxes (%
of production revenues)
|
|
2.5% -
2.7%
|
|
2.5% -
2.9%
|
|
Direct lease
operating ($/Boe)
|
|
$8.60 -
$9.40
|
|
$8.40 -
$9.60
|
|
|
|
|
|
|
|
Transportation,
treating & gathering ($/Boe)(2)
|
|
$1.60 -
$1.80
|
|
$1.50 -
$1.80
|
|
Cash general &
administrative ($/Boe)
|
|
$6.90 -
$7.40
|
|
$6.00 -
$6.60
|
|
________________
|
(1)
|
Based on equivalent
of 6 thousand cubic feet (Mcf) of natural gas to one barrel of oil,
condensate or NGLs.
|
(2)
|
Pursuant to revenue
recognition accounting, fee will be applied as revenue deduction in
2018. Approximately 40% of fee is estimated to apply to NGLs
and 60% to natural gas.
|
Conference Call
Gastar has scheduled a conference call for 10:00 a.m.
Eastern Time (9:00 a.m. Central
Time) on Friday, March 16,
2018. Investors may participate in the call either by phone
or audio webcast.
By
Phone:
|
Dial 1-412-902-0030
at least 10 minutes before the call. A telephone replay will be
available through March 23 by dialing 1-201-612-7415 and using the
conference ID: 13676480.
|
|
|
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
in the United States. Gastar's
principal business activities include the identification,
acquisition and subsequent exploration and development of oil and
natural gas properties with an emphasis on unconventional reserves,
such as shale resource plays. Gastar holds a concentrated acreage
position in the normally pressured oil window of the STACK Play, an
area of central Oklahoma which is
home to multiple oil and natural gas-rich reservoirs including the
Oswego limestone, Meramec and Osage bench formations within the Mississippi
Lime, the Woodford shale and
Hunton limestone formations. For more information, visit Gastar's
website at www.gastar.com.
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 first quarter and
full-year of 2018 are based upon the current 2018 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.
- Financial Tables Follow –
GASTAR EXPLORATION
INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
|
|
For the Three
Months
Ended December 31,
|
|
|
For the Years
Ended
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
(in thousands,
except share and per share data)
|
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and
condensate
|
|
$
|
16,781
|
|
|
$
|
12,547
|
|
|
$
|
54,667
|
|
|
$
|
43,011
|
|
Natural gas
|
|
|
2,627
|
|
|
|
2,460
|
|
|
|
10,079
|
|
|
|
10,854
|
|
NGLs
|
|
|
4,314
|
|
|
|
2,152
|
|
|
|
11,841
|
|
|
|
7,252
|
|
Total oil and
condensate, natural gas and NGLs revenues
|
|
|
23,722
|
|
|
|
17,159
|
|
|
|
76,587
|
|
|
|
61,117
|
|
