Louisiana Energy Conference J. Russell Porter President and CEO June 7, 2012 Houston, TX E X P A N D I N G O U R H O R I Z O N S
Cautionary Statement CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE PURPOSE OF SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 This presentation of Gastar Exploration Ltd. contains forward-looking statements relating to Gastar s operations that are based on management s current expectations, estimates and projections about the petroleum, chemicals and other energy-related industries. Words such as anticipates, expects, intends, plans, targets, projects, believes, seeks, schedules, estimates, budgets and similar expressions are intended to identify such forwardlooking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond the company s control and are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. The reader should not place undue reliance on these forward-looking statements, whether as a result of new information, future events or otherwise. Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are: changing crude oil and natural gas prices; changing refining, marketing and chemical margins; actions of competitors or regulators; timing of exploration expenses; timing of crude oil liftings; the competitiveness of alternative-energy sources or product substitutes; technological developments; the results of operations and development activities; the potential failure to achieve expected net production from existing and future crude oil and natural gas development projects; potential delays in the development, construction or start-up of planned projects; the potential disruption or interruption of the company s net production or manufacturing facilities or delivery/transportation networks due to war, accidents, political events, civil unrest, sever weather or crude oil production quotas that might be imposed by the Organization of Petroleum Exporting Countries; the potential liability for remedial actions or assessments under existing or future environmental regulations and litigation; significant investment or product changes under existing or future environmental statutes, regulations and litigation; the potential liability resulting from other pending or future litigation; the company s future acquisition or disposition of assets and gains and losses from asset dispositions or impairments; government-mandated sales, divestitures, recapitalizations, industry-specific taxes, changes in fiscal terms or restrictions on scope of company operations; foreign currency movements compared with the U.S. dollar; the effects of changed accounting rules under generally accepted accounting principals promulgated by rule-setting bodies; and the factors set forth under the heading Risk Factors on pages 16 through 29 of the company s 2011 Annual Report on Form 10-K. In addition, such statements could be affected by general domestic and international economic and political conditions. Unpredictable or unknown factors not discussed in this presentation could also have material adverse effects on forward-looking statements. The company undertakes no obligation to publicly update or revise any forward-looking statements except as required by law. Certain terms, such as resources, resource base, undeveloped gas resources, oil in place, recoverable reserves, recoverable resources, EUR, probable, possible, and similar terms, may be used in this presentation to describe certain oil and gas properties that are not permitted to be used in filings with the U.S. Securities and Exchange Commission. These estimates are by their nature more speculative than estimates of proved reserves and accordingly are subject to substantially greater risk of being actually realized by the company. 2
Gastar Overview 65.7 million shares outstanding $113.0 million equity market capitalization (1) $234.4 million enterprise value (2) Focused on exploration, development and production of natural gas and oil in the U.S. 119.7 Bcfe of proved reserves; 14.8 R/P at year-end 2011 Strategy built on organic growth through the drillbit 75% of planned capital allocated to drilling in 2012 3 core asset areas Marcellus Shale East Texas Mid-Continent Oil Play Track record of adding reserves and creating value Reserves have grown 145% from 2009 to 2011 PV-10 value increased 223% over YE 2010 to $217 million Capital to achieve our business plan (1) Market capitalization at June 5, 2012. (2) Includes preferred shares of $81 million face value as of June 5, 2012. 3
Asset Overview 1Q 2012 Net Production by Region Marcellus Shale 29.4 MMcfe/d 2011 Proved Reserves by Region Bossier Shale Eaglebine Play 113,448 Net Acres Note: net acres as of 12/31/2011. 119.7 Bcfe 4
Aggressively Shifting Capital to Liquids ($ in millions) Area Capital Marcellus $103 Mid-Continent 20 East Texas 6 Capitalized Costs 5 Total $134 2012 Capital Investment Capital investment program of $134 million 97% of drilling and recompletion costs target liquids-rich wells $134 million 75% of planned capital dedicated to drilling in 2012 (1) Includes capitalized interest and G&A costs. 5
Great Assets with Room to Grow
Strong Position in the Marcellus Shale Near-term activity concentrated in highly prospective liquids-rich portion of the play 76,100 net acres with Marcellus exposure Two rigs currently operating Marshall & Wetzel Counties JV partner Atinum 14,100 net acres Focus of initial development program Condensate and ultra-rich gas Pennsylvania JV partner Atinum 5,900 net acres Butler County 3 wells completed in 2011 4 wells completed in 2012 Marcellus East 56,100 net acres De-risked acquisition Tested two vertical Marcellus wells prior to closing Drilled, completed and begun production test on one horizontal well Hickory Ridge 2H 2,500 foot lateral o o o Marshall & Wetzel Counties Pennsylvania Marcellus East 7
Liquids-Rich Window of Marshall & Wetzel Counties High Btu gas and condensate yields 25-30 bbls/mmcf condensate 30-50 bbls/mmcf NGLs 30 horizontal wells drilled to date in Marshall County 17 completed and producing 18 drilled, completing or awaiting completion 2 drilling rigs running $103 million capital budget for 2012 Drilling time down to 16 days per well Additional savings being realized on completion costs Active development program GST and JV partner Atinum have over 90 additional Marcellus horizontal wells planned in Marshall and Wetzel Counties for 2013 and beyond 23 operated horizontal wells planned in 2012 34 wells scheduled to be on production at year end 2012 Dedicated midstream capacity with increasing throughput and major new gathering system owner (Williams) 8
Operational Excellence w/ Pad Drilling 9
Microseismic Frac Technology Keeps Gastar On The Leading Edge All stages, all wells of the Corley Pad. Map View Corley 1H Corley 3H Corley 2H 500 Corley 4H Events colored by stage and sized by energy (compressed dynamic range) 2011 Microseismic. All rights reserved. Color Key Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Stage 8 Stage 9 Stage 10 Stage 11 Stage 12 Stage 13 Stage 14 Stage 15 Stage 16 Stage 17 Stage 18 10
Microseismic Frac Technology Keeps Gastar On The Leading Edge All stages, all wells of the Corley Pad. Color Key Depth View Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Stage 8 Stage 9 100 Stage 10 Stage 11 Stage 12 Stage 13 Stage 14 Stage 15 Stage 16 Stage 17 Stage 18 500 Events colored by stage and sized by energy (compressed dynamic range) 2011 Microseismic. All rights reserved. 11
Shallow Potential Combined With Proven Success in East Texas Combination of Eagle Ford/Woodbine liquids and Bossier gas. Substantial Shallow Potential Identified Eagle Ford/Woodbine ( Eaglebine ) becoming more active Encana and EOG drilling in immediate area with Encana reporting success Consolidated Acreage Position 21,800 net acres 50-67% WI 100% operated Call on Natural Gas Prices Well IPs >20 MMcfe/d Multiple stacked pay sands Upper, Middle, Lower Bossier, & Knowles Upper Bossier horizontals enhance recovery/economics Large Resource Potential Remaining Net Bossier potential of ~0.5 Tcfe Oil Potential??? Robertson Leon 12
Solid Acreage Position in the Emerging Eagle Ford Trend Actively monitoring and evaluating as our peers de-risk the play. 21,800 Net Acres 13
Abundant Supply of Eagle Ford/Woodbine Opportunities Potential for 100+ horizontal drilling locations. First Class Neighbors 14