Gastar Exploration Ltd. (NYSE MKT: GST) has agreed to provide Cubic Energy a further extension on the closing of the previously announced sale of Gastar's East Texas properties. The closing of the transaction has been extended to August 16, with an option to extend to August 30, to allow Cubic Energy additional time to finalize financing.
As compensation for the August 16 extension, Cubic Energy has paid an additional deposit of $1.15 million to Gastar, bringing the total nonrefundable deposit received to $3.45 million, or 7.5% of the transaction's $46 million value. If Cubic Energy elects to further extend the closing date to August 30, an additional $1.15 million nonrefundable deposit will be made. Upon closing, the deposit shall be applied toward the purchase price. In addition, as previously disclosed, Gastar will receive an aggregate reduction of $700,000 in negative closing adjustments for prior extensions granted to Cubic Energy.
Gastar's principal business activities include the identification, acquisition, and subsequent exploration and development of oil and natural gas properties with an emphasis on unconventional reserves such as shale resource plays. Gastar is currently pursuing the development of liquids-rich natural gas in the Marcellus Shale in West Virginia and is also in the early stages of 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, but has entered into this definitive agreement to sell its East Texas assets.
In July, Gastar signed a purchase and sale agreement with an undisclosed third party for the sale of Gastar's interests in about 76,000 net acres in Kingfisher and Canadian counties, Oklahoma, for approximately $62 million in cash. The agreement also provides for the trading of certain acreage between Gastar and the third party to create more concentrated acreage blocks for both parties. The transaction is subject to customary closing conditions and is expect to close in mid-third-quarter 2013.