HOUSTON, Jan. 10, 2017 /PRNewswire/ — Gastar Exploration Inc. (NYSE MKT: GST) (“Gastar”) announced today that it has declared special cash dividends on its 8.625% Series A Preferred Stock (“Series A Preferred Stock”) and its 10.75% Series B Preferred Stock (“Series B Preferred Stock”) to pay in full all accumulated and unpaid cash dividends on both of its outstanding series of preferred stock. Due to covenant restrictions under its credit agreement, Gastar had previously suspended the payment of monthly cash dividends on both outstanding series of its preferred stock as of April 1, 2016. The total amount of the declared dividend payments is approximately $12.1 million.
The dividend on the Series A Preferred Stock and Series B Preferred Stock is payable on January 31, 2017 to holders of record at the close of business on January 20, 2017.
The Series A Preferred Stock January 2017 dividend payment will include all accumulated and unpaid dividends accrued since April 1, 2016 at an annualized 8.625% through the payment date, which is equivalent to $1.796875 per share, based on the $25.00 per share liquidation preference. The Series A Preferred Stock is currently listed on the NYSE MKT and trades under the ticker symbol “GST.PRA.”
The Series B Preferred Stock January 2017 dividend payment will include all accumulated and unpaid dividends accrued since April 1, 2016 at an annualized 10.75% through the payment date, which is equivalent to $2.239584 per share, based on the $25.00 per share liquidation preference. The Series B Preferred Stock is currently listed on the NYSE MKT and trades under the ticker symbol “GST.PRB.”
In connection with the dividend declaration, Gastar also announced that it has entered into an amendment of its credit agreement governing its revolving credit facility to, among other items, permit the limited payment of certain cash dividends on its preferred stock, including the dividends declared payable on January 31, 2017, provided that Gastar’s borrowing base will be correspondingly reduced in the amount of any such dividend payment and Gastar pays down its outstanding indebtedness in the amount of dividends paid. Gastar’s credit agreement had previously prohibited payment of cash dividends on preferred stock after March 31, 2016.
Under the amendment, payment of the declared January 2017 dividend and monthly preferred stock cash dividends through May 2017 is permitted contingent upon the satisfaction of certain conditions, including but not limited to (1) the absence of any defaults or borrowing base deficiency, (2) having cash liquidity (including any available revolver borrowings) of more than $30 million, and (3) paying permitted dividends solely from proceeds received by Gastar from sales of equity since November 30, 2016 (including through the Company’s at-the-market sales program). There is no assurance, however, when or if Gastar will declare and pay further preferred stock dividends after January 31, 2017.
Under the credit agreement amendment, Gastar also agreed to pay down indebtedness under its revolving credit facility by at least an additional $8.1 million by April 30, 2017, which is anticipated to be paid out of proceeds received by such date from its previously announced sale of non-core Canadian County, Oklahoma oil and gas properties.
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.