This is really worth a listen imo for anyone with even a passing interest in GST. Timely as well as you can get the Ceo's take this week almost in real time. Can access through Gastar website. Three areas stuck out to me.
1. They are really hyper-focused on liquidity. Porter used words like good and nice to describe where they are at. The hedging strategy has really helped. They have 60% of their oil hedged at $78 for 2016. They have just added some gas basis hedges through 2018. Cap ex is going to be lower next year even though potential may be higher given...
2. Porter talked about their new well being drilled in the stack. Touchdown is this week. He sounded very matter of fact that they would complete and flow in early November. To those oil industry vets, could he be seeing something in the drilling that makes him sound this confident? He expects 100 locations to be de-risked by this well. I sort of thought it might take them a few wells to figure out the land but his confidence seemed unusual. Also mentioned 4 zones potentially open to them.
3. He ended by explaining that the management owns 8% of the common but that it represents near 100% of their net worth and that that they were determined to make sure the shareholders got the upside value. Seems very helpful to have the management that determined and aligned with shareholders including preferred.
I came away much more comfortable that Gastar has its risks under control and will have a huge upside in three plays once the world calms down a bit. Bought more preferreds today which are ludicrous imo.
imo this secondary into a weak market has created a great buying opportunity. the analysts like the delta house dropdown enough to move this above 16, now its 10 and the balance sheet due to todays secondary is stronger. really poorly place by the underwriters gives a great entry point.
absolutely. with the debt paid down more through this the company is safer today than yesterday and you buy it at a big discount to the deal price.
I say the estimate is they will earn 2.80 next year and it will be a joke if it doesn't trade up to at least 28. Great opportunity here anywhere below $21.
this news is really welcome. all three sponsors stepping up. this is really strong and addresses some of the most important concerns out there. This should move back to 11-12 shortly imo
Let me start by saying I bought more preferred today based on GE's answers in the conference call. He talked about putting more money in personally to get the preferreds paid again by year end. Reading the 10q tonight that make sense as the lenders are requiring 2 million in new equity. Some of the covenants though look near impossible for them to meet. Here is one:"The first of these covenants requires certain maximum ratios between the total outstanding principal balance of the Company’s debt to annualized adjusted net income as defined by the specific covenant starting at 4.0 to 1.0 at June 30, 2015 and decreasing quarterly over the following four quarters to 2.0 to 1.0 by June 30, 2016." Maybe the definition has loopholes, but based on where they are I don't see how they can meet these without a seemingly ludicrous increase in net income. Am I missing something here? The next thing is they need to be in compliance for 2 consecutive quarters to pay the dividend where GE made it sound like they would pay by year end? That wouldn't seem to jibe. Finally, the amendment they received today, is that a subsequent event to todays 10q and thus changes some of the above? Its all a whole lot less clear than I expected.This loan looks very honorous and set up to at a minimum extract maximum pain from grh if not make them (fail?). The comments on the mhr drilling in q 4 and the barging were very hopeful but reading the notes it just doesn't seem to add up to a good story for quite a while.
agreed. most important i think a lot of potential ams mevion customers were concerned about the lack of transparency around Mevions future. This will insure they are well funded and should help Ams get additional proton contracts imo
Totally disagree, this quarter was wrecked by acute short term medical stuff, not long-term medical stuff. Huge cash flow here and underlying growth dynamics to the business. They put a couple better quarters together and the stock will fully recover all todays losses which implies a 50% upside. Longer term this company is in the right place, they need to execute better and they know that now. You have to buy great growth situations when they screw up, like today.
This one is apt to be very different and to go through imo. The family has controlled the company which was listed on the nyse for decades. They own 53%, the balance sheet is loaded with cash and they clearly feel now is the time to take out the minority holders using the companys cash and lose the public company expenses. I feel very strongly this one goes through. They will probably bring it public in China 5 years from now at 4x the price.
you were correct on your well analysis which is great, what about your statement "The preferred will be paid on time" ? any insight would be appreciated. thx.