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Additional Information
Market: ASX
Sector: Oil and Gas Exploration and Production
Epic: ASX:STO
News: Latest news
Web Site: Santos
Other Articles: 13-08-200902-07-200908-12-2008

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Santos

Santos

Santos is a major Australian oil and gas exploration and production company with interests and operations in every major Australian petroleum province and in Indonesia, Papua New Guinea, Vietnam, India, Bangladesh, Kyrgyzstan and Egypt.

Thursday, July 02, 2009

Gastar Exploration to sell Australian assets to Santos for US$240 mln

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Gastar Exploration Ltd (NYSE Amex: GST; TSX: YGA) has agreed it sell its Australian assets to Santos Ltd (ASX: STO) for US$240 million and announced plans to de-list from the Toronto Stock Exchange once the sale is completed.

Gastar has entered into definitive agreements with Santos QNT Pty Ltd and Santos International Holdings Pty Ltd for the sale of its interest in Petroleum Exploration Licenses 238, 433 and 434 in New South Wales, Australia, along with the sale of the shares of Gastar Power Pty Ltd, the entity holding Gastar's 35 percent interest in the Wilga Park power station.

 Gastar expects to book a net gain of approximately US$175 million from the sale, and the transaction is expected to close on July 10 2009.

Gastar plans to use the money to repay outstanding debt under its secured revolving credit facility, to retire its C$25 million secured term loan and to pay in full Gastar's C$30 million convertible subordinated debentures upon their maturity in November 2009.

What remains is planned to finance an offer to repurchase any and all of Gastar's C$100 million senior secured notes, thus repaying substantially all of Gastar's debt and reducing its annual interest expense by as much as US$20 million.

President and CEO J Russell Porter said: "Gastar will maintain its current ownership in the East Texas Deep Bossier and Marcellus Shale plays (in the US) and plans to proceed with the development of those assets while limiting capital expenditures to excess cash flow generated by its producing assets.”

Following the completion of the transactions with Santos, Gastar intends to implement a 1-for-5 reverse share consolidation that was authorized by Gastar's shareholders in June 2008, and it will de-list its shares from trading on TSX.

In 2009 to date, less than 1 percent of the total daily trading volume in Gastar's common shares were executed on the TSX. Trading on two exchanges has become unduly costly and burdensome without providing any significant additional liquidity for Gastar's shareholders, the group added.

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