GASTAR EXPLORATION LTD (GST, Financial) filed Quarterly Report for the period ended 2010-09-30.
Gastar Exploration Ltd has a market cap of $184.9 million; its shares were traded at around $3.68 with a P/E ratio of 52.3 and P/S ratio of 5.7. GST is in the portfolios of Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.
During the three months ended September 30, 2010, approximately 79% of our natural gas production was hedged. The realized effect of hedging on natural gas sales was an increase of $1.5 million in natural gas and oil revenues resulting in an increase in total price realized from $3.39 per Mcf to $4.09 per Mcf. The realized hedge impact includes a benefit of $159,000 for amortization of prepaid put purchase and call sale premiums. Excluding the non-cash amortization, the realized effect of hedging was an increase in revenues of $1.3 million comprised of
$2.1 million of NYMEX hedge gains offset by $275,000 of regional basis losses and deferred put premiums of $484,000. For the remainder of 2010, we have costless collar hedges for approximately 8,600 MMBtu per day representing approximately 39% of our estimated future natural gas production with a weighted average floor of $6.31, short put of $4.43 and a ceiling of $7.58. In addition, we have put spread hedges for approximately 9,400 MMBtu per day representing approximately 42% of our estimated future natural gas production with a weighted average floor of $5.93 and a short put of $4.19.
Lease operating expenses. We reported lease operating expenses of $1.5 million for the three months ended September 30, 2010 down from $1.8 million for the three months ended September 30, 2009. This decrease was primarily due to a $270,000 decrease in ad valorem taxes and an $89,000 decrease in lease operating expense partially offset by a $137,000 increase in workover expenses. Our lease operating expenses were $0.74 per Mcfe for the three months ended September 30, 2010 compared to $0.82 per Mcfe for the same period in 2009. The decrease in the rate per Mcfe was primarily due to lower ad valorem taxes of $0.12 per Mcfe partially offset by higher workover costs of $0.07 per Mcfe and lower production volumes.
Depreciation, depletion and amortization. We reported depreciation, depletion and amortization (DD&A) expense of $2.7 million for the three months ended September 30, 2010 down from $3.0 million for the three months ended September 30, 2009. The decrease in DD&A expense was the result of a 7% decrease in the DD&A rate per Mcfe and a 3% decrease in production. The DD&A rate for the three months ended September 30, 2010 was $1.28 per Mcfe compared to $1.38 per Mcfe for the same period in 2009. The decrease in the rate is primarily due to lower proved costs as a result of gathering system sales proceeds credited to proved property costs in late 2009.
General and administrative. We reported general and administrative expenses of $3.8 million for the three months ended September 30, 2010 down from $5.2 million for the three months ended September 30, 2009. Non-cash stock-based compensation expense, which is included in general and administrative expense, was $713,000 and $633,000 for the three months ended September 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 decreased $1.4 million to $3.1 million for the three months ended September 30, 2010 compared to September 30, 2009. This decrease is primarily due to a $612,000 decrease in personnel and contract labor expense and a $1.1 million decrease in bonuses due to the 2009 payment of one-time bonuses related to the sale of the Australian Assets partially offset by a $413,000 increase in legal expense.
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Gastar Exploration Ltd has a market cap of $184.9 million; its shares were traded at around $3.68 with a P/E ratio of 52.3 and P/S ratio of 5.7. GST is in the portfolios of Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
ClassicStar Mare Lease Litigation Settlement. On October 26-27, 2010, we signed a letter of intent with representatives of the ClassicStar Mare Lease Litigation plaintiffs outlining a proposed settlement agreement where we would pay to the plaintiffs an aggregate of $21.2 million in cash, including an initial $18.0 million payment to be paid late fourth quarter of 2010 and the remaining $3.2 million as a non-interest bearing payment obligation consisting of sixteen monthly payments, the first of which shall be $150,000 and the next fifteen of which shall be $200,000 each, in exchange for dismissal of the plaintiffs claims in all seven cases. The proposed settlement is contingent upon approval of the Bankruptcy Court. We recorded $21.2 million in litigation settlement expense in the Statement of Operations for the nine months ended September 30, 2010 and short-term and long-term litigation settlement liabilities of $19.8 million and $1.4 million, respectively, on the Balance Sheet at September 30, 2010.During the three months ended September 30, 2010, approximately 79% of our natural gas production was hedged. The realized effect of hedging on natural gas sales was an increase of $1.5 million in natural gas and oil revenues resulting in an increase in total price realized from $3.39 per Mcf to $4.09 per Mcf. The realized hedge impact includes a benefit of $159,000 for amortization of prepaid put purchase and call sale premiums. Excluding the non-cash amortization, the realized effect of hedging was an increase in revenues of $1.3 million comprised of
$2.1 million of NYMEX hedge gains offset by $275,000 of regional basis losses and deferred put premiums of $484,000. For the remainder of 2010, we have costless collar hedges for approximately 8,600 MMBtu per day representing approximately 39% of our estimated future natural gas production with a weighted average floor of $6.31, short put of $4.43 and a ceiling of $7.58. In addition, we have put spread hedges for approximately 9,400 MMBtu per day representing approximately 42% of our estimated future natural gas production with a weighted average floor of $5.93 and a short put of $4.19.
Lease operating expenses. We reported lease operating expenses of $1.5 million for the three months ended September 30, 2010 down from $1.8 million for the three months ended September 30, 2009. This decrease was primarily due to a $270,000 decrease in ad valorem taxes and an $89,000 decrease in lease operating expense partially offset by a $137,000 increase in workover expenses. Our lease operating expenses were $0.74 per Mcfe for the three months ended September 30, 2010 compared to $0.82 per Mcfe for the same period in 2009. The decrease in the rate per Mcfe was primarily due to lower ad valorem taxes of $0.12 per Mcfe partially offset by higher workover costs of $0.07 per Mcfe and lower production volumes.
Depreciation, depletion and amortization. We reported depreciation, depletion and amortization (DD&A) expense of $2.7 million for the three months ended September 30, 2010 down from $3.0 million for the three months ended September 30, 2009. The decrease in DD&A expense was the result of a 7% decrease in the DD&A rate per Mcfe and a 3% decrease in production. The DD&A rate for the three months ended September 30, 2010 was $1.28 per Mcfe compared to $1.38 per Mcfe for the same period in 2009. The decrease in the rate is primarily due to lower proved costs as a result of gathering system sales proceeds credited to proved property costs in late 2009.
General and administrative. We reported general and administrative expenses of $3.8 million for the three months ended September 30, 2010 down from $5.2 million for the three months ended September 30, 2009. Non-cash stock-based compensation expense, which is included in general and administrative expense, was $713,000 and $633,000 for the three months ended September 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 decreased $1.4 million to $3.1 million for the three months ended September 30, 2010 compared to September 30, 2009. This decrease is primarily due to a $612,000 decrease in personnel and contract labor expense and a $1.1 million decrease in bonuses due to the 2009 payment of one-time bonuses related to the sale of the Australian Assets partially offset by a $413,000 increase in legal expense.
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