In the news release, Gastar Exploration Signs Agreement to Acquire an Interest in the West Edmund Hunton Lime Unit in Oklahoma, issued 05-Sep-2013 by Gastar Exploration Ltd. over PR Newswire, we are advised by the company that multiple factual changes were made throughout the release. The complete, corrected release follows:
Gastar Exploration Signs Agreement to Acquire an Interest in the West Edmund Hunton Lime Unit in Oklahoma
- Expected to add approximately 2,000 net BOE per day and 24,000 HBP net acres to Gastar's existing 96,300 net acres in the Hunton Limestone play
- Transaction expected to be accretive to future earnings, cash flow and EBITDA
HOUSTON, Sept. 5, 2013 /PRNewswire/ -- Gastar Exploration Ltd. (NYSE MKT: GST) today announced that it has signed a purchase and sale agreement to acquire a 98.3% working interest (80.5% net revenue interest) in 24,000 acres of the West Edmund Hunton Lime Unit ("WEHLU") located in Kingfisher, Logan, Oklahoma and Canadian counties, Oklahoma. All of the acreage in the unit is held by production ("HBP") and located nearly adjacent to a portion of the Hunton Limestone assets that Gastar acquired earlier this year from Chesapeake Energy ( see attached map). The transaction purchase price is $187.5 million, subject to customary closing adjustments, with an expected closing date in late November 2013 and a purchase effective date of August 1, 2013. The property currently produces at a daily net sales rate of 1,200 barrels of oil ("BO"), 2.7 million cubic feet of natural gas ("MMCF") and 428 barrels of natural gas liquids ("NGLs") – or 2,078 barrels of oil equivalent ("BOE"). Based on Gastar's internal estimates, total proved reserves are 11.1 million BOE, of which 66% is oil and 43% is proved developed. The estimated present value of proved reserves (discounted at 10% using NYMEX futures pricing as of August 28, 2013) is $191.3 million. The transaction is expected to be funded from the potential issuance of additional long-term debt, the potential issuance of perpetual preferred stock, borrowings under the existing revolving credit facility, cash on hand and the expected proceeds from the sale of our East Texas assets. Gastar intends to pursue a potential partner to help acquire and develop the acreage. "This transaction is another important step in our program to further balance Gastar's production profile between liquids and natural gas while also expanding our presence in the Hunton play," said J. Russell Porter, President and Chief Executive officer of Gastar. "This strategic 'tack-on' acquisition provides a stable producing asset base and meaningful upside potential. With this acquisition, we now have over 380 net potential drilling locations in our Mid-Continent oil play. "The acquisition of the producing reserves, plus the PUD reserves to be developed on the HBP acreage, has attractive economics, and the transaction is projected to be immediately accretive to earnings, cash flow and EBITDA per share. It will also significantly increase our total reserves and production and further support our shift towards owning and producing high-value crude oil and natural gas liquids.