GASTAR EXPLORATION, INC.: announcements explained, share price

Announcements, explained

Each one in plain English, with the numbers worked through for a shareholder.

13 June 2008capital raising announcement▲ GoodMajor

On June 12, 2008 Gastar settled all disputes and litigation with GeoStar, the seller of its East Texas properties, which had claimed 1.7 billion new Gastar shares under 'look back' provisions. Gastar pays about $25.7 million in cash from existing balances and issues a warrant for 10 million shares ($2.75 if East Texas is sold for over $500 million by June 11, 2011; otherwise $3.00 in a six-month window from that date). GeoStar assigns its West Virginia and Pennsylvania interests to Gastar, while Gastar gives up EL 4416 and EL 4968 in Australia's Gippsland Basin and keeps its 35% of PEL 238. The company's press release says this removes uncertainty about potential dilution of existing shareholders.

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29 May 2007capital raising announcement● Neutral

Gastar closed the sale of 1,757,195 new shares at $2.00 each ($3,514,390) to Chesapeake Energy on May 23, 2007. Chesapeake used its right to buy shares to keep its percentage after the Navasota share issue in the East Texas sale; it now owns 16.4% of 207,098,570 basic shares. This follows Chesapeake's open-market purchase reported on May 25 (the filing itself describes it as a preemptive-rights purchase from the company).

What it means for a shareholder

1.8m new shares at $2.00 to raise about $3.5m. Shares on issue before the raise aren't in the record, so the dilution can't be worked out.

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15 Nov 2006capital raising announcement● NeutralMajor

Gastar priced a private placement of 25,000,000 common shares at $2.00 each, about $50.0 million gross and an estimated $47.9 million net, to fund drilling in East Texas, Wyoming and Southeastern Australia and for general corporate purposes. Chesapeake, which first invested in November 2005, took part using its preferential right and is expected to own about 16.6% afterwards. Existing shareholders are diluted; the issue price of $2.00 compares with the CDN$4.50 per-share value used in the March 2006 GeoStar issuance (different currency, so not directly comparable).

What it means for a shareholder

25.0m new shares at $2.00 to raise about $50.0m. Shares on issue before the raise aren't in the record, so the dilution can't be worked out.

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13 Apr 2006capital raising announcement● Neutral

On March 31, 2006, Gastar issued 548,128 common shares (0.3% of its shares, valued at $2.1 million at CDN$4.50 per share) to GeoStar to settle post-closing adjustments on the June 2005 purchase of Hilltop (East Texas) and Powder River Basin properties. The filing also includes audited revenue and operating-expense statements for those acquired properties; for 2004 they show gas sales of $3.4 million (in thousands: $3,366) against direct costs of $1.6 million. This continues the GeoStar acquisition thread; GeoStar was already a 10%+ owner.

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