Gastar Exploration signs agreement to sell non-core acreage in Oklahoma, US

US-based energy company Gastar Exploration has signed an agreement with an undisclosed third party to sell its interests in around 76,000 net acres in the counties of Kingfisher and Canadian in Oklahoma, for approximately $62m in cash.

The agreement will allow the trading of certain acreage between Gastar and the third party to create more concentrated acreage blocks for both parties.

The divesting acres were acquired from Chesapeake Energy on 7 June in a transaction that included drilling rights on around 157,000 net acres in Oklahoma and approximately 2.8 million barrels of oil equivalent of proved developed producing (PDP) reserves.

Gastar also announced that its partner in its original area of mutual interest (AMI) in Oklahoma has elected to exercise its rights and acquire approximately 12,820 net acres that Gastar first acquired from Chesapeake for a total payment of $12.1 million.

Gastar plans to acquire all of the PDP reserves located outside the existing AMI and 50% of the PDP reserves inside the AMI which are owned in the Chesapeake transaction.

The company will continue to own drilling rights on the remaining 70,206 net acres acquired from Chesapeake. Gastar has around 59,390 gross additional acres, which were acquired in an earlier joint venture to develop the Hunton Limestone formation. Gastar will have a total acreage of about 136,772 gross acres from both transactions.

Gastar Exploration president and CEO J Russell Porter said that the transaction allowed the company to monetise non-core acreage in Oklahoma at a very attractive valuation.

"The Chesapeake transaction assumed a cost of about $41 million for the undeveloped lease acreage and approximately $33.2m for the developed and producing acreage, so we are pleased to be retaining all our key acreage and the producing reserves while recouping most of the total investment," Porter added.

The transaction is expected to be completed in the mid-third quarter of this year, subject to certain closing conditions.

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Image: Gastar Exploration has signed an agreement to sell its interests in about 76,000 net acres in Oklahoma. Photo: courtesy of Bob Jenkins.