Gastar Exploration Reports Third Quarter 2007 Financial and Operational Results



    HOUSTON, November 7 /CNW/ - Gastar Exploration Ltd. (AMEX:  GST) (TSX:YGA)
today reported financial and operational results for the three and nine months
ended September 30, 2007.

    Net loss for the third quarter of 2007 was $5.5 million, or $0.03 per
share, compared to a net loss of $7.7 million, or $0.05 per share, for the
third quarter of 2006. The third quarter 2006 net loss included a charge for
litigation settlement expense of $465,000.

    Revenues for the third quarter of 2007 increased 46% to approximately
$9.8 million, compared to revenues of $6.7 million for the comparable period
in 2006. The increase in revenue was primarily due to increased natural gas
production from new wells in East Texas, partially offset by a 10% decrease in
natural gas prices, mainly related to Wyoming production.

    Net cash flows provided by operating activities for the three months
ended September 30, 2007 were $5.5 million, compared to a cash loss of $2.3
million for the comparable period in 2006.

    Weighted average shares of common stock outstanding on a basic and
diluted basis increased 23% to 207.1 million shares for the third quarter of
fiscal 2007 compared to the year-earlier period.

    Average daily production for the third quarter of 2007 was 22.7 million
cubic feet of natural gas equivalent per day (MMcfe/d) -- an increase of 66%,
compared to 13.7 MMcfe/d for the third quarter of 2006 -- and a 50% increase
over production levels of 15.1 MMcfe/d for the second quarter of 2007, due to
three East Texas wells being brought on at high initial production rates. The
average realized price for natural gas in the third quarter of 2007 was $4.65
per Mcf compared to $5.14 per Mcf in the third quarter of 2006.

    Lease operating expense (LOE) was $1.7 million for both the third quarter
of 2007 and 2006. LOE per Mcfe decreased 40% to $0.81 per Mcfe during the
third quarter of 2007 from $1.35 per Mcfe for the comparable period in 2006
and decreased 26% from $1.10 per Mcfe for the second quarter of 2007. The
decrease in LOE per Mcfe was primarily due to higher production volumes
combined with lower ad valorem taxes and lower fixed costs associated with
natural gas treatment plants in East Texas.

    J. Russell Porter, Gastar's Chairman, President and CEO, stated, "We are
making excellent progress toward further delineating the value of our East
Texas and Australian assets. In East Texas the accumulated drilling and
production data is helping us to improve drilling results, and we are now
beginning to utilize our new 3-D seismic data to better identify future
drilling locations.

    "One of our best Deep Bossier wells to date, the Donelson #3, is
maintaining a solid production rate at approximately 13.7 MMcf/d. We are
currently drilling an offset well based on the new 3-D data, the Wildman Trust
#3, which should reach the Deep Bossier formation in mid-December. Due to the
success of our first horizontal Knowles Limestone well, the Lone Oak Ranch
("LOR") #4, we have secured a second rig which is currently drilling the LOR
#3, another horizontal well targeting the Knowles Limestone formation that is
expected to reach total depth in early December.

    "In the fourth quarter we expect production levels will be slightly lower
than what we averaged in the third quarter due to the natural decline in peak
production from the new East Texas wells brought on in July and August. In
addition, Wyoming production was curtailed during October due to low natural
gas prices being realized in the area. We should see improvement in production
volumes compared to the third quarter in the first quarter of 2008 as we
complete the Wildman Trust #3 and the LOR #3, assuming these come on
production as expected," added Porter.

    "In Australia, we received the initial proved and probable (2P) gas
reserve certification from our independent engineering firm, Netherland Sewell
& Associates, for PEL 238 in New South Wales. A total 59 Bcf were certified,
including 21 Bcf of gross proved (1P) reserves (6.6 Bcf net), although the
evaluated acreage covers less than 1 percent of the acreage. These reserve
estimates are made under the Society of Petroleum Engineers standards, and
none of these yet meets the definition of proved reserves under SEC
guidelines, primarily due to the early status of negotiations for contracts
for infrastructure and gas sales. This is just the first step toward defining
the value of our extensive acreage position in New South Wales. Our ongoing
nine-well pilot program is continuing to perform well, and we are currently
drilling a six-well corehole program designed to increase 2P reserve
certification by mid-2008."

    Nine Month Results:

    For the nine months ended September 30, 2007, Gastar reported a net loss
of $12.1 million, or $0.06 per share, compared to a net loss of $57.3 million,
or $0.34 per share, for the nine months ended September 30, 2006. Results for
the nine months of 2007 included a gain on the sale of unproved natural gas
and oil properties of $38.9 million, a non-cash full cost ceiling impairment
of natural gas and oil properties of $28.5 million and a $5.0 million
litigation settlement expense. Results for the first nine months of 2006
included a non-cash full cost ceiling impairment of natural gas and oil
properties of $37.3 million and a charge for litigation settlement expense of
$1.7 million. Excluding the effect of these items in both years, Gastar would
have incurred a loss of $17.5 million, or $0.09 per share, for the nine months
of 2007, compared to a loss of $18.4 million, or $0.11 per diluted share, for
the same period in 2006.

    Revenues for the nine months ended September 30, 2007 were $25.2 million,
compared to revenues of $20.0 million for the comparable period in 2006.
Average daily production for the nine months of 2007 was 17.3 MMcfe/d, up 37%
from 12.7 MMcfe/d for the nine months of 2006.

    Net cash flows provided by operating activities for the nine months ended
September 30, 2007 were $11.2 million, (excluding $38.9 million of gain on
sale and a $5.0 million litigation settlement accrual) compared to $415,000
for the comparable period in 2006 (including the payment of $1.7 million of
litigation settlement expense).

