UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date of
Report (Date of earliest event reported): November 5, 2010 (November
1, 2010)
GASTAR
EXPLORATION LTD.
(Exact
Name of Registrant as Specified in its Charter)
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ALBERTA,
CANADA
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001-32714
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98-0570897
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(State
or other jurisdiction
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(Commission
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(IRS
Employer
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of
incorporation)
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File
Number)
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Identification
No.)
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1331
LAMAR STREET, SUITE 1080
HOUSTON,
TEXAS 77010
(Address
of principal executive offices)
(713)
739-1800
(Registrant's
telephone number, including area code)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
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¨
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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¨
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Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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¨
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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¨
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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SECTION
1 – REGISTRANT’S BUSINESS AND OPERATIONS
Item
1.01 Entry into a Material Definitive Agreement.
As previously announced, on September
21, 2010, Gastar Exploration USA, Inc., a wholly-owned subsidiary of Gastar
Exploration Ltd. (collectively, the “Company”), entered into a purchase and sale
agreement (the “JV Agreement”) with Atinum Marcellus I LLC (“Atinum”), an
affiliate of Atinum Partners Co., Ltd, a Korean investment firm (the “Atinum
Joint Venture”). Pursuant to the JV Agreement, the Company agreed to
assign to Atinum an initial 21.43% interest in all of its existing Marcellus
Shale assets in West Virginia and Pennsylvania, which consists of approximately
34,200 net acres and a 50% working interest in 16 producing shallow conventional
wells and one non-producing vertical Marcellus Shale well (the “Atinum Joint
Venture Assets”).
On November 1, 2010, the Company
completed the Atinum Joint Venture as contemplated by the JV Agreement (the
“Closing”). At Closing, Atinum paid approximately $30.0 million in cash to the
Company in exchange for the interest in the Atinum Joint Venture Assets
described above. Under the terms of the JV Agreement, Atinum is also obligated
to fund its 50% share of drilling, completion and infrastructure costs, and will
pay an additional $40.0 million in the form of a drilling carry by funding 75%
of the Company’s 50% share of those same costs. Upon the completion
of the funding of the $40.0 million drilling carry, Atinum will own a 50%
interest in the Atinum Joint Venture Assets, making the transaction valued at
approximately $70.0 million. A post-closing title review period could result in
certain purchase price adjustments.
The Company and Atinum have an initial
three-year development program that calls for them to drill one horizontal
Marcellus Shale well during the remainder of 2010, a minimum of 12 horizontal
wells in 2011 and 24 horizontal wells in each of 2012 and 2013. The
Company will continue to serve as operator of all of the Atinum Joint Venture
Assets.
The JV
Agreement also established an initial area of mutual interests (“AMI”) for
potential additional acreage acquisitions in Ohio and New York, along with those
counties in West Virginia and Pennsylvania in which the Atinum Joint Venture
Assets are located, plus areas within 2 miles of those assets. Within
the initial AMI, the Company will act as operator and will offer any future
lease acquisitions to Atinum on a 50/50 basis. For acreage in which
Atinum participates, in addition to paying 50% of the acquisition costs, Atinum
has agreed to pay the Company on an annual basis an amount equal to 10% of lease
bonuses and third party leasing costs up to $20.0 million and 5% of such costs
above $20.0 million. Until June 30, 2011, Atinum will have the right to
participate in any future leasehold acquisitions made by the Company outside of
the initial AMI and within West Virginia or Pennsylvania on terms identical to
those governing the existing Atinum Joint Venture.
A
description of the material terms of the Atinum Joint Venture can be found in
Item 1.01 of the Company’s Current Report on Form 8-K filed with the Securities
Exchange Commission on September 24, 2010, which is incorporated herein by
reference; the JV Agreement was filed as Exhibit 2.1 to such report and is
incorporated herein by reference.
SECTION
2 – FINANCIAL INFORMATION
Item
2.01 Completion of an Acquisition or Disposition of Assets.
The information described in Item 1.01
above relating to the Closing of the Atinum Joint Venture and the transactions
contemplated by the JV Agreement is hereby incorporated by reference into this
Item 2.01.
SECTION
7 – REGULATION FD
Item
7.01 Regulation FD Disclosure
On
November 2, 2010, the Company issued a press release announcing the closing of
the Atinum Joint Venture described in Item 1.01 of this Current
Report. A copy of the press release is furnished as Exhibit 99.1 to
this Current Report on Form 8-K and is incorporated herein by
reference.
In
accordance with General Instruction B.2 of Form 8-K, the information presented
herein under this Item 7.01 and set forth in the attached Exhibit 99.1 is deemed
to be “furnished” solely pursuant to Item 7.01 of this report and shall not be
deemed “filed” for purposes of Section 18 of the Securities Exchange Act of
1934, as amended, or otherwise subject to the liabilities of that section, nor
shall such information or the Exhibit be deemed incorporated by reference into
any filing under the Securities Act of 1933 or the Securities Exchange Act of
1934, each as amended.
SECTION
9 – FINANCIAL STATEMENTS AND EXHIBITS
Item
9.01 Financial Statements and Exhibits.
(b) Pro Forma Financial
Information
The
unaudited pro forma financial information of the Company with respect to the
Atinum Joint Venture for the year ended December 31, 2009 and nine months ended
September 30, 2010 are included as Exhibit 99.2 hereto.
(d) Exhibits
The following is a list of exhibits
filed or furnished as part of this Current Report.
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Exhibit Number
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Description of Document
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10.1
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Purchase
and Sale Agreement, dated September 21, 2010, by and between Gastar
Exploration USA, Inc. and Atinum Marcellus I LLC (previously filed as
Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the
Securities Exchange Commission on September 24, 2010, and incorporated
herein by reference).
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99.1
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Press
Release, dated November 2, 2010.
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99.2
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Unaudited
pro forma financial information of Gastar Exploration Ltd. for the year
ended December 31, 2009 and nine months ended September 30,
2010.
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Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
GASTAR
EXPLORATION LTD.
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Date: November
5, 2010
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By:
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/s/ J. RUSSELL
PORTER
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J.
Russell Porter
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President
and Chief Executive Officer
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EXHIBIT
INDEX
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Exhibit Number
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Description of Document
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10.1
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Purchase
and Sale Agreement, dated September 21, 2010, by and between Gastar
Exploration USA, Inc. and Atinum Marcellus I LLC (previously filed as
Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the
Securities Exchange Commission on September 24, 2010, and incorporated
herein by reference).
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99.1
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Press
Release dated November 2, 2010.
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99.2
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Unaudited
pro forma financial information of Gastar Exploration Ltd. for the year
ended December 31, 2009 and nine months ended September 30,
2010.
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