Gastar Exploration Inks Deal Eastern Star Gas

Gastar Exploration Ltd. entered into a Farm-In Agreement with Eastern Star Gas Limited under which Gastar will earn a 35% working interest in the PEL 433 and adjoining PEL 434 properties located in New South Wales ("NSW"). Under the terms of the Farm-In Agreement, Gastar will pay the costs of a two core-hole program and the related costs of the evaluation of the coal reservoirs intersected by the core-holes. ESG is the operator of PEL 238 and will serve as operator of PEL 433 and PEL 434.

PEL 433 is located south of PEL 238 where Gastar and ESG are developing their Gunnedah Basin Gas Project (Coal Seam Gas Joint Venture), targeting independent certification of proved and probable (2P) gas reserves by year-end 2007. ESG expects to commence the two core-hole drilling program during July on PEL 433 to evaluate coal seam gas potential. The core-holes will evaluate the coal seam gas potential of the Hoskissons Coal Seam within the Late Permian Black Jack Coal Measures.

Coal evaluation core hole drilling completed during the 1970s and 1980s by the NSW Government has already identified the distribution and thickness of the coal measures within PEL 433. The Hoskissons Coal Seam is believed to be thick (approximately 6 meters) and widely distributed within the eastern part of PEL 433. However, there has been no previous coal seam gas exploration and evaluation work in the area, and thus there is no information on gas content, gas composition or coal permeability. The aim of the PEL 433 core-hole program is to gather this additional information to evaluate the potential coal seam gas resource in the area.

The most prospective coal seam gas area within PEL 433 underlies the Central Ranges Natural Gas Pipeline that links Dubbo with Tamworth and joins with the larger Moomba-Sydney Gas Pipeline. This gas pipeline would enable gas sales within the region and potentially to Sydney and surrounding markets.

J. Russell Porter, Gastar's President & CEO, stated, "The addition of these two properties is a logical extension of our joint venture activities on PEL 238. This agreement aligns both parties' joint venture interests within PEL 238, PEL 433 and PEL 434 for coal seam gas development in the Gunnedah Basin. Eastern Star Gas has done an excellent job of drilling and testing the PEL 238 pilots, and we are excited to join them on these licenses. Based on the known extent and thickness of the coals on PEL 433, we believe there is significant gross reserve potential on the license."


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