Gastar Exploration (GST) Well Results May be Good for Magnum Hunter Resources (MHR) - Topeka

Topeka Capital maintained a Buy rating on Gastar Exploration Limited (NYSE: GST) with a price target of $11. Earlier the company provided an operational update on recent well results and activity in the Utica/Point Pleasant play in West Virginia and in the Hunton Limestone play in north-central Oklahoma. Analyst Gabriele Sorbara said results bode well for Magnum Hunter Resources (NYSE: MHR).

"This morning, GST announced results from its first dry gas Utica well, the Simms U-5H well (4,447 foot lateral) in Marshall County, West Virginia, at an initial 48-hour gross sales rate of 29.4 Mmcf/d, above our expectations of 18-30 Mmcfe/d for a 24-hour peak rate. Adjusting for a 7,500 foot lateral, this well would have had a rate of 49.6 Mmcf/d, making it one of the best wells in the dry gas Utica play. Additionally, GST’s Utica well is located furthest south on the West Virginia side of the play, boding well for Magnum Hunter Resources’ (MHR-$6.32: Buy) acreage in Wetzel and Tyler Counties," said Sorbara.

"GST plans to commence drilling its second dry gas Utica well off the Blake pad (6,600 ft lateral) by mid-October. Additionally, GST announced the Easton 22-1H (Lower Hunton) well with a peak rate of 673 boe/d (89% crude oil) and most recent 5-day average of 602 boe/d (87% crude oil). This Lower Hunton well goes a long way in confirming the potential across its WEHLU acreage. The Easton 22-2H (Upper Hunton) well had a peak production rate of 855 boe/d (94% crude oil) and a most recent 5-day average of 628 boe/d (93% crude oil), outperforming its PUD type curve. With the aforementioned results in the Utica and at its WEHLU area, our $13.50 RNAV and $11 PT have an upward bias – we expect to revisit at a later date. We reaffirm our Buy rating and expect shares to outperform, as very little (if anything), is currently reflected in shares for its Utica shale potential," he added.

For an analyst ratings summary and ratings history on Gastar Exploration Limited click here. For more ratings news on Gastar Exploration Limited click here.

Shares of Gastar Exploration Limited closed at $7.38 yesterday.

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