Gastar Exploration Enters Deal to Sell East Texas Assets to Cubic for $46M
Gastar Exploration Ltd. (NYSE: GST) today announced that it has entered into a definitive agreement to sell its East Texas assets to Cubic Energy, Inc. (NYSE: QBC) for $46.0 million, subject to customary closing adjustments. The transaction is expected to close on or before June 5 2013, with a property sale effective date of January 1, 2013.
"This sale allows Gastar to redeploy capital to our higher return projects in the Marcellus Shale and Hunton Limestone," said J. Russell Porter, Gastar's President and CEO. "In conjunction with our previously announced Hunton Limestone acquisition, this transaction furthers our planned transition to a liquids rich asset portfolio."
The assets to be sold include approximately 31,800 gross (16,300 net) acres in the Hilltop area of East Texas in Leon and Robertson Counties. For the three months ended December 31, 2012, net production from the Hilltop area averaged approximately 12.4 MMcfe/d. At December 31, 2012, proved reserves attributable to the Hilltop area were approximately 27.4 Bcfe, of which 100% are classified as proved developed and represented approximately 15% of Gastar's total proved reserves.
The closing of the proposed property sale is subject to satisfaction of customary closing conditions. Proceeds from the transaction will initially be used to reduce Gastar's outstanding balance under its revolving credit facility. Management anticipates that this transaction will result in a net increase in the Company's liquidity position of approximately $25 million.
© 2017 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.