    Gastar Exploration Conference Call

    Gastar Exploration's management team will hold a conference call today,
Wednesday, November 7, at 2:00 p.m. Eastern Time (1:00 p.m. Central), to
discuss these results. To participate in the call, dial (303) 262-2141 at
least 10 minutes before the conference call begins and ask for the Gastar
Exploration conference call. A replay of the call will be available
approximately two hours after the call ends and will be accessible until
November 14, 2007. To access the replay, dial (303) 590-3000 and enter the
pass code 11100386 #.

    Investors, analysts and the general public can listen to the conference
call over the Internet by accessing Gastar's Web site at
http://www.gastar.com. To listen to the live call on the Web, please visit
Gastar's Web site at least 10 minutes early to register, download and install
any necessary audio software. An archive will be available shortly after the
call. For more information, please contact Donna Washburn at DRG&E at (713)
529-6600 or e-mail dmw@drg-e.com.

    About Gastar Exploration

    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 over 7 million gross (2.9 million
net) acres controlled by Gastar and its joint development partners in
Australia's Gunnedah Basin (PEL 238, PAL 2, PEL 433 and PEL 434) located in
New South Wales, and the Gippsland Basin (EL 4416), located in Victoria. 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 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 news 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 27, 2007 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
news release.

    The SEC has generally permitted oil and gas companies, in their filings
with the SEC, to disclose only proved reserves that, under SEC definitions and
guidelines, a company has demonstrated by actual production or conclusive
formation tests to be economically and legally producible under existing
economic and operating conditions. We use the terms in this announcement such
as "2P" or "probable" reserves, or other descriptions of volumes of
hydrocarbons that the SEC's guidelines would prohibit us from including in our
filings with the SEC. We also have included in this announcement information
concerning reserves attributed to our Australian coal bed methane pilot
program that are categorized as "proved" under the definitions and guidelines
set by the Society of Petroleum Engineers that would not be so categorized
under SEC definitions and guidelines. All of these volumes and estimates are
by their nature more speculative than estimates of proved reserves under SEC
definitions and guidelines and accordingly are subject to substantially
greater risk of being actually realized by us.

    
                   GASTAR EXPLORATION LTD. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                                 (Unaudited)


                         For the Three Months       For the Nine Months
                          Ended September 30,       Ended September 30,
                       ------------------------- -------------------------
                           2007         2006         2007         2006
                       ------------ ------------ ------------ ------------
                         (in thousands, except share and per share data)

    REVENUES           $     9,775  $     6,680  $    25,246  $    19,988

    EXPENSES:
      Production taxes         256          345          770        1,111
      Lease operating
       expenses              1,700        1,702        4,909        4,408
      Transportation
       and treating            426          487        1,088        1,103
      Depreciation,
       depletion and
       amortization          6,625        3,633       16,409       11,507
      Impairment of
       natural gas and
       oil properties            -            -       28,514       37,301
      Accretion of
       asset
       retirement
       obligation               77           59          215          173
      Mineral resource
       properties               15           40         (108)         230
      General and
       administrative
       expenses              3,193        4,018        9,897        9,644
      Litigation
       settlement
       expense                   -          465        4,972        1,665
                       ------------ ------------ ------------ ------------
        Total expenses      12,292       10,749       66,666       67,142
                       ------------ ------------ ------------ ------------

    LOSS FROM
     OPERATIONS             (2,517)      (4,069)     (41,420)     (47,154)

    OTHER (EXPENSES)
     INCOME:
      Interest expense      (4,100)      (3,998)     (11,781)     (11,573)
      Investment
       income and
       other                 1,084          372        2,219        1,391
      Gain on sale of
       unproved
       natural gas and
       oil properties            -            -       38,872            -
      Foreign exchange
       gain (loss)               7          (11)           9           (7)
                       ------------ ------------ ------------ ------------

    LOSS BEFORE INCOME
     TAXES                  (5,526)      (7,706)     (12,101)     (57,343)
      Provision for
       income taxes              -            -            -            -
                       ------------ ------------ ------------ ------------

    NET LOSS           $    (5,526) $    (7,706) $   (12,101) $   (57,343)
                       ------------ ------------ ------------ ------------

    NET LOSS PER
     SHARE:
      Basic and
       diluted         $     (0.03) $     (0.05) $     (0.06) $     (0.34)
                       ------------ ------------ ------------ ------------

    WEIGHTED AVERAGE
     COMMON SHARES
     OUTSTANDING:
      Basic and
       diluted         207,098,570  167,942,813  201,389,892  166,431,346
                       ------------ ------------ ------------ ------------
    

    
                            PRODUCTION AND PRICES

                               For the Three Months   For the Nine Months
                                Ended September 30,   Ended September 30,
                               --------------------- ---------------------
                                  2007       2006       2007       2006
                               ---------- ---------- ---------- ----------
    Production:
      Natural gas (MMcf)            2,085      1,234      4,696      3,411
      Oil (MBbls)                       1          5          7          8
         Total (MMcfe)              2,092      1,263      4,736      3,457
      MMcfe per day                  22.7       13.7       17.3       12.7

    Average sales prices:
      Natural gas (per Mcf)    $     4.65 $     5.14 $     5.29 $     5.70
      Oil (per Bbl)            $    74.34 $    69.02 $    61.01 $    68.19
    




For further information:

For further information: Gastar Exploration Ltd. Michael Gerlich, Vice
President and CFO, 713-739-1800 mgerlich@gastar.com or Investor Relations
Counsel: DRG&E Lisa Elliott, 713-529-6600 lelliott@drg-e.com Anne Pearson,
713-529-6600 apearson@drg-e.com

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GASTAR EXPLORATION, LTD.

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