Gastar Exploration Inc. said Monday that it would sell its Marcellus and Utica shale assets to an affiliate of privately held investment developer Tug Hill Inc. for $80 million and exit the Appalachian Basin in favor of its Midcontinent assets. The company added, however, that it would mostly suspend exploratory drilling there until 2017 on low oil and gas prices.
The sale would include Gastar's producing assets and proved reserves across 19,600 net acres in Marshall and Wetzel counties, WV. Financial analysts had expected the assets to bring Gastar nearly $100 million when the company announced that it would seek a buyer for the properties last October (see Shale Daily, Oct. 15, 2015). But the commodities downturn has complicated the market for acquisitions and divestitures.
In announcing the deal, Gastar made clear that it needed the money. The company has been hammered by widening Appalachian basis differentials, which forced it to idle its operations in West Virginia last year and turn to oilier assets in the Midcontinent, where it has been earning higher returns (see Shale Daily, Nov. 9, 2015).Click here to read more.
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