Gastar Exploration Announces Results of Operations For the Quarter and Year Ended December 31, 2006



    HOUSTON, March 27 /CNW/ - Gastar Exploration Ltd. (AMEX:  GST) (TSX:YGA)
reported a net loss attributable to common shares for the three months ended
December 31, 2006 of $27.5 million, or $0.15 per basic and diluted common
share, compared to a net loss of $4.8 million, or $0.03 per basic and diluted
common share, for the three months ended December 31, 2005. The fourth quarter
2006 loss included an impairment of natural gas and oil properties of $19.0
million and litigation settlement expense of $742,000. Total revenues for the
three months ended December 31, 2006 were $6.8 million, a decrease of $3.1
million, as compared to revenues of $9.9 million for the 2005 comparable
period. The decrease in 2006 quarterly revenues was the result of a 35%
decrease in prices, which was partially offset by a 5% increase in production.
Average daily production for the three months ended December 31, 2006 was 13.7
million cubic feet of natural gas equivalents per day ("MMcfed"), compared to
13.0 MMcfed for the three months ended December 31, 2005. Average daily
production for the fourth quarter was flat to third quarter 2006 due to delays
in the completion of several Bossier wells. EBITDA, as defined below, for the
three months ended December 31, 2006 was $396,000, down from EBITDA of $4.7
million for the three months ended December 31, 2005.

    Gastar reported a net loss attributable to common shares for the year
ended December 31, 2006 of $84.8 million, or $0.50 per basic and diluted
common share, compared to a net loss of $25.7 million, or $0.20 per basic and
diluted common share, for the year ended December 31, 2005. The net loss for
2006 and 2005 includes impairment of natural gas and oil properties of $56.3
million and $8.7 million, respectively. Year end 2006 results also included
litigation settlement expense of $2.4 million. Total revenues for the year
ended December 31, 2006 were $26.8 million, a decrease of $600,000 from
revenues of $27.4 million for the 2005 comparable period. The decrease in 2006
revenues was the result of a 21% decrease in prices, which was partially
offset by a 23% increase in annual production. Average daily production for
the year ended December 31, 2006 was 12.9 MMcfed, compared to 10.5 MMcfed for
the year ended December 31, 2005. EBITDA for the year ended December 31, 2006
was $3.6 million, down from $12.3 million for the year ended December 31,
2005.

    Total proved reserves as of December 31, 2006 were 31.2 billion cubic
feet of natural gas and 30,000 barrels of oil. The present value of estimated
future cash flows before income taxes as of December 31, 2006, based on the
weighted average natural gas and oil prices, after basis adjustments, of $4.76
per Mcf and $56.59 per barrel, discounted at 10% per annum, was $40.3 million.
Current year reserves were negatively impacted by a 36% decrease in realized
natural gas prices from year end 2005 and a 10 billion cubic feet equivalent
("Bcfe") downward revision in Gastar's Powder River Basin coal bed methane
reserves. The Powder River Basin revision was the result of lower gas prices
and basin-wide performance revisions.

    J. Russell Porter, Gastar's President and Chief Executive Officer, made
the following comment, "The fourth quarter results for 2006 were negatively
impacted by the downward revision of Powder River Basin coal bed methane
reserves and lower natural gas prices at year-end resulting in additional
non-cash ceiling impairment charges. The downward revision overshadowed the
success of our 2006 East Texas deep Bossier results. Including positive
reserve revisions related to well performance, our 2006 deep Bossier reserves
increased 86% to 21 Bcfe after production of 2.9 Bcfe. The success of wells
drilled in late 2006 and completed in 2007 was not fully recognized in our
year-end reserve estimates. The impact of these recent wells is demonstrated
in our gross sales rate for the East Texas area which has nearly doubled since
year-end. The 3-D seismic survey that was recently delivered for processing
should be available in the second quarter to better define and high grade our
Bossier drilling opportunities in the second half of 2007."

    Gastar Exploration Ltd. is an exploration and production company focused
on finding and developing natural gas assets in North America and Australia.
The Company pursues a strategy combining select higher risk, deep natural gas
exploration prospects with lower risk coal bed methane (CBM) development. The
Company owns and operates exploration and development acreage in the deep
Bossier gas play of East Texas. Gastar's CBM activities are conducted within
the Powder River Basin of Wyoming and on approximately 3.0 million gross acres
controlled by Gastar and its joint development partners in Australia's
Gunnedah Basin, PEL 238, located in New South Wales and the Gippsland Basin,
EL 4416, located in Victoria.

    Safe Harbor Statement and Disclaimer

    This news release includes "forward looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Act of 1934. A statement identified by the words "expects",
"projects", "plans", 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 press release. These include risks inherent in the drilling
of natural gas and oil wells, including risks of fire, explosion, blowouts,
pipe failure, casing collapse, unusual or unexpected formation pressures,
environmental hazards, and other operating and production risks inherent in
the natural gas and oil drilling and production activities, 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, risks with respect to
natural gas and oil prices, a material decline in which could cause the
Company to delay or suspend planned drilling operations or reduce production
levels, and 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 and other risk
factors described in the Company's Annual Report on Form 10-K, as filed on
March 31, 2006 with the SEC at www.sec.gov and on the System for Electronic
Document Analysis and Retrieval (SEDAR) at www.sedar.com.

