Gastar Exploration Inc. has announced a deal to sell 19,000 net noncore acres in Kingfisher County, OK, for $46.2 million to a undisclosed privately-owned company.
The deal is expected to close next month. Gastar plans to use the proceeds to pay down debt and help fund this year's $103 million capital budget, nearly all of which it plans to spend in the Midcontinent (see Shale Daily, Sept. 17, 2014).
Since late last year, the company has cut its capital budget three times (see Shale Daily, Feb. 3). It has also shifted its focus this year from the Appalachian Basin to its liquids-rich Hunton Limestone oil play in Oklahoma. If the deal closes, Gastar said it would be left with 103,000 net acres in Kingfisher and surrounding counties. Those assets are in the north-central part of the state, and are part of a broader play in the Midcontinent referred to by other operators as CNOW, Stack or SCOOP for the multiple horizons being targeted (see Shale Daily, April 11, 2014).
At the end of the first quarter, Gastar said net production from the divestiture was 170,000 boe/d, of which 57% was natural gas. The properties included 17 producing wells and proved reserves attributable to the acreage were 379,000 boe, most of which is natural gas.
CEO J. Russell Porter said the company's remaining acreage is prospective for the Meramec Shale in addition to the Mississippi Lime and the Woodford Shale, which it's already producing. A part of the proceeds, Porter said, could go toward a potential test of the Meramec later this year.