Joint Venture Targets CBM Properties in Powder River Basin
Rocky Mountain Gas Inc. (RMG) has signed on with Gastar Exploration Ltd. in a joint venture to develop nearly 37,000 acres of Gastar's coalbed methane (CBM) properties in the Powder River Basin of Wyoming and Montana.
RMG, a subsidiary of U.S. Energy and Crested Corp., would be part of an earn-in joint venture under which RMG will make an initial cash payment of $7 million to Gastar and thereafter spend $15 million on behalf of itself and Gastar to develop joint venture properties until Dec. 31, 2005. RMG would hold a 60% interest in the leases until it has recovered the $15 million spending commitment amount and a 50% interest after that. Currently, the leases are producing about 2 MMcf/d.
J. Russell Porter, Gastar's COO, said the joint venture will allow the company to accelerate its CBM development "at a time when realized gas prices are strong and projected to remain strong." He added that the funding also would give Gastar a boost to continue exploration and development of its Deep Bossier Sand assets in East Texas as well as assets in Australia.
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