Gastar Exploration Reports Second Quarter 2007 Financial and Operational Results



    HOUSTON, August 14 /CNW/ - Gastar Exploration Ltd. (AMEX:  GST) and
(TSX:YGA) today reported financial and operational results for the three and
six months ended June 30, 2007.

    Net income attributable to common shares for the second quarter of 2007
was $4.4 million, or $0.02 per basic and diluted share, compared to a net loss
of $6.7 million, or $0.04 per basic and diluted share, for the second quarter
of 2006. Net income for the second quarter of 2007 included a gain on the sale
of unproved natural gas and oil properties of $38.9 million, which was
partially offset by a non-cash full cost ceiling impairment of natural gas and
oil properties of $28.5 million. The second quarter 2006 net loss included a
charge for litigation settlement expense of $1.2 million. Excluding the effect
of these items in both years, Gastar would have incurred a second quarter loss
of $6.0 million, or $0.03 per share, for 2007, compared to a loss of $5.5
million, or $0.03 per share, for the second quarter of 2006.

    Total revenues for the three months ended June 30, 2007 were
approximately $8.0 million, compared to $6.7 million for the comparable period
in 2006. Of the 19% increase in revenues, 76% was attributable to increases in
production resulting from the commencement of production of natural gas from
new wells in East Texas in 2007, and 24% was attributable to increases in
natural gas prices. Net cash flows provided by operating activities for the
three months ended June 30, 2007 were $5.4 million, compared to $5.5 million
for the comparable period in 2006. Weighted average shares of common stock
outstanding on a basic and diluted basis increased 21% to 201.9 million shares
for the second quarter of fiscal 2007 compared to the year earlier-period.

    Average daily production for the second quarter of 2007 was 15.1 million
cubic feet of natural gas equivalents per day (MMcfe/d), an increase of 14%,
compared to 13.2 MMcfe/d for the second quarter of 2006 and a 7% increase over
production levels of 14.1 MMcfe/d for the first quarter of 2007. Lease
operating expense (LOE) was $1.5 million both for the second quarter of 2007
and for the same period of 2006. LOE per Mcfe decreased to $1.10 per Mcfe
during the second quarter of 2007 from $1.21 per Mcfe for the comparable
period in 2006. The decrease in LOE per Mcfe was primarily due to higher
production volumes and lower ad valorem taxes, which were partially offset by
unexpected workover costs in East Texas.

    In May 2007, the Company sold a portion of its undeveloped natural gas
and oil acreage in the Hilltop area of East Texas for approximately $68.2
million, before transaction costs, resulting in a gain on the sale of $38.9
million. In the second quarter of 2007, a $28.5 million non-cash full cost
ceiling impairment of natural gas and oil properties was recorded. The
weighted average natural gas price used for the June 30, 2007 ceiling
impairment evaluation was $5.75 per Mcf, held constant, as compared to $6.31
for the March 31, 2007 similar evaluation, when there was no impairment. There
was no impairment recorded for the three months ended June 30, 2006. The
second quarter 2006 loss included $1.2 million of litigation expense.

    J. Russell Porter, Gastar's Chairman, President and CEO, stated, "During
the second quarter, we participated in the drilling of 2 gross (1.1 net) wells
in our deep Bossier gas play of East Texas, with a 100% success rate. In early
August, we announced our best East Texas well initial production rate to date
- the Donelson #3, which is currently producing at a gross sales rate of
approximately 20 MMcf/d. We are drilling a horizontal Knowles Limestone well,
the Lone Oak Ranch #4, after encouraging results from a vertical Knowles
Limestone well, the John Parker #3.

    "While not reflected in our financial statements, in Australia the
production pilot program on PEL 238 is progressing well, and we expect to
receive the initial probable (2P) reserve certification from our independent
engineering firm, Netherland Sewell & Associates, by the end of the year. We
are currently drilling a six-well corehole program designed to increase 2P
reserve certification by year-end or the first quarter of 2008. A Memorandum
of Understanding signed with Macquarie Generation provides the framework for a
potentially substantial market for gas from this project. Our joint venture
group has also been approached by other potential gas buyers for sizable
volume commitments.

    "For the balance of 2007, we will drill at least one additional deep
Bossier well, likely an offset to the Donelson #3 well, and either one more
additional deep Bossier well or another Knowles Limestone horizontal well,
depending on the results of the Lone Oak Ranch #4. We also anticipate that the
Odom #1 re-drill, a lower Yegua prospect located in Orange County, Texas, will
spud during the third quarter."

