Midcontinent pure-play operator Gastar Exploration Inc. said it has closed on the sale of certain noncore assets in Oklahoma to an undisclosed buyer for $74.7 million, and that its borrowing base has been trimmed to $85 million.
In a statement Monday, the Houston-based company said it received $46.4 million in the initial closing, and that the buyer has placed an additional $28.3 million into escrow. The release of the escrow funds to Gastar is subject to certain title curative and other conditions.
Last month, Gastar said it would sell 19,100 net acres in northeast Canadian County and southeast Kingfisher County for $71 million, of which up to $10 million was contingent upon the satisfaction of certain conditions. The acreage included 181 boe/d of production from 25 gross (11.2 net) wells, with 32% weighted toward oil.
Gastar said that following its regularly scheduled borrowing base redetermination for November, its borrowing base was reduced from $100 million to $85 million. The company said it will repay the required $15 million borrowing base reduction with proceeds from the closing of the sale of its noncore assets. Gastar's next regularly scheduled borrowing base redetermination is set for May 2017.
Gastar became a pure-play Midcontinent operator, focused on Oklahoma's stacked reservoirs, after selling its Appalachian Basin portfolio to Tug Hill Inc. for $80 million last April. During its 3Q2016 earnings presentation, the company said it would hold 81,400 net surface acres in the Midcontinent after the sale was completed. The acreage includes those under a development agreement, announced in October, with an undisclosed investor to jointly develop up to 60 wells in 20 well tranches in the STACK play in Kingfisher County.
Last week, Gastar said it could add a third drilling rig to its program in 2017, as it looks to delineate its acreage in the STACK play.