Exhibit
99.1
NEWS
RELEASE
Contact:
Gastar
ration Ltd.
Michael
A. Gerlich, Chief Financial Officer
713-739-1800
/ mgerlich@gastar.com
Investor
Relations Counsel:
Lisa
Elliott / Anne Pearson
DRG&L:
713-529-6600
lelliott@drg-l.com
/ apearson@drg-l.com
|
|
For
the Three Months Ended
September
30,
|
For
the Nine Months Ended
September
30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
(in
thousands, except share and per share data)
|
||||||||||||||||
REVENUES:
|
||||||||||||||||
Natural
gas and oil revenues
|
$ | 8,657 | $ | 7,553 | $ | 22,152 | $ | 32,976 | ||||||||
Unrealized
natural gas hedge gain (loss)
|
5,487 | (3,290 | ) | 13,893 | (7,912 | ) | ||||||||||
Total
revenues
|
14,144 | 4,263 | 36,045 | 25,064 | ||||||||||||
EXPENSES:
|
||||||||||||||||
Production
taxes
|
84 | 76 | 300 | 325 | ||||||||||||
Lease
operating expenses
|
1,549 | 1,759 | 5,206 | 5,085 | ||||||||||||
Transportation,
treating and gathering
|
1,165 | 172 | 3,508 | 990 | ||||||||||||
Depreciation,
depletion and amortization
|
2,673 | 2,954 | 6,068 | 14,314 | ||||||||||||
Impairment
of natural gas and oil properties
|
- | - | - | 68,729 | ||||||||||||
Accretion
of asset retirement obligation
|
101 | 90 | 292 | 265 | ||||||||||||
General
and administrative expense
|
3,842 | 5,156 | 11,618 | 11,601 | ||||||||||||
Litigation
settlement expense
|
21,150 | - | 21,150 | - | ||||||||||||
Total
expenses
|
30,564 | 10,207 | 48,142 | 101,309 | ||||||||||||
LOSS
FROM OPERATIONS
|
(16,420 | ) | (5,944 | ) | (12,097 | ) | (76,245 | ) | ||||||||
OTHER
INCOME (EXPENSE):
|
||||||||||||||||
Interest
expense
|
(22 | ) | (1,031 | ) | (120 | ) | (3,330 | ) | ||||||||
Early
extinguishment of debt
|
- | (15,902 | ) | - | (15,902 | ) | ||||||||||
Investment
income and other
|
3 | 499 | 1,343 | 522 | ||||||||||||
Gain
on sale of assets
|
- | 193,376 | - | 193,376 | ||||||||||||
Unrealized
warrant derivative gain (loss)
|
2 | (495 | ) | 205 | (495 | ) | ||||||||||
Foreign
transaction gain
|
14 | 3,765 | 349 | 3,762 | ||||||||||||
INCOME
(LOSS) BEFORE PROVISION FOR INCOME TAXES
|
(16,423 | ) | 174,268 | (10,320 | ) | 101,688 | ||||||||||
Provision
for income tax expense (benefit)
|
(12 | ) | 65,776 | (804 | ) | 65,776 | ||||||||||
NET
INCOME (LOSS)
|
$ | (16,411 | ) | $ | 108,492 | $ | (9,516 | ) | $ | 35,912 | ||||||
NET
INCOME (LOSS) PER SHARE:
|
||||||||||||||||
Basic
|
$ | (0.33 | ) | $ | 2.21 | $ | (0.19 | ) | $ | 0.80 | ||||||
Diluted
|
$ | (0.33 | ) | $ | 2.21 | $ | (0.19 | ) | $ | 0.79 | ||||||
WEIGHTED
AVERAGE COMMON SHARES OUTSTANDING:
|
||||||||||||||||
Basic
|
49,148,207 | 48,990,509 | 49,063,253 | 45,126,907 | ||||||||||||
Diluted
|
49,148,207 | 49,107,492 | 49,063,253 | 45,243,890 |
September
30,
2010
|
December
31,
2009
|
|||||||
(Unaudited)
|
||||||||
(in
thousands)
|
||||||||
ASSETS
|
||||||||
CURRENT
ASSETS:
|
||||||||
Cash
and cash equivalents
|
$ | 6,937 | $ | 21,866 | ||||
Term
deposit
|
- | 69,662 | ||||||
Accounts
receivable, net of allowance for doubtful accounts of $577 and $609,
respectively
|
2,954 | 5,336 | ||||||
Receivable
from unproved property sale
|
- | 19,412 | ||||||
Commodity
derivative contracts
|
12,233 | 4,870 | ||||||
Prepaid
expenses
|
269 | 669 | ||||||
Total
current assets
|
22,393 | 121,815 | ||||||
PROPERTY,
PLANT AND EQUIPMENT:
|
||||||||
Natural
gas and oil properties, full cost method of accounting:
|
||||||||
Unproved
properties, excluded from amortization
|
151,793 | 132,720 | ||||||
Proved
properties
|
338,954 | 313,100 | ||||||
Total
natural gas and oil properties
|
490,747 | 445,820 | ||||||
Furniture
and equipment
|
1,032 | 867 | ||||||
