HOUSTON, Dec. 16, 2015 /PRNewswire/ — Gastar Exploration Inc. (NYSE MKT: GST) (“Gastar” or the “Company”) today announced the closing of its previously announced acquisition of additional interests in its Area of Mutual Interest (“AMI”) from its AMI co-participant, Husky Ventures, Inc. (“Husky”), and certain other parties (collectively “Sellers”). The acquisition included working and net revenue interests in 103 gross (10.2 net) producing wells and approximately 15,700 net developed and undeveloped acres in Kingfisher and Garfield Counties, Oklahoma within the STACK play and Hunton Limestone formations. The purchase price of approximately $42.1 million, with an effective date of July 1, 2015, was funded with borrowings under Gastar’s revolving credit facility. Gastar also conveyed approximately 11,000 net non-core, non-producing acres in Blaine and Major Counties, Oklahoma to the Sellers. With the closing of the transaction, the AMI participation agreements with Gastar’s AMI co-participant have been dissolved. As a part of the agreements underlying the acquisition, Gastar and Husky filed dismissals of a legal proceeding that Gastar had filed against Husky and a separate legal proceeding that Husky had filed against certain officers and directors of Gastar.
The Company also announced the results of the Deep River 30-1H well, its first operated test of the STACK formation Meramec Shale in Oklahoma. The well commenced flow back on October 28th and has been gradually increasing oil and gas production to a recent initial peak 24-hour rate of 1,094 Boe per day (71% oil) and 1,549 barrels of completion fluids recovered per day. The Deep River 30-1H was producing at a most recent 10-day average oil and natural gas rate of 1,042 Boe per day (71% oil) and an average of 1,364 barrels of completion fluids per day. Gastar has a 100% working (80% net revenue) interest in the well. This Meramec Shale test well, located in Kingfisher County, was completed with 34 frack stages, placing approximately 12 million pounds of proppant in an approximate 5,100 foot lateral, for a total cost of $6.4 million. We expect that our future wells targeting the Meramec Shale, assuming a 5,000 foot lateral length, should cost approximately $5.5 million to drill and complete.
“Our Deep River Meramec test well is an important success and moves the productive outline of the Meramec play much further northeast than previously defined,” said J. Russell Porter, Gastar’s President and CEO. “It is also worth noting that the percentage of oil in our area is much higher than the production associated with acreage that has been involved in industry transactions recently completed at very high valuations. Plus, the robust gas production shows that our acreage has good reservoir pressure to drive high oil production volumes and increase reserve recovery. This should allow future drilling of the Meramec play to generate both positive cash flow and strong returns on our investment, even at current commodity prices.”
“With the completion of this acquisition of additional interests in Oklahoma, we have expanded our exposure to the STACK play as well as the Hunton and emerging Osage and Oswego plays. We estimate that, based on 320-acre spacing, we now have approximately 194 net locations on approximately 62,200 net acres that are prospective for the Meramec/Osage formation within the Mississippi Lime, an increase of 49 net locations. Now that our Mid-Continent AMI is dissolved, we control all future drilling plans on that acreage and are taking over operatorship of a majority of the wells previously drilled within the AMI.”