In the news release, Gastar Exploration Announces 138% Increase
in Proved Reserves and Provides 2012 Capital Budget and First
Quarter Production Guidance, issued 31-Jan-2012 by Gastar Exploration Ltd. over PR
Newswire, we are advised by the company that the first paragraph
under Preferred Share Issuances has been updated. The complete,
corrected release follows:
Gastar Exploration Announces 138% Increase in Proved Reserves and
Provides 2012 Capital Budget and First Quarter Production Guidance
HOUSTON, Jan. 31, 2012 /PRNewswire/ -- Gastar
Exploration Ltd. (NYSE Amex: GST) ("Gastar" or the "Company") today
announced its total proved Securities Exchange Commission ("SEC")
reserves as of December 31, 2011 and
approved its 2012 capital budget.
Proved Reserves
Gastar reported year-end 2011 proved natural gas, oil and
condensate and natural gas liquids (NGLs) reserves of 119.7 Bcfe
estimated in accordance with SEC regulations. This represents an
increase of 138% over year-end 2010 proved reserves of 50.3
Bcfe. Of the 119.7 Bcfe, 76.6% were attributable to natural
gas, 9.6% to oil and condensate and 13.8% to NGLs. The
pre-tax present value discounted at 10% ("PV-10") of the estimated
proved reserves increased to $217.1
million from $67.3 million at
year-end 2010. The Appalachian Basin represented 70% of
proved reserve volumes and 80% of the PV-10 value with East Texas comprising the majority of the
remainder of proved reserves and PV-10 value.
Proved undeveloped reserves at year-end 2011 represented
approximately 34% of total proved reserves compared to
approximately 17% at year-end 2010. Proved undeveloped
reserves at year-end 2011 were comprised of 41.2 Bcfe of
Appalachia Basin reserves having a PV-10 value of $67.3 million.
In accordance with SEC regulations, estimates of proved reserves
as of December 31, 2011 were made
using the 12-month unweighted arithmetic average of the
first-day-of-the-month price for each month in the period January
through December 2011. For natural gas volumes, the average
Henry Hub price utilized was $4.12
per MMbtu, and for oil volumes, the average West Texas Intermediate
price utilized was $92.71 per
barrel. The natural gas and oil prices are adjusted for
energy content or quality, transportation and regional price
differentials by area.
The Appalachian Basin proved reserves estimates as of
December 31, 2011 were prepared by
Wright & Company, Inc. Netherland
Sewell & Associates, Inc. prepared the East Texas and other areas reserves as of
December 31, 2011.
2012 Capital Budget
Gastar's Board of Directors has approved a 2012 capital
budget totaling $134.2 million.
In Appalachia, the Company expects to spend $103.0 million for drilling, completion,
infrastructure, lease acquisition and seismic costs. In East
Texas, the Company has budgeted $6.5
million. In addition, the Company has allocated
$19.8 million for a new Mid-Continent
oil-focused venture and $4.9 million
for capitalized interest and other costs. Drilling and
completion costs represent approximately $100.5 million of the total capital budget, of
which $88.9 million, or 89%, will be
spent on activities in the liquids-rich window of the Marcellus
Shale, and an additional $7.8
million, or 8%, will be directed to drilling the new oil
venture. Gastar anticipates funding this capital
activity through existing cash balances, internally generated cash
flow from operating activities, borrowings under the revolving
credit facility and possible future at-the-market issuances of
Series A Preferred Stock by Gastar Exploration USA, Inc. ("Gastar USA"), Gastar's first tier subsidiary and
primary operating company. Gastar exited 2011 with
$30 million outstanding under its
revolving credit facility and $10.6
million in cash.
Included in the 2012 capital budget are plans to drill and
complete 20 gross (10 net) operated new Marcellus horizontal wells
in Marshall County, West Virginia,
along with the completion of 10 gross (4.5 net) additional operated
Marcellus horizontal wells that were drilled and awaiting
completion as of December 31,
2011. Gastar exited 2011 with 9 gross (4.0 net) operated
Marcellus wells completed.
As mentioned above, Gastar has acquired an initial lease
position in a new oil play located in the Mid-Continent region and
plans to build the position, along with its partner, to
approximately 25,000 gross (12,500 net to Gastar) acres in
2012. Drilling is planned to commence in the second half of
2012 in hopes of developing a program focused on low-cost,
repeatable horizontal development of conventional oil-bearing
formations. Three gross (1.5 net) initial horizontal wells
are planned to be drilled and completed in this area during
2012. The Company will provide additional details on this new
oil play after Gastar and its partner have acquired sufficient
acreage to allow a multi-year development plan to be
undertaken.
