Gastar Exploration (AMEX: GST) is one of the latest energy companies looking to cash in on the Marcellus Shale natural gas play. The company got its first two horizontal wells up and running at the end of July, and some analysts think that despite a flagging operation in East Texas, the oil and gas outfit may be an unsung hero.

Commodity metaphors
Gastar is definitely drilling in the right place: Marcellus is a kingmaker. Of all the shale plays in the U.S. right now, it's the hottest. There is a bit of controversy about exactly how much gas is trapped in the Marcellus Shale, but even conservative estimates are huge, producing anywhere from 12 billion to 17 billion cubic feet per day by the end of the next five to 10 years.

Gastar's production capability
The first step to understanding Gastar is to evaluate how it fits into the Marcellus production story:  




Marcellus Net Acreage


Production Q2 2011




Chesapeake (NYSE: CHK)



Range Resources (NYSE: RRC)



Cabot Oil & Gas (NYSE: COG)



Anadarko (NYSE: APC)



Source: Company press releases.

Right now, operating only two brand-new wells means that Gastar's daily production is low. Though the company anticipates ramping up to 40 mmcf a day by the end of the year, that number still pales in comparison with the second-quarter numbers of the region's other major players.

Risk factors
There are at least two things that may doom Gastar's fledgling operation in the Marcellus -- falling natural gas prices among them.

Natural gas is now selling at half the 2008 average price -- the more players in the game and the more gas that's produced, the harder it is for companies like Gastar to make money and create value for investors. So, even though Gastar is setting up shop in the best possible shale play, it might not do it any good.

That being said, any change that makes natural gas more expensive to produce (government regulation) or increases demand (government-backed incentives) could help push up prices.

Foolish takeaway
Gastar is an intriguing opportunity simply because so much is unknown right now. Interested investors should keep an eye on production numbers in the Marcellus. If output ramps up, it would be worth considering Gastar as a potential buyout, as mergers and acquisitions boom in the industry.

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.