Chesapeake Energy Corp. Wednesday said its previously announced transaction with Gastar Exploration Ltd. to acquire all of Gastar's rights, title and interest in a portion of its East Texas undeveloped leasehold and to purchase 10 million newly issued Gastar common shares will not be consummated due to a third party exercising its right of first refusal through an existing agreement.
Gastar closed the sale of a portion of its undeveloped leasehold in East Texas for cash proceeds of approximately $88 million, including the issuance of 10 million newly issued Gastar common shares at $2/share, to Navasota Resources LP, the company said recently. An additional $4 million is expected to be received by July 9, 2007 assuming certain title curative actions can be completed.
Private exploration and production company Navasota exercised its preferential rights and acquired the leasehold interests and the Gastar common shares for cash.
As a result of the issuance of the 10 million new common shares in this transaction, Navasota holds approximately 4.9% of Gastar's 205,341,375 currently issued and outstanding common shares. The common shares issued to Navasota have not been registered under the Securities Act of 1933, as amended, or Canadian securities laws. Navasota was granted certain limited rights to register the resale of the shares purchased in the transaction.
"Gastar plans to use the proceeds from the sale of the leasehold interest to continue our East Texas deep Bossier drilling program, focusing on the areas that are covered by a recently acquired 3-D seismic survey, as well as to continue the development of our coalbed methane properties in southeastern Australia," said Gastar CEO J. Russell Porter. "The sale of these assets provides Gastar the financial flexibility to pursue our current business plan as well as potential new opportunities."
Because of certain anti-dilution rights previously obtained, Chesapeake will acquire approximately 1.8 million additional shares from Gastar at $2.00/share, thereby maintaining Chesapeake's fully diluted ownership in Gastar at 14.95%.
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