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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (40108)	11/17/2010 11:26:53 AM
From: E_K_S	Read Replies (1) \| Respond to of 78464

Hi Paul - Thank you for the link to Josh Young's interview (California-based Young Capital Management). Based on the article, I started a position in Gastar Exploration, Ltd. (GST). From his interview:"...You mentioned Gastar earlier. That’s an exploration and production (E&P) company with a market cap of about $200 million. A recent Canaccord Adams research report said, “Gastar is an attractively priced Marcellus producer given its relative growth potential.” Canaccord has a buy rating of $4.50 on it. Meanwhile, Rodman & Renshaw has a target of $5.50 on Gastar. What are some of the catalysts there? JY: Well, Gastar just did an acquisition but the stock doesn’t seem to have priced in the value creation from that acquisition. The company hasn’t announced the metrics on the transaction; but, based on the understanding of some of the research analysts that I’ve spoken with and some back-of-the-envelope math, Gastar just bought north of 50,000 acres at $1,000 an acre or less in the Marcellus. They bought it in the dry gas area, but in a very good area of West Virginia. That’s tremendously positive for the company. There are some big questions, though. What is the exact price Gastar paid? How will they finance the acreage acquisition and development? And did their existing JV partner decide to participate with it in the acquisition, or will they seek an additional JV partner? Gastar recently sold acreage to its joint venture partner at more than $4,000 an acre, and here it is buying similarly high-quality acreage at $1,000 an acre or even less. That’s huge, especially for a company as small as Gastar. Gastar is now likely the most levered company in the Marcellus by enterprise value, at least among those that are publicly traded. Gastar has really transformed itself to a certain extent into a Marcellus acreage play, and an extremely attractively priced one at that. This catalyst has already played out and it’s just a question of the price the company is paying. I think the market will be further surprised by other additional upcoming catalysts, such as the results from their oily Eagle Ford and Glen Rose wells in East Texas—you could see upside to the $5.50 price target that Rodman & Renshaw put out, and I really respect the analysts at both Rodman and Canaccord. Rodman recently upgraded RAME and raised their price target, and I suspect that could happen for Gastar as these catalysts play out...". ===================================================================== Gastar acquires 59,000 acres in W. Virginia Gastar acquires right to drill on 59,000 acres in West Virginia for natural gas production finance.yahoo.com From the article above, GST may have acquired this acreage for around $1,000/acre. That's good enough for me to start a tracking position. Peeled off a few shares of HON to fund the purchase. EKS

To: Paul Senior who wrote (40108)	12/2/2010 11:01:18 AM
From: Paul Senior	Respond to of 78464

With the market up over 300 (Dow) past two days, I'm not getting any open buy orders filled. I'll step up my position in e&p company Lucas Energy [t]LEI[/t] now though. Enterprise value ($31.3M, per Yahoo) is below 2pnpv10 of $51.9M. ==================================================== "HOUSTON, Nov. 29, 2010 (GLOBE NEWSWIRE) -- Lucas Energy, Inc. (NYSE Amex:LEI) an independent oil and gas company based in Houston, Texas, has provided an internal management update based upon its revised Eagle Ford potential reserves (proved and probable) as of September 30, 2010. The net present value at a 10% discount rate ("PV10") of the potential reserves estimated for Lucas by Forrest A. Garb & Associates, Inc. (Garb) as of April 1, 2010 was $51.9 million. Lucas performed an internal evaluation, as of September 30, 2010, and calculated an $83.6 million PV10 valuation for Lucas potential reserves. Garb's report as of April 1, 2010 estimated 2.7 million barrels of oil equivalent (BOE) of potential reserves, whereas Lucas' internal report, as of September 30, 2010, had an estimated 4.3 million BOE of potential reserves." --- It seems to me Lucas is a small-time player that has acquired land rights and old abandoned oil wells in the Austin Chalk area of Texas. Their business has been to retrofit/rework and place the wells back in service. It turns out, I believe, that under the Austin Chalk runs another layer -- the Three Forks, which now become the current big deal play in the oil bidness. It appears that Lucas has the rights to the Three Forks layer underneath their part of the Austin Chalk layer, and this is what enables Lucas management to guess their large value ($83.6M) for npv.

To: Paul Senior who wrote (40108)	12/7/2010 3:42:13 PM
From: E_K_S	Read Replies (1) \| Respond to of 78464

Hi Paul - Gastar Exploration Ltd New Ordi(AMEX: GST ) - Gastar Exploration Announces Public Offering of 12,000,000 Common Shares finance.yahoo.com From the article:"...The Company intends to use the net proceeds from the offering to fund the $28.8 million purchase price for its recently announced Marcellus Shale leasehold acquisition, $18 million for settlement payments with respect to the recently announced settlement of the seven In re ClassicStar Mare Lease litigation matters, and working capital and general corporate purposes...." ============================================================ Stock taking a hit today on this news down over 19%. They will now have plenty of cash to complete their drilling projects. Plan to cover my call options and/or ad shares to my position after the stock settles. Anything below $4.00/share would be a good entry point. My option hedge covers me down to $3.40/share. EKS