HOUSTON, March 13 /CNW/ - Gastar Exploration Ltd. (AMEX: GST; TSX:YGA)
announced today that it has executed, along with its PEL 238 joint venture
partner Eastern Star Gas (ASX:ESG), a Memorandum of Understanding (MOU) with
Macquarie Generation, a government-owned electricity generator in the state of
New South Wales, Australia (NSW). The MOU sets the framework for negotiation
of a potential long-term agreement to supply natural gas for the expansion of
Macquarie Generation's Bayswater power station. A potential long-term natural
gas supply and purchase agreement could reach as much as 500 billion cubic
feet in total and increase NSW's natural gas consumption by as much as 25%.
J. Russell Porter, Gastar's President and CEO, and Dennis Morton, Eastern
Star Gas Managing Director, issued a joint comment on the transaction. "This
is a very exciting commercial development and represents a watershed for both
our Gunnedah Basin Gas Project and the state of NSW. It could provide the PEL
238 joint venture with a large natural gas market that will underpin
development of a natural gas pipeline infrastructure and act as the foundation
for the large scale development and sale of natural gas within NSW. The
pipeline linking the natural gas project to the Bayswater power station could
bring natural gas within 100 kilometers of Newcastle and provide for the
potential additional natural gas sales into the greater
Newcastle-Sydney-Wollongong area. NSW will at last have a truly major,
indigenous source of natural gas."
Macquarie Generation, Australia's largest electricity producer, owns and
operates two coal fired power stations in the Hunter Valley - Bayswater (2,640
MW capacity) and Liddell (2,000 MW capacity). These two power stations can
produce the equivalent of 40% of NSW's electricity requirements. Macquarie
Generation is investigating an innovative gas fuelling initiative that could
both increase the output of the Bayswater power station and reduce the
intensity of greenhouse gas emissions.
The key terms of the Memorandum of Understanding are as follows:
-- Gastar and ESG will continue their PEL 238 Gunnedah Basin Gas Project
work program to prove natural gas reserves.
-- Macquarie Generation will investigate the use of natural gas fired
power generation within the Bayswater power station.
-- The parties will jointly investigate the installation of a 300 km
high pressure natural gas transmission pipeline linking Narrabri to Bayswater.
Gastar and ESG are in the process of commercializing the Gunnedah Basin
Gas Project through the successful implementation of the Bibblewindi
Production Pilot with a target to achieve initial certified natural gas
reserves by the third quarter, 2007. PEL 238 has an independently estimated
gas resource of 17 TCF of gas-in-place.
Gastar holds a 35% interest in the PEL 238 Gunnedah Basin Gas Project
(Coal Seam Gas), with ESG holding the remaining 65% interest and acting as
operator of the project.
The Gunnedah Basin Gas Project (Coal Seam Gas Joint Venture) is located
in Petroleum Exploration License ("PEL") 238 that covers 9,100 square
kilometers of the Gunnedah Basin in New South Wales. PEL 238 contains one of
the largest estimated onshore natural gas resource accumulations in Australia.
The 256 square kilometer Bohena Project Area within PEL 238 is currently under
development with independent gas reserves certification targeted for 2007.
Gastar Exploration Ltd. is an exploration and production company focused
on finding and developing natural gas assets in North America and Australia.
The Company pursues a balanced strategy combining select higher risk, deep
natural gas exploration prospects with low-risk coal bed methane (CBM)
development. The Company owns and controls exploration and development acreage
in the Deep Bossier gas play of East Texas and in the deep Trenton-Black River
play in the Appalachian Basin. Gastar's CBM activities are conducted within
the Powder River Basin of Wyoming and upon the approximate 3.5 million acres
controlled by Gastar and its Joint Development partners in Australia's
Gunnedah Basin, PEL 238 and Gastar's Gippsland Basins located in New South
Wales and Victoria respectively.
Safe Harbor Statement and Disclaimers:
The United States Securities and Exchange Commission (SEC) has generally
permitted oil and gas companies, in their filings with the SEC, to disclose
only proved reserves that a company has demonstrated by actual production or
conclusive formation tests to be economically and legally producible under
existing economic and operating conditions. We use the terms "resources,"
"gas-in-place" or other descriptions of volumes of hydrocarbons that the SEC
guidelines may prohibit us from including in filings with the SEC. Estimates
of gas resources or gas-in-place do not reflect volumes that are demonstrated
as being commercially or technically recoverable. Even if commercially or
technically recoverable, a significant recovery factor would be applied to
these volumes to determine estimates of volumes of proved reserves.
Accordingly, these estimates are by their nature more speculative than
estimates of proved reserves and accordingly are subject to substantially
greater risk of being actually realized by the Company. The methodology for
estimating gas-in-place or resources may also be different than the
methodology and guidelines used by the Society of Petroleum Engineers.
This Press Release includes forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Act of 1934. A statement identified by the words "expects," "projects,"
"plans," and certain of the other foregoing statements may be deemed
"forward-looking statements". Although Gastar believes that the expectations
reflected in such forward-looking statements are reasonable, these statements
involve risks and uncertainties that may cause actual future activities and
results to be materially different from those suggested or described in this
press release. These include risks inherent in the drilling of oil and natural
gas wells, including risks of fire, explosion, blowout, pipe failure, casing
collapse, unusual or unexpected formation pressures, environmental hazards,
and other operating and production risks inherent in oil and natural gas
drilling and production activities, which may temporarily or permanently
reduce production or cause initial production or test results to not be
indicative of future well performance or delay the timing of sales or
completion of drilling operations; risks with respect to oil and natural gas
prices, a material decline in which could cause the Company to delay or
suspend planned drilling operations or reduce production levels; and risks
relating to the availability of capital to fund drilling operations that can
be adversely affected by adverse drilling results, production declines and
declines in oil and gas prices and other risk factors as described in the
Company's Annual Report on Form 10-K, as filed on March 31, 2006 with the
United States Securities and Exchange Commission at www.sec.gov and on the
System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com
The American Stock Exchange and Toronto Stock Exchange have not reviewed
and do not accept responsibility for the adequacy or accuracy of this release.
For further information:
For further information: Gastar Exploration Ltd., Houston J. Russell
Porter, 713-739-1800 Fax: 713-739-0458 E-Mail: email@example.com