History
Gastar raised money and sold assets to survive debt pressure, shifted focus from Texas gas to the Marcellus Shale with a partner, then restructured its legal home in 2013 before delisting in 2014.
2006-2008: Raising money and clearing the decks
Gastar Exploration, Inc. was cleared to trade on the American Stock Exchange in January 2006. In November 2006 it priced a private placement of 25,000,000 shares at $2.00, about $50.0 million gross, to fund drilling in East Texas, Wyoming and Southeastern Australia. Chesapeake, which first invested in November 2005, took part and was expected to own about 16.6% afterwards.
In May 2007 Gastar sold part of its undeveloped East Texas leasehold to Navasota Resources for $92.2 million, including Navasota's purchase of 10 million new shares at $2.00. The sold interests had no proved reserves or revenues. The money was meant for deep Bossier drilling in East Texas and coal bed methane (gas held in coal seams) development in Australia.
Debt was reshuffled twice in late 2007. In November Gastar amended its 2005 senior secured notes at a higher interest margin and with an amendment fee. Weeks later its subsidiary Gastar USA issued $100 million of 12¾% senior secured notes due 2012 and opened a bank facility with Amegy Bank, using the money to repay the older notes in full, $78.0 million in total.
In June 2008 Gastar settled its disputes with GeoStar, the seller of its East Texas properties, which had claimed 1.7 billion new Gastar shares under 'look back' provisions. Gastar paid about $25.7 million in cash and issued a warrant for 10 million shares. GeoStar handed over West Virginia and Pennsylvania interests, and Gastar gave up two Australian licences while keeping its 35% of PEL 238.
2009: Selling Australia to clear the debt
By early 2009 money was tight. In February Gastar took a $25 million term loan at a fixed 20%, and its bank waived a breach of a working-capital covenant only to the end of the next quarter, with a warning that default was possible later. In May it sold 36,500,000 new shares at $0.40, raising about $13.8 million net.
The turning point came in July, when Gastar sold all its Australian assets to Santos at an approximate price of US$233 million. It received about US$217 million at closing, with about US$16 million awaiting government approvals and a possible further US$16 million if PEL 238 certified enough reserves. The proceeds repaid the term loan and the revolver, and in August all US$100 million of the 12¾% notes were tendered and retired for $108.7 million.
In the autumn Gastar signed a new Amegy revolver maturing January 2013, sold its Hilltop gas gathering system for about $21.7 million while agreeing to a 15-year agreement to ship its own gas through it, and repaid its remaining convertible debentures with a $17.0 million Amegy term loan plus cash.
2010-2011: Marcellus becomes the focus
Trouble in East Texas showed in June 2010, when the revolver's borrowing base was cut from $47.5 million to $40.0 million, tied mainly to delays returning the Belin #1 well to production. In July Gastar said its first-quarter 2010 results should not be relied on after a hedge accounting error; restated net income was $9.39 million rather than $27 thousand, with cash flow unchanged.
The company then turned to the Marcellus Shale in West Virginia and Pennsylvania. In November 2010 it closed a joint venture in which Atinum, a Korean investment firm affiliate, paid about $30.0 million for an initial 21.43% of about 34,200 net acres, with a further $40.0 million as a drilling carry, rising to 50%. Gastar stayed operator. Also that month it agreed to pay $21.15 million to settle the ClassicStar lawsuits, without admitting liability.
In December Gastar sold 12,000,000 new shares at $4.00, about $45.6 million net, to fund a $28.8 million Marcellus leasehold purchase and part of the settlement. It completed the purchase for about $29.1 million, giving it roughly 80,000 net Marcellus acres. Shares on issue were 64,179,115 at the end of 2010.
In June 2011 the Wengerd 1H and 7H horizontal wells were drilled, with a 2011 Marcellus budget of $141 million gross and $19 million for Gastar. In East Texas, Belin #2 produced only about 1 MMCFD gross, which the CEO called disappointing, and no other Bossier wells were planned for 2011. That month Gastar's bank agreement was amended so Gastar USA could issue 8.625% Series A preferred stock, with a public offering of 600,000 shares announced at $25.00 each to repay revolver borrowings.
2012-2014: A new legal home and delisting
The record is quiet for 2012. Shares on issue were 66,432,609 at the end of 2012 and 61,134,950 at the end of 2013, changes the disclosures do not explain.
On November 14, 2013 Gastar moved its legal home from Alberta to Delaware and renamed itself Gastar Exploration, Inc., with each old share converting into one new share and trading continuing on NYSE MKT as GST. In December it proposed merging the parent into its subsidiary Gastar Exploration USA, with a special meeting set for January 22, 2014; the Series A and Series B preferred stock would stay outstanding.
As of November 29, 2013, there were 57,432,031 common shares outstanding. On February 14, 2014 the exchange filed to remove a class of Gastar's securities from listing, and on March 5, 2014 the company terminated the registration of a class of securities, ending its reporting obligation for them. The disclosures give no result for the merger vote.
Written from the 27 story beats below (2006 to 5 Mar 2014), which come from the company's own announcements and filings.