(Loss) gain on
commodity derivatives contracts
|
|
|
(8,239)
|
|
|
|
1,128
|
|
|
|
(4,457)
|
|
|
|
(2,863)
|
|
Total
revenues
|
|
|
15,483
|
|
|
|
18,287
|
|
|
|
72,130
|
|
|
|
58,254
|
|
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production
taxes
|
|
|
1,155
|
|
|
|
439
|
|
|
|
2,830
|
|
|
|
1,908
|
|
Lease operating
expenses
|
|
|
5,799
|
|
|
|
4,776
|
|
|
|
22,195
|
|
|
|
20,605
|
|
Transportation,
treating and gathering
|
|
|
627
|
|
|
|
358
|
|
|
|
1,814
|
|
|
|
1,704
|
|
Depreciation,
depletion and amortization
|
|
|
7,253
|
|
|
|
5,130
|
|
|
|
24,015
|
|
|
|
29,673
|
|
Impairment of natural
gas and oil properties
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
48,497
|
|
Accretion of asset
retirement obligation
|
|
|
66
|
|
|
|
82
|
|
|
|
237
|
|
|
|
368
|
|
General and
administrative expense
|
|
|
4,360
|
|
|
|
3,573
|
|
|
|
16,842
|
|
|
|
19,445
|
|
Litigation settlement
benefit
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(10,100)
|
|
Total
expenses
|
|
|
19,260
|
|
|
|
14,358
|
|
|
|
67,933
|
|
|
|
112,100
|
|
(LOSS) INCOME FROM
OPERATIONS
|
|
|
(3,777)
|
|
|
|
3,929
|
|
|
|
4,197
|
|
|
|
(53,846)
|
|
OTHER (EXPENSE)
INCOME:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(9,211)
|
|
|
|
(8,507)
|
|
|
|
(38,955)
|
|
|
|
(35,246)
|
|
Loss on early
extinguishment of debt
|
|
|
—
|
|
|
|
—
|
|
|
|
(12,172)
|
|
|
|
—
|
|
Investment and other
income
|
|
|
9
|
|
|
|
33
|
|
|
|
175
|
|
|
|
31
|
|
LOSS BEFORE PROVISION
FOR INCOME TAXES
|
|
|
(12,979)
|
|
|
|
(4,545)
|
|
|
|
(46,755)
|
|
|
|
(89,061)
|
|
Provision for income
taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
NET LOSS
|
|
|
(12,979)
|
|
|
|
(4,545)
|
|
|
|
(46,755)
|
|
|
|
(89,061)
|
|
Dividends on preferred
stock
|
|
|
—
|
|
|
|
—
|
|
|
|
(8,443)
|
|
|
|
(3,618)
|
|
Undeclared cumulative
dividends on preferred stock
|
|
|
(3,618)
|
|
|
|
(3,618)
|
|
|
|
(6,030)
|
|
|
|
(10,855)
|
|
NET LOSS ATTRIBUTABLE
TO COMMON STOCKHOLDERS
|
|
$
|
(16,597)
|
|
|
$
|
(8,163)
|
|
|
$
|
(61,228)
|
|
|
$
|
(103,534)
|
|
NET LOSS PER SHARE OF
COMMON STOCK ATTRIBUTABLE
TO
COMMON STOCKHOLDERS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.08)
|
|
|
$
|
(0.06)
|
|
|
$
|
(0.31)
|
|
|
$
|
(0.93)
|
|
Diluted
|
|
$
|
(0.08)
|
|
|
$
|
(0.06)
|
|
|
$
|
(0.31)
|
|
|
$
|
(0.93)
|
|
WEIGHTED AVERAGE
SHARES OF COMMON
STOCK
OUTSTANDING:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
209,089,468
|
|
|
|
132,936,419
|
|
|
|
195,369,489
|
|
|
|
111,367,452
|
|
Diluted
|
|
|
209,089,468
|
|
|
|
132,936,419
|
|
|
|
195,369,489
|
|
|
|
111,367,452
|
|
GASTAR EXPLORATION
INC.
