HOUSTON, March 22, 2017 /PRNewswire/ -- Gastar
Exploration Inc. (NYSE MKT: GST) ("Gastar") announced today that it
has completed the acquisition of additional working and net revenue
interests in approximately 66 gross (9.5 net) producing wells
and 5,670 net acres of additional STACK oil and gas leasehold in
Kingfisher County, Oklahoma.
Prior to the acquisition, Gastar held an interest in the majority
of the acquired producing wells and leasehold. Current net
production associated with the acquired well interests is
approximately 330 barrels of oil equivalent per day (49% oil) and
57% of the acreage is currently held-by-production. The acquisition
price of $51.4 million has an
effective date of March 1, 2017 and is subject to
customary final closing adjustments.
The acquisition was funded through a tack-on issuance, to funds
managed by Ares Management, L.P. ("Ares"), of an additional
$75 million principal amount, priced
at par, of Gastar's previously issued convertible notes due 2022,
which increases the convertible notes issued to funds managed by
Ares to $200 million. Upon the
approval of the conversion rights of the convertible notes by
Gastar's shareholders at a special shareholders meeting currently
scheduled to be held on May 2, 2017,
$37.5 million principal of the
recently issued convertible notes will be repurchased and retired
by the Company in exchange for the issuance of 25,456,521 shares of
Gastar's common stock, issued at a price of $1.4731 per share, the 10-day volume weighted
average price for Gastar's common stock as of March 17, 2017. The remaining $162.5 million of the convertible notes will be
eligible for conversion into Gastar common shares according to the
terms of the indenture at an initial conversion price of
$2.2103 per share. If the
requisite shareholder approval of the conversion rights is not
obtained on or before July 3, 2017,
the convertible notes will not become convertible nor will they be
repurchased, the notes will not be redeemable prior to their
maturity except by payment of a "make whole" premium, and the
interest rate on the notes will increase in increments to 15% per
annum.
Commenting on the transaction, J.
Russell Porter, Gastar's President and Chief Executive
Officer, said, "This acquisition further increases Gastar's
position in the STACK Play to a total of 62,370 net surface acres,
excluding 27,100 net acres in the WEHLU and surrounding area.
Acquiring additional working interest within our core STACK
position in leases that Gastar currently owns and operates is an
attractive approach to creating additional value.
Approximately 48% of the additional interest is in leases that are
within our joint development agreement area and as a result, Gastar
will earn a 10% drilling promote on those additional interests that
are drilled within the joint venture. Through our planned
2017 capital program, a large majority of the acquired leases will
be held by production under our current drilling plan."
About Gastar Exploration
Gastar Exploration Inc. is a pure play Mid-Continent independent
energy company engaged in the exploration, development and
production of oil, condensate, natural gas and natural gas liquids.
Gastar's principal business activities include the identification,
acquisition, and subsequent exploration and development of oil and
natural gas properties with an emphasis on unconventional reserves,
such as shale resource plays. Gastar holds a concentrated acreage
position in what is believed to be the core of the STACK Play, an
area of central Oklahoma which is
home to multiple oil and natural gas-rich reservoirs including the
Meramec, Oswego, Osage,
Woodford and Hunton formations.
For more information, visit Gastar's website at www.gastar.com.
Forward Looking Statements
This news release includes "forward looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Forward looking statements give our current
expectations, opinion, belief or forecasts of future events and
performance. A statement identified by the use of forward
looking words including "may," "expects," "projects,"
"anticipates," "plans," "believes," "estimate," "will," "should,"
and certain of the other foregoing statements may be deemed
forward-looking statements. Although Gastar believes that the
expectations reflected in such forward-looking statements are
reasonable, these statements involve risks and uncertainties that
may cause actual future activities and results to be materially
different from those suggested or described in this news
release. These include the risk of receipt of the settlement
funds; and other risks described in Gastar's Annual Report on Form
10-K and other filings with the SEC, available at the SEC's website
at www.sec.gov. By issuing forward looking statements based on
current expectations, opinions, views or beliefs, Gastar has no
obligation and, except as required by law, is not undertaking any
obligation, to update or revise these statements or provide any
other information relating to such statements.
Important Stockholder Information
Gastar has agreed to use its reasonable best efforts to obtain
on or before July 3, 2017 any and all stockholder
approvals that would be required under the listing standards of The
NYSE MKT to permit all of Gastar's recently issued Convertible
Notes due 2022 to be converted into shares of Common Stock (the
"Stockholder Approval"). In connection with the special meeting
described herein, Gastar expects to file a Preliminary Proxy
Statement followed by a Definitive Proxy Statement with
the SEC regarding the special meeting of stockholders and
the proposal for Stockholder Approval.
INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE PRELIMINARY
PROXY STATEMENT AND THE DEFINITIVE PROXY STATEMENT AND OTHER
RELEVANT MATERIALS CAREFULLY AND IN THEIR ENTIRETY WHEN THEY ARE
FILED WITH THE SEC BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION
ABOUT THE SPECIAL MEETING OF STOCKHOLDERS AND THE PROPOSAL FOR
STOCKHOLDER APPROVAL.
The Preliminary Proxy Statement and the Definitive Proxy
Statement, and any amendments or supplements and other relevant
documents, will be available upon their filing free of charge
through the website maintained by
the SEC at www.sec.gov or by calling
the SEC at telephone number 1-800-SEC-0330. Free copies
of these documents will also be made available after filing with
the SEC from Gastar's website
at www.gastar.com or by writing to Secretary, Gastar
Exploration Inc., 1331 Lamar
Street, Suite 650, Houston, Texas 77010.
Participants in the Solicitation
Gastar and its directors and executive officers are deemed to be
participants in the solicitation of proxies from the stockholders
of Gastar in connection with the Stockholder Approval. Information
regarding Gastar's directors and executive officers is included, or
incorporated by reference in, Gastar's Annual Report on Form 10-K
for the fiscal year ended December 31, 2016, filed with
the SEC. Other information regarding the participants in such
proxy solicitation and a description of their direct and indirect
interests, by security holdings or otherwise, will be included in
the Preliminary Proxy Statement and the Definitive Proxy
Statement.
Contacts:
Gastar Exploration Inc.
J. Russell Porter, Chief Executive
Officer
713-739-1800 / rporter@gastar.com
Investor Relations Counsel:
Lisa Elliott, Dennardâ–ªLascar
Associates:
713-529-6600 / lelliott@DennardLascar.com
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SOURCE Gastar Exploration Inc.