Gastar has executed a Purchase and Sale Agreement ("PSA") with undisclosed private sellers for the acquisition of approximately 59,000 net acres of leasehold in the Marcellus Shale concentrated in Preston, Tucker and Pendleton Counties, West Virginia. Terms of the acquisition were not disclosed. Closing of the transaction is expected to take place in mid-December.
Prior to executing the PSA, Gastar had obtained an exclusive option on the leasehold with the right to conduct operations to test the Marcellus Shale potential on the properties to be acquired. Gastar deepened an existing well to the Marcellus Shale and tested that vertical well at over 1.1 MMCFD from the lower Marcellus. Gastar also re-completed another existing vertical well in the Marcellus and tested that well at rates as high as 1.0 MMCFD from the lower Marcellus formation.
The assets to be acquired include approximately 59,000 net acres of Marcellus Shale leasehold, a gathering system consisting of 41 miles of pipeline, a salt water disposal well and 7 producing conventional wells making approximately 500 MCFD.
J. Russell Porter, Gastar's President and CEO, stated, "This acquisition significantly increases Gastar's exposure to the Marcellus Shale and positions the company for long-term reserve and production growth. This was a unique opportunity structured by Gastar to allow us to essentially de-risk the acreage from a Marcellus Shale perspective prior to committing to the acquisition. The results of the work undertaken by Gastar, and the fact that this acreage is on trend with other successful Marcellus Shale wells, confirm the attractiveness of this opportunity. Gastar's joint venture partner in its existing Marcellus Shale assets has the right to participate in this acquisition on pre-determined terms. Once we know our joint venture partner's intentions, we will determine whether any external financing will be sought. Either way, Gastar has the ability to close the transaction with existing sources of capital."
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