Gastar Exploration Inc. (GST) is dealing 19,000 net acres from its noncore Midcontinent holdings, paving the way to exploit opportunities in Oklahoma's Stack Play.

Houston's Gastar said May 6 it entered into an agreement to sell certain noncore assets in Oklahoma for about $46.2 million to Oklahoma Energy Acquisitions LP, whose general partner is Alta Mesa GP LLC. The price is subject to certain adjustments and customary closing conditions.

The assets include 38 gross (16.7 net) wells on about 29,300 gross (19,000 net) acres in Kingfisher County. The wells produced an average of about 170 net barrels of oil equivalent per day (boe/d) per day, 57% natural gas, during the first quarter of 2015. At year-end 2014, proved reserves were 379,000 boe, of which 63% was natural gas.

Gabriele Sorbara, vice president of E&P/energy research, Topeka Capital Markets, valued the sale at $271,765 per flowing boe of production and $2,074 per net acre, after placing a value on the sold production.

“The sale not only shores up the company's balance sheet, but allows the company to focus on its core position in the play which offers stacked pay opportunities," Sorbara said in a report.

Gastar said it might use the sale proceeds for an initial operated test of the Meramec Shale potential in the Stack Play on its Midcontinent acreage later this year. Proceeds from the sale are also earmarked for reduction the company's debt under its revolving credit facility and other general corporate purposes.

Gastar, divestiture, sale, Oklahoma, noncore, overview, table "While we plan to maintain a conservative approach to our 2015 capital plan, we have been closely monitoring the success of other nearby operators targeting the Meramec Shale/Mississippi Lime formation and believe an operated drill test could help define the value of our Stack Play potential," said J. Russell Porter, Gastar's president and CEO, in a press release.

The company will continue to have sizeable holdings in the Midcontinent, including the Hunton Limestone Oil Play, the Meramec Shale/ Mississippi Lime potential and Woodford Shale. The company’s holdings also include the Marcellus and Utica.

Porter said the sale enhances the company’s liquidity position while it continues to focus on its Hunton Limestone exploration and development programs in its core Oklahoma acreage. The company also retained a substantial acreage position with Stack Play potential.

The company's core Oklahoma acreage lies within and around Gastar's West Edmond Hunton Lime Unit (WEHLU) and joint venture area in Blaine, Garfield, Kingfisher and Major counties.

"We currently believe we will have ample liquidity to support our capital expenditure plans for the remainder of 2015, and the proceeds from this sale will further enhance our liquidity and our financial flexibility regarding future capital activities," he said.

Gastar has $334.7 million of total debt and $12.1 million of cash on hand, Sorbara said.

He also estimates the company has a total liquidity of $202.4 million, including $190.3 million available under its $200 million borrowing base. The company's funding gap is $45.5 million for 2015 and $69.3 million in 2016, he said.

"We believe GST is in great shape with more than ample liquidity to weather the current commodity price downturn through 2016," he said.

The transaction is expected to close on or before June 22, with an April 1 effective date. The closing of the proposed property sale is subject to the satisfaction of customary closing conditions.

Contact the author, Emily Moser, at emoser@hartenergy.com.