Total
property, plant and equipment
|
491,779 | 446,687 | ||||||
Accumulated
depreciation, depletion and amortization
|
(290,094 | ) | (284,026 | ) | ||||
Total
property, plant and equipment, net
|
201,685 | 162,661 | ||||||
OTHER
ASSETS:
|
||||||||
Restricted
cash
|
50 | 50 | ||||||
Commodity
derivative contracts
|
11,567 | 10,698 | ||||||
Deferred
charges, net
|
567 | 764 | ||||||
Drilling
advances and other assets
|
100 | 250 | ||||||
Total
other assets
|
12,284 | 11,762 | ||||||
TOTAL
ASSETS
|
$ | 236,362 | $ | 296,238 | ||||
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
||||||||
CURRENT
LIABILITIES:
|
||||||||
Accounts
payable
|
$ | 3,127 | $ | 8,291 | ||||
Revenue
payable
|
4,556 | 4,621 | ||||||
Accrued
interest
|
167 | 130 | ||||||
Accrued
drilling and operating costs
|
3,540 | 736 | ||||||
Commodity
derivative contracts
|
3,263 | 3,678 | ||||||
Commodity
derivative premium payable
|
3,024 | 1,190 | ||||||
Accrued
litigation settlement liability
|
19,750 | - | ||||||
Short-term
loan
|
- | 17,000 | ||||||
Accrued
taxes payable
|
- | 75,887 | ||||||
Other
accrued liabilities
|
1,706 | 1,438 | ||||||
Total
current liabilities
|
39,133 | 112,971 | ||||||
LONG-TERM
LIABILITIES:
|
||||||||
Long-term
debt
|
24,000 | - | ||||||
Commodity
derivative contracts
|
2,141 | 4,047 | ||||||
Commodity
derivative premium payable
|
5,838 | 8,176 | ||||||
Accrued
litigation settlement liability
|
1,400 | - | ||||||
Asset
retirement obligation
|
6,463 | 5,943 | ||||||
Warrant
derivative
|
- | 205 | ||||||
Total
long-term liabilities
|
39,842 | 18,371 | ||||||
Commitments
and contingencies (Note 13)
|
||||||||
SHAREHOLDERS'
EQUITY:
|
||||||||
Preferred
stock, no par value; unlimited shares authorized; no shares
issued
|
- | - | ||||||
Common
stock, no par value; unlimited shares authorized; 50,378,094 and
50,028,592 shares issued and outstanding at September 30, 2010 and
December 31, 2009, respectively
|
263,809 | 263,809 | ||||||
Additional
paid-in capital
|
22,789 | 20,782 | ||||||
Accumulated
deficit
|
(129,211 | ) | (119,695 | ) | ||||
Total
shareholders' equity
|
157,387 | 164,896 | ||||||
TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY
|
$ | 236,362 | $ | 296,238 |
For
the Nine Months Ended
September
30,
|
||||||||
2010
|
2009
|
|||||||
(in
thousands)
|
||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net
income (loss)
|
$ | (9,516 | ) | $ | 35,912 | |||
Adjustments
to reconcile net income (loss) to net cash provided by operating
activities:
|
||||||||
Depreciation,
depletion and amortization
|
6,068 | 14,314 | ||||||
Impairment
of natural gas and oil properties
|
- | 68,729 | ||||||
Stock-based
compensation
|
2,352 | 2,767 | ||||||
Unrealized
natural gas hedge (gain) loss
|
(13,893 | ) | 7,912 | |||||
Realized
loss (gain) on derivative contracts
|
1,604 | (2,605 | ) | |||||
Amortization
of deferred financing costs and debt discount
|
220 | 1,635 | ||||||
Accretion
of asset retirement obligation
|
292 | 265 | ||||||
Loss
on early extinguishment of debt
|
- | 7,027 | ||||||
Gain
on sale of assets
|
- | (193,376 | ) | |||||
Unrealized
warrant derivative (gain) loss
|
(205 | ) | 495 | |||||
Accrued
litigation settlement liability
|
21,150 | - | ||||||
Changes
in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
2,847 | 5,215 | ||||||
Commodity
derivative contracts
|
1,232 | 2,889 | ||||||
Prepaid
expenses
|
400 | 497 | ||||||
Accrued
taxes payable
|
(1,420 | ) | 69,832 | |||||
Accounts
payable and accrued liabilities
|
(3,333 | ) | (8,821 | ) | ||||
Net
cash provided by operating activities
|