    The American Stock Exchange and the Toronto Stock Exchange have not
reviewed and do not accept responsibility for the adequacy or accuracy of this
release.

    
                           GASTAR EXPLORATION LTD.
                    CONSOLIDATED STATEMENTS OF OPERATIONS

                                              For the Years Ended
                                                 December 31,
                                     -------------------------------------
                                           2006               2005
                                     ------------------ ------------------
                                     (in thousands, except per share data)

    REVENUES                                   $26,765            $27,442

    EXPENSES:
         Lease operating,
          transportation and selling
          expenses                               8,584              6,910
         Depreciation, depletion and
          amortization                          16,332             13,914
         Impairment of natural gas
          and oil properties                    56,280              8,697
         Accretion of asset
          retirement obligation                    234                109
         Mineral resource properties               450                 65
         General and administrative
          expenses                              13,548              8,710
         Litigation settlement
          expense                                2,407                  -
                                     ------------------ ------------------
             Total expenses                     97,835             38,405
                                     ------------------ ------------------

    LOSS FROM OPERATIONS                       (71,070)           (10,963)

    OTHER (EXPENSES) INCOME:
         Interest expense                      (15,599)           (15,261)
         Investment income and other             1,836                492
         Foreign translation (loss)
          gain                                      (6)                40
                                     ------------------ ------------------

    LOSS BEFORE INCOME TAXES                   (84,839)           (25,692)
         Provision for income taxes                  -                  -
                                     ------------------ ------------------

    NET LOSS                                  $(84,839)          $(25,692)
                                     ------------------ ------------------

    NET LOSS PER SHARE:
         Basic and diluted                      $(0.50)            $(0.20)
                                     ------------------ ------------------

    WEIGHTED AVERAGE COMMON SHARES
     OUTSTANDING:
         Basic and diluted                     170,015            129,398
                                     ------------------ ------------------

    

    
                        PRODUCTION, PRICES AND EBITDA

                                      For the Three
                                       Months Ended    For the Years Ended
                                       December 31,        December 31,
                                   ------------------- -------------------
                                     2006      2005      2006      2005
                                   --------- --------- --------- ---------
    Production:
      Natural gas (MMcf)            1,235.8   1,195.2   4,646.3   3,810.0
      Oil and condensate (MBbls)        3.8       0.3      11.6       1.9
         Total (MMcfe)              1,258.7   1,197.0   4,716.1   3,821.5

         Total (MMcfed)                13.7      13.0      12.9      10.5

    Average sales price:
      Natural gas (per Mcf)           $5.31     $8.31     $5.60     $7.18
      Oil and condensate (per Bbl)   $57.49    $54.03    $64.66    $50.85

    EBITDA (in thousands) (1)          $396    $4,665    $3,606   $12,289
    

    
    (1)  EBITDA represents earnings before interest expense, accretion of
          asset retirement obligations, depletion, depreciation and
          amortization, impairment of natural gas and oil properties and
          provision for income taxes. We have reported EBITDA because we
          believe EBITDA is a measure commonly reported and widely used by
          investors as an indicator of a company's operating performance
          and ability to incur and service debt. We believe EBITDA assists
          investors in comparing a company's performance on a consistent
          basis without regard to depreciation, depletion and
          amortization, impairment of natural gas and oil properties and
          exploration expenses, which can vary significantly depending
          upon accounting methods. EBITDA is not a calculation based on
          U.S. generally accepted accounting principles and should not be
          considered an alternative to net income (loss) in measuring our
          performance or used as an exclusive measure of cash flow because
          it does not consider the impact of working capital growth,
          capital expenditures, debt principal reductions and other
          sources and uses of cash, which are disclosed in our statements
          of cash flows. Investors should carefully consider the specific
          items included in our computation of EBITDA. While we have
          disclosed our EBITDA to permit a more complete comparative
          analysis of our operating performance and debt servicing ability
          relative to other companies, investors should be cautioned that
          EBITDA as reported by us may not be comparable in all instances
          to EBITDA as reported by other companies. EBITDA amounts may not
          be fully available for management's discretionary use, due to
          requirements to conserve funds for capital expenditures, debt
          service, preferred stock dividends and other commitments.
    

    A reconciliation of net loss to EBITDA for the periods indicated is
presented below.

    
                                      For the Three
                                       Months Ended    For the Years Ended
                                       December 31,        December 31,
                                   ------------------- -------------------
                                     2006      2005      2006      2005
                                   --------- --------- --------- ---------
                                               (in thousands)
    Net loss for the period        $(27,496)  $(4,771) $(84,839) $(25,692)
    Interest expense                  4,027     4,554    15,599    15,261
    Accretion of asset retirement
     obligations                         61        31       234       109
    Depletion, depreciation and
     amortization                     4,825     4,851    16,332    13,914
    Impairment of natural gas and
     oil properties                  18,979         -    56,280     8,697
    Provision for income taxes            -         -         -         -
                                   --------- --------- --------- ---------
       EBITDA                          $396    $4,665    $3,606   $12,289
                                   --------- --------- --------- ---------
    




For further information:

For further information: Gastar Exploration Ltd., Houston J. Russell
Porter, 713-739-1800 FAX: 713-739-0458 E-Mail: rporter@gastar.com Web Site:
www.gastar.com

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