Gastar Exploration expects to receive approximately US $12.5 million in additional after-tax consideration for the 2009 sale of its interests in PEL 238, a coal seam natural gas project in New South Wales, Australia.
Year-end reserves for the PEL 238 project disclosed this week by project operator Eastern Star Gas exceeded the 2P target of 1.3 Tcf under the sale agreement. As a result, Gastar has earned an additional AU$20 million payment from the purchaser, affiliates of Santos Ltd. Based on recent foreign exchange rates and net of the 30% Australian tax due on the additional payment, net proceeds are expected to be approximately US $12.5 million. The company expects to receive the payment in cash in the near future pursuant to the sale agreement.
In addition to the reserve upside payment from Santos, Gastar also has the right to receive up to US $10 million in future cash payments from Eastern Star if certain previously negotiated production thresholds are achieved in the future.
"Proceeds from this upside payment for our former Australian assets will enhance our already strong liquidity position and will help enable us to execute our planned capital programs in the Marcellus Shale and in the East Texas Bossier play," said J. Russell Porter, Gastar President and Chief Executive Officer.
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