MT. PLEASANT, Mich., April 30, 2003 (PRIMEZONE) -- Gastar Exploration, Ltd. (TSE:YGA) and Rocky Mountain Gas, Inc. ("RMG," a subsidiary of U.S. Energy Corp. (Nasdaq:USEG) and Crested Corp. (OTCBB:CBAG), d/b/a USECC) are pleased to announce the signing of a Letter of Intent regarding the intended formation of an earn-in joint venture to pursue development of approximately 37,000 acres of Gastar's CBM properties in the Powder River Basin of Wyoming and Montana.
The terms of the Letter of Intent call for the creation of an earn-in joint venture under which RMG will make an initial cash payment to Gastar of approximately USD $7 million, and thereafter spend USD $15 million on behalf of itself and Gastar for further development of the joint venture properties prior to December 31, 2005. Upon execution of the definitive agreements, Gastar will assign RMG a 50% working interest position in all existing producing leases within the Area of Mutual Interest in consideration for the cash payment. These leases are currently producing approximately 2 MMCFD.
RMG will then earn up to a 50% interest in all other undeveloped acreage within an Area of Mutual Interest upon satisfaction of the $15 million spending commitment. The funds provided by RMG will be used for accelerated development of these CBM properties. RMG will hold a 60% interest until it has recovered the $15 million spending commitment amount and a 50% interest thereafter. Gastar and RMG shall be 50/50 joint venture partners for CBM exploration and development activity within the AMI after RMG's spending commitment has been satisfied.
Commenting on the joint venture, J. Russell Porter, Gastar's COO, said, "This is an important development for Gastar. First, we will get an outstanding partner and operator in RMG. We have been very pleased with RMG's operation of our jointly owned and developed Bobcat project area in the Powder River Basin and we look forward to their involvement in the rest of our acreage. This transaction allows us to accelerate development of these CBM assets at a time when realized gas prices are strong and projected to remain strong. Finally, this transaction also provides funding for Gastar's continued exploration and development including its Deep Bossier Sand assets in East Texas and funding for its CBM assets in New South Wales (PEL 238) and Victoria (the Gippsland Basin), Australia. Gastar is currently in the final stages of planning its second Deep Bossier exploration well, following the geologic success realized in its first Deep Bossier well."
Gastar Exploration is an exploration and production company focused on finding and developing natural gas in North America and Australia. The Company pursues a balanced strategy combining low-risk CBM development with select higher risk, deep natural gas exploration prospects. Gastar's CBM activities are conducted within the Powder River Basin of Wyoming and upon the approximate 4 million acres controlled by Gastar in Australia's Gunnedah and Gippsland Basins located in New South Wales and Victoria respectively. The Company owns prospective acreage in the Deep Bossier Sand gas play of East Texas, in the deep Trenton - Black River play of Appalachia and in the deep Temblor gas play in the East Lost Hills field within the San Joaquin Basin of California.
U.S. Energy and Crested Corp. are engaged in joint business operations as USECC, and through their subsidiary Rocky Mountain Gas, Inc., own working interests in over 280,000 gross acres prospective for coalbed methane in the Powder River Basin of Wyoming and Montana and acreage adjacent to the Greater Green River Basin in southwest Wyoming. All properties are subject to a definitive agreement with a division of Carrizo Oil & Gas, Inc. (Nasdaq:CRZO) of Houston, TX to develop and expand RMG's CBM properties dated July 10, 2001. USECC owns control of Sutter Gold Mining Company, which owns properties in California. USECC also owns various interests in uranium properties in Wyoming and Utah.
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. Although Gastar believes that its expectations are based on reasonable assumptions, it can give no assurance that its goals and assumptions will be achieved. Important factors that could cause actual results to differ materially from those in the forward-looking statements contained herein, include, among others, the success and timing of certain projects, the success in drilling and producing oil and gas properties, changes in commodity prices for oil and natural gas, operating risks, the uncertainty associated with estimating underground quantities of crude oil and natural gas reserves and other risk factors as described in the Company's Annual Information Form filed as of May 2002, on the System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com.
The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.
Contact Information: Gastar Exploration, Ltd. (TSX:YGA) 2480 West Campus Drive, Bldg C Mt. Pleasant, MI 48858 (989) 773-7050 FAX (989) 773-0006 Attention J. Russell Porter or Victor W. Hughes, Jr. E-Mail: rporter@gastar.com or vhughes@gastar.com Web Site:www.gastar.com