In a related matter, Gastar has sent a letter to Geostar Corporation requesting arbitration to settle certain disputed issues and interpretations under a Participation and Operating Agreement (POA) with Geostar and its subsidiaries concerning Geostar's failure to deliver certain documents, requests for cash calls that far exceed the funds actually required for operations within a reasonable time frame and requesting cash calls while simultaneously asserting that certain provisions of the POA, including overhead reimbursement rates, need to be renegotiated on terms that Gastar believes are not reasonable and are not within industry standards.
Commenting on the developments, Gastar's Chairman, Chief Executive Officer and President, J. Russell Porter, said, "We are pleased to begin a more active exploration and testing program on our Gippsland Basin holdings. Gastar believes that EL 4416 contains significant CBM resource potential. This property is strategically located near existing infrastructure and the large gas markets in eastern Australia. Our expectations are that this ten well program will help us evaluate the CBM potential on EL 4416 and formulate additional plans for assessing and quantifying optimal drilling and completion techniques, the potential for commercial rates from individual wells and the size of the potential resource. While we have continued confidence in Geostar's ability to operate the proposed wells, we feel the need to protect Gastar's interests and establish clarity in our relationship with Geostar through this arbitration request. We hope that these issues will be settled amicably between us before an arbitration decision needs to be rendered."
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