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GASTAR EXPLORATION LTD Reports Operating Results (10-Q)

August 05, 2010 | About:
10qk

10qk

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GASTAR EXPLORATION LTD (GST) filed Quarterly Report for the period ended 2010-06-30.

Gastar Exploration Ltd has a market cap of $205.6 million; its shares were traded at around $4.08 with and P/S ratio of 6.2. Gastar Exploration Ltd had an annual average earning growth of 1.7% over the past 5 years.GST is in the portfolios of Chuck Royce of Royce& Associates.
This is the annual revenues and earnings per share of GST over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of GST.


Highlight of Business Operations:

During the three months ended June 30, 2010, approximately 67% of our natural gas production was hedged. The realized effect of hedging on natural gas sales was an increase of $1.6 million in revenues resulting in an increase in total price realized from $3.50 per Mcf to $4.62 per Mcf. The realized hedge impact includes $724,000 of amortization of prepaid put purchase and call sale premiums and contract monetizations. Excluding the non-cash amortization, the realized effect of hedging was a gain of $2.3 million comprised of $2.7 million of NYMEX hedge gains offset by $353,000 of regional basis losses. For the remainder of 2010, we have costless collar hedges for approximately 20,000 MMBtu per day representing 81% of our estimated future natural gas production with a weighted average floor of $5.91, short put of $4.35 and a ceiling of $7.48. In addition, we have put spread hedges for approximately 9,200 MMBtu per day representing 37% of our estimated future natural gas production with a weighted average floor of $6.03 and a short put of $4.24.

Lease operating expenses. We reported lease operating expenses of $1.9 million for the three months ended June 30, 2010 up from $1.4 million for the three months ended June 30, 2009. This increase was primarily due to an increase in workover expenses of $410,000 and slightly higher ad valorem costs. Our lease operating expenses were $1.33 per Mcfe for the three months ended June 30, 2010 compared to $0.62 per Mcfe for the same period in 2009. The increase in the rate per Mcfe was primarily due to lower production volumes and higher workover costs of $0.30 per Mcfe.

General and administrative. We reported general and administrative expenses of $3.9 million for the three months ended June 30, 2010 up from $3.5 million for the three months ended June 30, 2009. Non-cash stock-based compensation expense, which is included in general and administrative expense, was $880,000 and $713,000 for the three months ended June 30, 2010 and 2009, respectively. The increase in stock-based compensation expense is due primarily to the issuance of additional restricted shares with a higher fair value. Excluding stock-based compensation expense, general and administrative expense increased $290,000 to $3.1 million for the three months ended June 30, 2010 compared to June 30, 2009. This increase is primarily due to higher legal costs of $669,000 related to ongoing litigation matters and lower contract labor expense.

During the six months ended June 30, 2010, approximately 52% of our natural gas production was hedged. The realized effect of hedging on natural gas sales was an increase of $594,000 in revenues resulting in an increase in total price received from $3.97 per Mcf to $4.16 per Mcf. The realized hedge impact includes $1.8 million of amortization of prepaid put purchase and call sale premiums. Excluding the non-cash amortization, the realized effect of hedging was a gain of $2.4 million comprised of $3.4 million of NYMEX hedge gains offset by $1.0 million of regional basis losses.

Lease operating expenses. We reported lease operating expenses of $3.7 million for the six months ended June 30, 2010 up from $3.3 million for the six months ended June 30, 2009. This increase was primarily due to an increase in workover expenses of $292,000 and slightly higher ad valorem taxes. Our lease operating expenses were $1.14 per Mcfe for the six months ended June 30, 2010 compared to $0.66 per Mcfe for the same period in 2009. The increase in the rate per Mcfe was primarily due to lower production volumes and an increase in workover costs of $0.14 per Mcfe.

General and administrative. We reported general and administrative expenses of $7.8 million for the six months ended June 30, 2010 up from $6.4 million for the six months ended June 30, 2009. Non-cash stock-based compensation expense, which is included in general and administrative expense, was $1.6 million and $2.1 million for the six months ended June 30, 2010 and 2009, respectively. The decrease in stock-based compensation expense is due primarily to the decision in March 2009 to pay the 2008 management bonuses of $801,000 in vested restricted common shares in lieu of cash. Excluding stock-based compensation expense, general and administrative expense increased $1.8 million to $6.1 million for the six months ended June 30, 2010 compared to June 30, 2009. This increase is primarily due to higher legal costs of $1.5 million related to ongoing litigation matters and lower personnel costs for the six months ended June 30, 2009 due to the March 2009 payment of 2008 management bonuses in restricted common shares rather than in cash.

Read the The complete Report

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