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
December
31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
(in thousands, except share and
per share
data)
|
|
ASSETS
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
13,266
|
|
|
$
|
71,529
|
|
Accounts receivable,
net of allowance for doubtful accounts of $1,953
|
|
|
38,575
|
|
|
|
26,883
|
|
Commodity derivative
contracts
|
|
|
1,370
|
|
|
|
6,212
|
|
Prepaid
expenses
|
|
|
960
|
|
|
|
755
|
|
Total current
assets
|
|
|
54,171
|
|
|
|
105,379
|
|
PROPERTY, PLANT AND
EQUIPMENT:
|
|
|
|
|
|
|
|
|
Oil and natural gas
properties, full cost method of accounting:
|
|
|
|
|
|
|
|
|
Unproved properties,
excluded from amortization
|
|
|
131,955
|
|
|
|
67,333
|
|
Proved
properties
|
|
|
1,344,329
|
|
|
|
1,253,061
|
|
Total natural gas and
oil properties
|
|
|
1,476,284
|
|
|
|
1,320,394
|
|
Furniture and
equipment
|
|
|
3,838
|
|
|
|
2,622
|
|
Total property, plant
and equipment
|
|
|
1,480,122
|
|
|
|
1,323,016
|
|
Accumulated
depreciation, depletion and amortization
|
|
|
(1,155,027)
|
|
|
|
(1,131,012)
|
|
Total property, plant
and equipment, net
|
|
|
325,095
|
|
|
|
192,004
|
|
OTHER
ASSETS:
|
|
|
|
|
|
|
|
|
Restricted
cash
|
|
370
|
|
|
|
—
|
|
Commodity derivative
contracts
|
|
|
—
|
|
|
|
1,638
|
|
Deferred charges,
net
|
|
|
—
|
|
|
|
676
|
|
Advances to operators
and other assets
|
|
|
82
|
|
|
|
102
|
|
Other
|
|
|
405
|
|
|
|
405
|
|
Total other
assets
|
|
|
857
|
|
|
|
2,821
|
|
TOTAL
ASSETS
|
|
$
|
380,123
|
|
|
$
|
300,204
|
|
LIABILITIES AND
STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
24,382
|
|
|
$
|
8,867
|
|
Revenue
payable
|
|
|
11,823
|
|
|
|
6,690
|
|
Accrued
interest
|
|
|
7,298
|
|
|
|
3,515
|
|
Accrued drilling and
operating costs
|
|
|
9,381
|
|
|
|
2,615
|
|
Advances from
non-operators
|
|
|
1,445
|
|
|
|
3,504
|
|
Commodity derivative
contracts
|
|
|
4,416
|
|
|
|
338
|
|
Commodity derivative
premium payable
|
|
|
135
|
|
|
|
1,654
|
|
Asset retirement
obligation
|
|
|
—
|
|
|
|
89
|
|
Other accrued
liabilities
|
|
|
2,706
|
|
|
|
2,462
|
|
Total current
liabilities
|
|
|
61,586
|
|
|
|
29,734
|
|
LONG-TERM
LIABILITIES:
|
|
|
|
|
|
|
|
|
Long-term debt,
net
|
|
|
342,952
|
|
|
|
404,493
|
|
Commodity derivative
contracts
|
|
|
2,572
|
|
|
|
—
|
|
Commodity derivative
premium payable
|
|
|
—
|
|
|
|
969
|
|
Asset retirement
obligation
|
|
|
4,841
|
|
|
|
5,443
|
|
Total long-term
liabilities
|
|
|
350,365
|
|
|
|
410,905
|
|
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 December 31, 2017 and 2016,
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 December 31, 2017 and 2016,
respectively, with liquidation preference
of $25.00 per share
|
|
|
21
|
|
|
|
21
|
|
Common stock, par
value $0.001 per share; 800,000,000 and 550,000,000 shares
authorized at December 31, 2017 and 2016,
respectively; 218,874,418 and 150,377,870 shares issued and outstanding at December
31, 2017 and 2016, respectively
|
|
|
219
|
|
|
|
150
|
|
Additional paid-in
capital
|
|
|
819,554
|
|
|
|
644,306
|
|
Accumulated
deficit
|
|
|
(851,663)
|
|
|
|
(784,953)
|
|
Total stockholders'
deficit
|
|
|
(31,828)
|
|
|
|
(140,435)
|
|
TOTAL LIABILITIES AND
STOCKHOLDERS' DEFICIT
|
|
$
|
380,123
