Gastar Exploration acquires mid-continent interests and marketing of Appalachian basin assets
HOUSTON -- Gastar Exploration has entered into a definitive purchase and sale agreement to acquire additional working and net revenue interests from its AMI partner, Husky Ventures and certain other parties.
The acquisition consists of additional working and net revenue interests in 103 gross (10.2 net) producing wells and certain undeveloped acreage in the STACK and Hunton Limestone formations in its Area of Mutual Interest from its sellers.
The purchase price is approximately $43.3 million, subject to certain adjustments and customary closing conditions, and the conveyance of approximately 11,000 net non-core, non-producing acres in Blaine and Major Counties, Oklahoma to the Sellers. The transaction is expected to close on or about November 30, 2015, with an effective date of July 1, 2015. After closing, the AMI joint venture with Husky will be dissolved. The acquisition will be funded with borrowings under Gastar's revolving credit facility.
The transaction includes the acquisition of approximately 15,700 net acres in Kingfisher and Garfield Counties, Oklahoma, of which approximately 42% is held by production. After closing, Gastar will own approximately 110,400 net acres in the Hunton Limestone Play, of which approximately 45% is held by production. Gastar's exposure to the STACK play will be approximately 62,300 net acres in the Meramec Shale play and 48,900 net acres in the Woodford Shale play.
Current net production of the wells being acquired is approximately 625 boed, of which 46% is oil, 26% is natural gas liquids and 28% is natural gas. Gastar will assume operatorship of 70 of the 103 gross wells being acquired. Based on our third-party reserve report at Jun. 30, estimated proved reserves being purchased are approximately 1.2 Mboe, of which 43% is oil, 28% is natural gas liquids and 29% is natural gas.
J. Russell Porter, Gastar's President and CEO, said, "With this strategic Mid-Continent transaction, we are consolidating our working interest in our core Mid-Continent acreage and will be able to operationally control development decisions going forward.
“We believe this acreage is not only productive for the Hunton Limestone formation but also very prospective for the Meramec Shale and Woodford Shale STACK play, with additional upside from the Oswego and Osage formations.
“In addition, the contemplated sale of certain of our Marcellus and Utica assets should allow us to further reduce leverage while enhancing our liquidity position to allow for the future development of our extensive Mid-Continent position."