    First Half Results

    For the six months ended June 30, 2007, Gastar reported a net loss
attributable to common shares of $6.6 million, or $0.03 per basic and diluted
share, compared to a net loss of $49.6 million, or $0.30 per basic and diluted
share, for the six months ended June 30, 2006. Results for the first six
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 six 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 $1.2 million.
Excluding the effect of these items in both years, Gastar would have incurred
a loss of $12.0 million, or $0.06 per share, for the first six months of 2007,
compared to a loss of $11.1 million, or $0.07 per diluted share, for the same
period in 2006.

    Total revenues for the six months ended June 30, 2007 were $15.5 million,
compared to $13.3 million for the comparable period in 2006. Average daily
production for the six months ended June 30, 2007 was 14.6 MMcfe/d, up 21%
from 12.1 MMcfe/d for the six months ended June 30, 2006. Net cash flows
provided by operating activities for the six months ended June 30, 2007 were
$5.7 million, compared to $2.7 million for the comparable period in 2006.

    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 approximately 3 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. 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.

    
                           GASTAR EXPLORATION LTD.
                    CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (unaudited)

                        For the Three Months        For the Six Months
                           Ended June 30,             Ended June 30,
                      ------------------------- --------------------------
                          2007         2006         2007         2006
                      ------------ ------------ ------------ -------------
                             (in thousands, except per share data)

    REVENUES               $7,956       $6,684      $15,471      $13,307

    EXPENSES:
      Production taxes        220          366          514          766
      Lease operating
       expenses             1,514        1,450        3,209        2,706
      Transportation
       and treating           339          312          662          616
      Depreciation,
       depletion and
       amortization         5,443        3,565        9,784        7,874
      Impairment of
       natural gas and
       oil properties      28,514            -       28,514       37,301
      Accretion of
       asset
       retirement
       obligation              72           57          138          114
      Mineral resource
       properties            (136)          33         (123)         190
      General and
       administrative
       expenses             3,519        3,107        6,704        5,626
      Litigation
       settlement
       expense                  -        1,200        4,972        1,200
                      ------------ ------------ ------------ -------------
          Total
           expenses        39,485       10,090       54,374       56,393
                      ------------ ------------ ------------ -------------

    LOSS FROM
     OPERATIONS           (31,529)      (3,406)     (38,903)     (43,086)

    OTHER (EXPENSES)
     INCOME:
      Interest expense     (3,738)      (3,816)      (7,681)      (7,575)
      Investment
       income and
       other                  772          492        1,135        1,020
      Gain on sale of
       unproved
       natural gas and
       oil properties      38,872            -       38,872            -
      Foreign exchange
       gain                     3            3            2            4
                      ------------ ------------ ------------ -------------

    INCOME (LOSS)
     BEFORE INCOME
     TAXES                  4,380       (6,727)      (6,575)     (49,637)
      Provision for
       income taxes             -            -            -            -
                      ------------ ------------ ------------ -------------

    NET INCOME (LOSS)      $4,380      $(6,727)     $(6,575)    $(49,637)
                      ------------ ------------ ------------ -------------

    NET INCOME (LOSS)
     PER SHARE:
      Basic and
       diluted              $0.02       $(0.04)      $(0.03)      $(0.30)
                      ------------ ------------ ------------ -------------

    WEIGHTED AVERAGE
     COMMON SHARES
     OUTSTANDING:
      Basic and
       diluted        201,918,634  166,513,762  198,488,244  165,663,086
                      ------------ ------------ ------------ -------------


                            PRODUCTION AND PRICES

                        For the Three Months        For the Six Months
                           Ended June 30,             Ended June 30,
                      ------------------------- --------------------------
                          2007         2006         2007         2006
                      ------------ ------------ ------------ -------------
    Production:
      Natural gas
       (MMcf)             1,357.7      1,182.8      2,610.8      2,176.2
      Oil (MBbls)             2.4          2.8          5.6          3.0
         Total (MMcfe)    1,372.2      1,199.3      2,644.3      2,194.2
      MMcfe per day          15.1         13.2         14.6         12.1

    Average sales
     prices:
      Natural gas (per
       Mcf)                 $5.75        $5.49        $5.80        $6.02
      Oil (per Bbl)        $63.06       $67.29       $58.49       $66.87
    




For further information:

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

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GASTAR EXPLORATION, LTD.

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