|
|
|
$
|
300,204
|
|
GASTAR EXPLORATION
INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
|
For the years ended December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
(in
thousands)
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(46,755)
|
|
|
$
|
(89,061)
|
|
Adjustments to
reconcile net loss to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation,
depletion and amortization
|
|
|
24,015
|
|
|
|
29,673
|
|
Impairment of natural
gas and oil properties
|
|
|
—
|
|
|
|
48,497
|
|
Stock-based
compensation
|
|
|
5,921
|
|
|
|
3,918
|
|
Mark to market of
commodity derivatives contracts:
|
|
|
|
|
|
|
|
|
Total loss on
commodity derivatives contracts
|
|
|
4,457
|
|
|
|
2,863
|
|
Cash settlements of
matured commodity derivative contracts, net
|
|
|
8,181
|
|
|
|
13,110
|
|
Cash premiums paid for
commodity derivatives contracts
|
|
|
(1,418)
|
|
|
|
(565)
|
|
Amortization of
deferred financing costs
|
|
|
10,977
|
|
|
|
4,980
|
|
Paid-in-kind
interest
|
|
|
6,599
|
|
|
|
—
|
|
Accretion of asset
retirement obligation
|
|
|
237
|
|
|
|
368
|
|
Settlement of asset
retirement obligation
|
|
|
—
|
|
|
|
(307)
|
|
Loss on sale of
furniture and equipment
|
|
|
—
|
|
|
|
97
|
|
Loss on early
extinguishment of debt
|
|
|
12,172
|
|
|
|
—
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(12,345)
|
|
|
|
(14,850)
|
|
Prepaid
expenses
|
|
|
(205)
|
|
|
|
4,301
|
|
Accounts payable and
accrued liabilities
|
|
|
8,226
|
|
|
|
3,713
|
|
Net cash provided by
operating activities
|
|
|
20,062
|
|
|
|
6,737
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Development and
purchase of oil and natural gas properties
|
|
|
(107,748)
|
|
|
|
(59,922)
|
|
(Acquisition of)
refund for oil and natural gas properties
|
|
|
(54,496)
|
|
|
|
1,143
|
|
Proceeds from sale of
oil and natural gas properties
|
|
|
28,781
|
|
|
|
121,273
|
|
(Application) receipt
of proceeds from non-operators
|
|
|
(2,059)
|
|
|
|
3,337
|
|
(Advances to)
reimbursements from operators
|
|
|
(44)
|
|
|
|
576
|
|
(Purchase) sale of
furniture and equipment
|
|
|
(1,216)
|
|
|
|
73
|
|
Net cash (used in)
provided by investing activities
|
|
|
(136,782)
|
|
|
|
66,480
|
|
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)
|
|
|
|
(115,370)
|
|
Loss on early
extinguishment of debt
|
|
|
(7,011)
|
|
|
|
—
|
|
Proceeds from issuance
of common shares, net of issuance costs
|
|
|
56,366
|
|
|
|
69,224
|
|
Dividends paid on
preferred stock
|
|
|
(19,298)
|
|
|
|
(3,618)
|
|
Deferred financing
charges
|
|
|
(11,010)
|
|
|
|
(1,285)
|
|
Increase in restricted
cash
|
|
|
(370)
|
|
|
|
—
|
|
Tax withholding
related to restricted stock and PBU vestings
|
|
|
(590)
|
|
|
|
(713)
|
|
Net cash provided by
(used in) financing activities
|
|
|
58,457
|
|
|
|
(51,762)
|
|
NET (DECREASE)
INCREASE IN CASH AND CASH EQUIVALENTS
|
|
|
(58,263)
|
|
|
|
21,455
|
|
CASH AND CASH
EQUIVALENTS, BEGINNING OF PERIOD
|
|
|
71,529
|
|
|
|
50,074
|
|
CASH AND CASH
EQUIVALENTS, END OF PERIOD
|
|
$
|
13,266
|
|
|
$
|
71,529
|
|
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 Adjusted Net Loss:
|
|
|
|
For the Three
Months
Ended December 31,
|
|
|
For the Years
Ended
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
