Each one in plain English, with the numbers worked through for a shareholder.
12 Aug 2013asset acquisition disposition▲ GoodMajor
Gastar closed the sale of about 76,000 net undeveloped Oklahoma acres in Kingfisher and Canadian Counties to Newfield Exploration Mid-Continent on August 6, 2013, for expected net proceeds of about $60.1 million, after receiving back 1,850 net acres (the earlier figure was about 2,260). The sale is booked as a reduction of capitalized costs, with no gain and no effect on the income statement. Management says this recouped most of the investment in the Chesapeake acreage while keeping its core Hunton acreage, leaving about 136,800 gross (96,400 net) Hunton acres. This resolves the pending Oklahoma sale thread and names the previously unnamed buyer.
The East Texas sale to Cubic was extended a fourth time, to August 16, 2013, with an option to August 30. Cubic paid another $1.15 million non-refundable deposit, bringing the total to $3.45 million (7.5% of the $46 million value), with a further $1.15 million due if it takes the August 30 option. The filing also furnishes the Q2 2013 results release and the August dividend announcement for the Series A Preferred; only the headline of the results (production up 65% from Q2 2012 to 57.6 MMcfe per day, production revenue up 111% to $23.4 million) is visible, as the rest was cut off.
Gastar and Cubic Energy again pushed back the closing of the East Texas sale (still about $46.0 million), this time to July 31, 2013, to give Cubic time to finalize financing. If it does not close by then, the agreement ends automatically and Gastar keeps Cubic's $2.3 million deposit; Gastar also agreed to cut certain due diligence price deductions by a further $350,000 as compensation for the extension. This continues the slipping closing date from the earlier July 12 target.
Gastar agreed to sell about 76,000 net acres of Kingfisher and Canadian County, Oklahoma leasehold, part of the acreage bought from Chesapeake on June 7, to an unnamed buyer for about $62.0 million, with closing due by August 6, 2013. Gastar will receive about 2,260 net acres back through a lower price. The press release also says its partner in the original Oklahoma joint area has chosen to buy about 12,820 net acres from Gastar for $12.1 million, and that Cubic Energy's East Texas closing was moved to July 12. Together these let Gastar recover most of the cost of the Chesapeake deal while keeping its core Hunton acreage.
Gastar and Cubic Energy again extended the closing of the East Texas sale, to July 12, 2013; the price is still described as about $46.0 million, subject to adjustments. The filing also announces the July 2013 monthly dividend on the Series A Preferred Stock of 8.625%, $0.179688 per share, payable July 31 to holders of record on July 15. Both are routine updates. The sale has now slipped past its original June 5 target.
12 June 2013asset acquisition disposition▲ GoodMajor
Gastar closed the Chesapeake Oklahoma acquisition on June 7, 2013, along with the buyback of Chesapeake's 6,781,768 shares and the settlement of the Texas lawsuit, for about $84.0 million in total (subject to adjustments), paid with the May notes proceeds. The same day it signed a new credit agreement with Wells Fargo (initial $50.0 million borrowing base, maturing November 14, 2017) and an intercreditor agreement putting the notes' liens behind the revolver's. The Cubic East Texas sale was pushed to a June 28 closing, with the price reduced for excluded assets. Michael McCown was named Senior Vice President and Chief Operating Officer, and the change-of-control severance plan was amended for that role. This resolves the pending Chesapeake deal and buyback, and the Chesapeake shareholding is gone.
Gastar's subsidiary Gastar USA issued $200 million of 8 5/8% Senior Secured Notes due May 15, 2018, with the money held in escrow until the Chesapeake Oklahoma acquisition closes. If that deal is not completed by June 30, 2013 (or the purchase agreement is terminated earlier), the notes will be redeemed at 100% of the initial offering price plus accrued interest. Separately, Wells Fargo replaced Amegy Bank as administrative and collateral agent on the existing credit agreement. This is the debt financing flagged as an open thread after the April Chesapeake deal.
Gastar agreed to sell its Hilltop-area East Texas leasehold (about 16,300 net acres in Leon and Robertson Counties, with producing wells) to Cubic Energy for about $46.0 million cash, with closing expected on or before June 5, 2013. Proceeds will first pay down the revolving credit facility. This follows the earlier mention of possible East Texas sales as a way to fund the Chesapeake Oklahoma deal; the press release says it expects a net liquidity increase of about $25 million.
Gastar agreed to buy about 157,000 net acres of Oklahoma leasehold, including interests in 176 producing wells, from Chesapeake affiliates for about $74.2 million in cash. In a linked settlement of Chesapeake's lawsuit, Gastar will pay about $10.8 million, of which about $9.8 million buys back Chesapeake's 6,781,768 shares (about 9.9% of the shares). The roughly $85 million total is to be funded from revolver borrowings, possible East Texas asset sales, and debt or preferred stock, and closing is targeted by June 7, 2013.
Gastar USA and its lenders, led by Amegy Bank, signed a fourth amendment to its 2009 credit agreement, extending the maturity of borrowings to September 30, 2015. It also lets Gastar USA hedge up to 100% of its proved developed producing reserves using hedges other than floors and protective spreads, and caps outstanding LIBO Rate Loans at ten.
