Gastar Updates Marcellus, Bossier, Eagle Ford Shale Ops

Gastar Exploration Ltd., Houston, (NYSE: GST) has updated its Marcellus shale and East Texas operations.

Marcellus Operations

Gastar has completed the drilling of two horizontal Marcellus wells in Marshall County, West Virginia, the Wengerd 1H and 7H, with lateral lengths of 4,700 and 5,700 feet, respectively. These wells are scheduled to be fracture stimulated starting in mid-June with first production expected by early August. All infrastructure necessary to produce natural gas and condensate from these wells will be in place prior to August. Gastar owns a 50% working interest (WI) in these wells.

Gastar has successfully put in place several arrangements that will facilitate on-going Marcellus operations. The company entered into an agreement with Baker Hughes to provide well completion services along with two agreements with other parties to provide up to 15,000 barrels of fresh water per day for well completions. Gastar has also buried an array of geophones over 13 square miles of our leasehold to collect microseismic data on future well stimulations. The company recently completed the construction of a 131,000 barrel frac pond and are nearing completion on a second frac pond with a capacity of 50,000 barrels. These actions will allow continuous frac operations on multi-well pads while minimizing costs related to water acquisition, transportation and disposal.

Gastar currently has two drilling rigs running in the play and will add a third rig this month. Currently, Gastar is drilling on two multi-well pads in Marshall County and plan on spudding the Hickory Ridge 2H well (GST 100% WI) in Preston County, West Virginia on the acreage that was acquired in December 2010. Rex Energy has completed the drilling of seven Grosick wells in Butler County, Pennsylvania (GST WI of 19%) and plans to complete three of the wells with fracs scheduled for September and October of this year. First production from these wells is expected in the fourth quarter of this year.

In preparation for future drilling plans in the Marcellus, we are permitting two 3-D seismic surveys; one in Preston and Tucker Counties, West Virginia covering 103 square miles and another in Fayette County, Pennsylvania covering 20 square miles. These surveys are expected to be acquired late this year and in the first half of 2012 and should allow Gastar to execute horizontal wells and avoid potential drilling issues given the somewhat more complex geology in the eastern side of the Marcellus play.

"We are moving quickly to capitalize on our position in the liquids-rich area of Marshall and Wetzel Counties, West Virginia and taking full advantage of our joint venture drilling carry," says J. Russell Porter, president and chief executive officer. "We expect that the economics of drilling in the liquids-rich portion of the Marcellus will be excellent and when coupled with a carry of 75% of our costs this year by our joint venture partner, should result in outstanding rates of return and very short payouts for Gastar. Our gross capital expenditure plan for the Marcellus in 2011 totals $141 million of which Gastar will contribute only $19 million while receiving the benefit of 50% of the total expenditures."

East Texas Operations

Gastar recently fraced the Belin #2 well in two lower Bossier zones. The company encountered expected reservoir pressures of over 9,000 psi and good permeability, however these zones are only producing at a gross sales rate of 1 MMCFD due to suspected formation damage. Gastar is currently evaluating a possible re-frac of these zones. Two additional lower Bossier zones remain in the wellbore to be completed at a future date.

Gastar is currently drilling the Belin #3 well at a depth of 16,800 feet with an expected total depth of 19,000 feet. The company has no other Bossier wells planned at this time for the remainder of 2011. Gastar is evaluating core data taken from the Eagle Ford/Woodbine interval in the Belin #3 well in order to determine drilling and completion plans for a future Eagle Ford/Woodbine well to be drilled later this year. Gastar is also continuing to evaluate production from the Wildman 8H Glen Rose completion in order to determine whether production warrants further development.

"The results of the Belin #2 well are disappointing and surprising given that the log characteristics and pressure responses seen in this well were very similar to the other lower Bossier zones that have produced at much higher rates. We plan on producing the well while we evaluate future possible operations in this wellbore," adds Porter.