(in thousands,
except share and per share data)
|
|
NET LOSS ATTRIBUTABLE
TO COMMON
STOCKHOLDERS
|
|
$
|
(16,597)
|
|
|
$
|
(8,163)
|
|
|
$
|
(61,228)
|
|
|
$
|
(103,534)
|
|
SPECIAL
ITEMS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Losses related to the
change in mark to market value for
outstanding commodity derivatives
contracts
|
|
|
9,977
|
|
|
|
648
|
|
|
|
11,875
|
|
|
|
13,622
|
|
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
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
472
|
|
Non-recurring
severance costs related to property divestments
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
677
|
|
Allowance for bad
debt
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,953
|
|
Litigation settlement
benefit
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(10,100)
|
|
ADJUSTED NET LOSS
ATTRIBUTABLE TO
COMMON STOCKHOLDERS
|
|
$
|
(6,620)
|
|
|
$
|
(7,515)
|
|
|
$
|
(37,181)
|
|
|
$
|
(48,413)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED NET LOSS PER
SHARE OF COMMON
STOCK ATTRIBUTABLE TO COMMON
STOCKHOLDERS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.03)
|
|
|
$
|
(0.06)
|
|
|
$
|
(0.19)
|
|
|
$
|
(0.43)
|
|
Diluted
|
|
$
|
(0.03)
|
|
|
$
|
(0.06)
|
|
|
$
|
(0.19)
|
|
|
$
|
(0.43)
|
|
WEIGHTED AVERAGE
SHARES OF COMMON
STOCK
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
209,089,468
|
|
|
|
132,936,419
|
|
|
|
195,369,489
|
|
|
|
111,367,452
|
|
Diluted
|
|
|
209,089,468
|
|
|
|
132,936,419
|
|
|
|
195,369,489
|
|
|
|
111,367,452
|
|
Reconciliation of
Cash Flows before Working Capital Changes and to Adjusted Cash
Flows from Operations:
|
|
|
|
|
|
|
|
|
|
For the Three
Months
Ended December 31,
|
|
|
For the Years
Ended
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
(in thousands,
except share and per share data)
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(12,979)
|
|
|
$
|
(4,545)
|
|
|
$
|
(46,755)
|
|
|
$
|
(89,061)
|
|
Adjustments to
reconcile net loss to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation,
depletion and amortization
|
|
|
7,253
|
|
|
|
5,130
|
|
|
|
24,015
|
|
|
|
29,673
|
|
Impairment of oil and
natural gas properties
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
48,497
|
|
Stock-based
compensation
|
|
|
1,931
|
|
|
|
773
|
|
|
|
5,921
|
|
|
|
3,918
|
|
Mark to market of
commodity derivatives contracts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total (gain) loss on
commodity derivatives contracts
|
|
|
8,239
|
|
|
|
(1,128)
|
|
|
|
4,457
|
|
|
|
2,863
|
|
Cash settlements of
matured commodity derivatives
contracts, net
|
|
|
2,579
|
|
|
|
2,420
|
|
|
|
8,181
|
|
|
|
13,110
|
|
Cash premiums paid for
commodity derivatives
contracts
|
|
|
(1,418)
|
|
|
|
—
|
|
|
|
(1,418)
|
|
|
|
(565)
|
|
Amortization of
deferred financing costs
|
|
|
2,759
|
|
|
|
1,168
|
|
|
|
10,977
|
|
|
|
4,980
|
|
Paid-in-kind
interest
|
|
|
6,599
|
|
|
|
—
|
|
|
|
6,599
|
|
|
|
—
|
|
Accretion of asset
retirement obligation
|
|
|
66
|
|
|
|
82
|
|
|
|
237
|
|
|
|
368
|
|
Settlement of asset
retirement obligation
|
|
|
—
|
|
|
|
(220)
|
|
|
|
—
|
|
|
|
(307)
|
|
Loss on sale of
furniture and equipment
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
97
|
|