Production Guidance
Based on the approved capital expenditure budget, Gastar
expects first quarter 2012 production to range from 26 MMcfe/d to
28 MMcfe/d. Gastar's operated production and sales in
West Virginia continues to be
impacted by issues with high line pressures on the third-party
operated gathering system. The operator of the gathering
system anticipates having the line pressure issues alleviated by
early February. The continued focus on condensate and oil and
NGL-rich projects should result in Gastar's first quarter 2012
production profile containing approximately 12% to 16%
liquids.
Preferred Share Issuances
During the fourth quarter ended December 31, 2011, Gastar USA issued 554,044 preferred shares for net
proceeds of $10.5 million resulting
in year-end 2011 total preferred shares issued of 1,364,543 for net
proceeds of $27.4 million. To
date during January 2012, Gastar
USA has issued an additional
499,387 preferred shares for net proceeds of $9.4 million, resulting in inception to date net
proceeds of $36.8
million.
J. Russell Porter, Gastar's
President and CEO, commented: "This 138% increase in our proved
reserves in 2011, and the 223% increase in the PV-10 value of those
reserves, reflects the significant success we achieved developing
our Marcellus acreage. It also reflects the benefit of the
$40 million drilling carry we
utilized during the year in the Marcellus Shale and the benefit of
strong oil and liquids prices.
"By concentrating on developing our liquids-rich acreage, we are
raising the percentage of oil, condensate and NGLs in our
production profile. As we test and potentially develop our
new oil play in the Mid-Continent, we may have an opportunity to
further increase the liquids content of our reserves and production
even more substantially."
About Gastar Exploration
Gastar Exploration Ltd. is an independent company
engaged in the exploration, development and production of natural
gas and oil in the United States. Our principal business
activities include the identification, acquisition, and subsequent
exploration and development of natural gas and oil properties with
an emphasis on prospective deep structures identified through
seismic and other analytical techniques as well as unconventional
natural gas reserves, such as shale resource plays. We are
pursuing natural gas exploration in the Marcellus Shale in the
Appalachian area of West Virginia
and central and southwestern Pennsylvania and in the deep Bossier gas play
in the Hilltop area of East Texas. We also conduct limited
coal bed methane development activities within the Powder River
Basin of Wyoming and
Montana. For more information, visit our web site at
www.gastar.com.
Safe Harbor Statement and
Disclaimer
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 risk inherent in natural gas and oil
drilling and production activities, including 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 with respect to natural gas and
oil prices, a material decline in which could cause Gastar to delay
or suspend planned drilling operations or reduce production levels;
risks relating to the availability of capital to fund drilling
operations that can be adversely affected by adverse drilling
results, production declines and declines in natural gas and oil
prices; risks relating to unexpected adverse developments in the
status of properties; risks relating to the absence or delay in
receipt of government approvals or fourth party consents; 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. 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.
Gastar's capital budget is subject to revision and reevaluation
dependent upon future developments including drilling results,
availability of crews, supplies and production capacity, weather
delays, significant changes in commodities prices or drilling
costs.
Year-end pre-tax discounted present value of proved reserves, or
PV-10, is a non-GAAP financial measure as defined by the SEC. It
differs from Standardized Measure of Discounted Future Net Cash
Flows ("SMOG") in that PV-10 excludes the discounted value of
estimated future income taxes. We believe that the
presentation of PV-10 is relevant and useful to our investors
because it presents the discounted future net cash flows
attributable to our proved reserves prior to taking into account
corporate future income taxes and our current tax structure. We
further believe investors and creditors use PV-10 as a basis for
comparison of the relative size and value of our reserves as
compared with other companies. The discounted value of future
income taxes is being evaluated and estimated in connection with
completion of Gastar's 2011 financial statements and a
reconciliation of PV-10 to SMOG will be included in Gastar's Form
10-K.
Contacts:
Gastar
Exploration Ltd.
J. Russell
Porter, Chief Executive Officer
713-739-1800 / rporter@gastar.com
Investor
Relations Counsel:
Lisa
Elliott
DRG&L:
713-529-6600
lelliott@drg-l.com / apearson@drg-l.com
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SOURCE Gastar Exploration Ltd.