Gastar To Sell East Texas Assets

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Plans to sell its East Texas assets in Leon and Robertson counties.

Gastar Exploration Ltd. (NYSE MKT: GST) plans to sell its East Texas assets to Cubic Energy Inc. (NYSE MKT: QBC) for $46.0 million.

The assets 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 Dec. 31, 2012, net production from the Hilltop area averaged approximately 12.4 million cubic feet equivalent (MMcfe) per day. About 97% of the production is natural gas.

At Dec. 31, 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.

"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 chief executive. "In conjunction with our previously announced Hunton Limestone acquisition, this transaction furthers our planned transition to a liquids-rich asset portfolio."

Funds from the sale will be used to pay down debt. Gastar management anticipates that this transaction will result in a net increase in the Company's liquidity position of approximately $25 million.

Calvin A. Wallen III, Cubic’s chairman, chief executive and president, said: “We are excited to take the first step in transitioning Cubic to a diversified oil & natural gas company. As Cubic moves forward with additional acquisitions, the East Texas EagleBine Assets will prove to be a critical first step with its upside in the oil rich Cretaceous Zone, including the Eagleford & Woodbine intervals. The asset also gives us great flexibility with the deeper Bossier, a prolific and highly commercial play that we have the option to develop as natural gas pricing improves.”

The deal is expected to close on or before June 5, with an effective date of Jan. 1.

Gastar Exploration Ltd. is an independent oil and gas company based in Houston. It has assets in the Marcellus shale in West Virginia and is exploring and developing the Hunton Limestone horizontal oil play in Oklahoma. Gastar also holds producing natural gas acreage in the deep Bossier play in the Hilltop area of East Texas and prospective Marcellus Shale acreage in Pennsylvania.

Cubic Energy, Inc. is an independent oil and gas company based in Dallas, Texas. Its assets and activity are concentrated primarily in the Cotton Valley and Haynesville Shale Play located in Northwest Louisiana.