Loss on early
extinguishment of debt
|
|
|
—
|
|
|
|
—
|
|
|
|
12,172
|
|
|
|
—
|
|
Cash flows from
operations before working capital
changes
|
|
|
15,029
|
|
|
|
3,680
|
|
|
|
24,386
|
|
|
|
13,573
|
|
Dividends on preferred
stock
|
|
|
(3,618)
|
|
|
|
(3,618)
|
|
|
|
(14,473)
|
|
|
|
(14,473)
|
|
Paid-in-kind
interest
|
|
|
(6,599)
|
|
|
|
—
|
|
|
|
(6,599)
|
|
|
|
—
|
|
Non-recurring general
and administrative costs related
to acquisition of assets
|
|
|
—
|
|
|
|
2
|
|
|
|
—
|
|
|
|
472
|
|
Non-recurring
severance costs related to property divestments
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
677
|
|
Allowance for bad
debt
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,953
|
|
Litigation settlement
benefit
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(10,100)
|
|
Adjusted cash flows
from operations
|
|
$
|
4,812
|
|
|
$
|
64
|
|
|
$
|
3,314
|
|
|
$
|
(7,898)
|
|
Reconciliation of
Net Loss to Adjusted Earnings Before Interest, Income Taxes,
Depreciation, Depletion and Amortization ("Adjusted
EBITDA"):
|
|
|
|
For the Three
Months
Ended December 31,
|
|
|
For the Years
Ended
December
31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
(in thousands,
except share and per share data)
|
|
NET LOSS ATTRIBUTABLE
TO COMMON
STOCKHOLDERS
|
|
$
|
(16,597)
|
|
|
$
|
(8,163)
|
|
|
$
|
(61,228)
|
|
|
$
|
(103,534)
|
|
Interest
expense
|
|
|
9,211
|
|
|
|
8,507
|
|
|
|
38,955
|
|
|
|
35,246
|
|
Loss on early
extinguishment of debt
|
|
|
—
|
|
|
|
—
|
|
|
|
12,172
|
|
|
|
—
|
|
Depreciation,
depletion and amortization
|
|
|
7,253
|
|
|
|
5,130
|
|
|
|
24,015
|
|
|
|
29,673
|
|
Impairment of oil and
natural gas properties
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
48,497
|
|
EBITDA
|
|
|
(133)
|
|
|
|
5,474
|
|
|
|
13,914
|
|
|
|
9,882
|
|
Dividends on preferred
stock
|
|
|
3,618
|
|
|
|
3,618
|
|
|
|
14,473
|
|
|
|
14,473
|
|
Accretion of asset
retirement obligation
|
|
|
66
|
|
|
|
82
|
|
|
|
237
|
|
|
|
368
|
|
Losses related to the
change in mark to market value for
outstanding commodity derivatives
contracts
|
|
|
9,977
|
|
|
|
648
|
|
|
|
11,875
|
|
|
|
13,622
|
|
Non-cash stock
compensation expense
|
|
|
1,931
|
|
|
|
773
|
|
|
|
5,921
|
|
|
|
3,918
|
|
Investment income and
other
|
|
|
(9)
|
|
|
|
(33)
|
|
|
|
(175)
|
|
|
|
(31)
|
|
General and
administrative costs related to acquisition of assets
|
|
|
—
|
|
|
|
2
|
|
|
|
—
|
|
|
|
472
|
|
General and
administrative costs related to employee severance
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
677
|
|
Litigation settlement
benefit
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(10,100)
|
|
Allowance for bad
debt
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,953
|
|
Adjusted
EBITDA
|
|
$
|
15,450
|
|
|
$
|
10,564
|
|
|
$
|
46,245
|
|
|
$
|
35,234
|
|
Contacts:
Gastar Exploration Inc.
Michael A. Gerlich, Chief Financial
Officer
713-739-1800 / mgerlich@gastar.com
Investor Relations Counsel:
Lisa Elliott, Dennard▪Lascar
Investor
Relations
713-529-6600 / lelliott@DennardLascar.com
View original
content:http://www.prnewswire.com/news-releases/gastar-exploration-announces-fourth-quarter-and-full-year-2017-results-300614930.html
SOURCE Gastar Exploration Inc.