7,798 | 12,687 | ||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Development
and purchase of natural gas and oil properties
|
(43,588 | ) | (40,868 | ) | ||||
Drilling
advances
|
- | (7,122 | ) | |||||
Proceeds
from sale of natural gas and oil properties
|
19,199 | 229,541 | ||||||
Purchase
of furniture and equipment
|
(165 | ) | (15 | ) | ||||
Purchase
of term deposit
|
(4,855 | ) | (52,374 | ) | ||||
Net
cash (used in) provided by investing activities
|
(29,409 | ) | 129,162 | |||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Proceeds
from issuance of common shares
|
- | 13,829 | ||||||
Repayment
of 12 3/4 % senior secured notes
|
- | (100,000 | ) | |||||
Repayment
of term loan
|
- | (25,000 | ) | |||||
Repayment
of revolving credit facility
|
- | (18,875 | ) | |||||
Repayment
of convertible senior unsecured subordinated debentures
|
- | (10,305 | ) | |||||
Repayment
of subordinated unsecured notes
|
- | (3,250 | ) | |||||
Repayment
of short-term loan
|
(17,000 | ) | - | |||||
Proceeds
from term loan
|
- | 25,000 | ||||||
Proceeds
from revolving credit facility
|
24,000 | - | ||||||
Deferred
financing charges
|
(22 | ) | (1,485 | ) | ||||
Other
|
(296 | ) | (298 | ) | ||||
Net
cash provided by (used in) financing activities
|
6,682 | (120,384 | ) | |||||
NET
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
|
(14,929 | ) | 21,465 | |||||
CASH
AND CASH EQUIVALENTS, BEGINNING OF PERIOD
|
21,866 | 6,153 | ||||||
CASH
AND CASH EQUIVALENTS, END OF PERIOD
|
$ | 6,937 | $ | 27,618 |
For
the Three Months Ended
|
For
the Nine Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Production:
|
||||||||||||||||
Natural
gas (MMcf)
|
2,063 | 2,139 | 5,243 | 7,155 | ||||||||||||
Oil
(MBbl)
|
3 | 1 | 7 | 3 | ||||||||||||
Total
production (MMcfe)
|
2,082 | 2,145 | 5,285 | 7,175 | ||||||||||||
Total
(MMcfed)
|
22.6 | 23.3 | 19.4 | 26.3 | ||||||||||||
Average
sales price per unit:
|
||||||||||||||||
Natural
gas per Mcf, excluding impact of realized hedging
activities
|
$ | 3.39 | $ | 2.46 | $ | 3.74 | $ | 2.93 | ||||||||
Natural
gas per Mcf, including impact of realized hedging
activities
|
4.09 | 3.50 | 4.13 | 4.58 | ||||||||||||
Oil
per Bbl
|
68.47 | 61.97 | 70.59 | 51.29 |
For
the Three Months Ended
September
30,
|
For
the Nine Months Ended
September
30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||||||
Net
income (loss)
|
$ | (16,411 | ) | $ | 108,492 | $ | (9,516 | ) | $ | 35,912 | ||||||
Adjustments
to reconcile net income (loss) to net cash provided by operating
activities:
|
||||||||||||||||
Depreciation,
depletion and amortization
|
2,673 | 2,954 | 6,068 | 14,314 | ||||||||||||
Impairment
of natural gas and oil properties
|
- | - | - | 68,729 | ||||||||||||
Stock-based
compensation
|
713 | 633 | 2,352 | 2,767 | ||||||||||||
Unrealized
natural gas hedge (gain) loss
|
(5,487 | ) | 3,290 | (13,893 | ) | 7,912 | ||||||||||
Realized
loss (gain) on derivative contracts
|
(159 | ) | (496 | ) | 1,604 | (2,605 | ) | |||||||||
Amortization
of deferred financing costs and debt discount
|
63 | 227 | 220 | 1,635 | ||||||||||||
Accretion
of asset retirement obligation
|
101 | 90 | 292 | 265 | ||||||||||||
Loss
on early extinguishment of debt
|
- | 7,027 | - | 7,027 | ||||||||||||
Gain
on sale of assets
|
- | (193,376 | ) | - | (193,376 | ) | ||||||||||
Unrealized
warrant derivative (gain) loss
|
(2 | ) | 495 | (205 | ) | 495 | ||||||||||
Accrued
litigation settlement liability
|
21,150 | - | 21,150 | - | ||||||||||||
Cash
flow from operations before working capital changes (1)
|
$ | 2,641 | $ | (70,664 | ) | $ | 8,072 | $ | (56,925 | ) |