HOUSTON, July 13 /PRNewswire-FirstCall/ -- Gastar Exploration Ltd. (NYSE Amex: GST) has completed the previously announced sale of all of its interest in Petroleum Exploration Licenses 238, 433 and 434 in New South Wales, Australia, and the sale of its shares of Gastar Power Pty Ltd, to affiliates of Santos Ltd. (ASX: STO). Gastar received approximately US $217 (AU $280) million of the aggregate US $233 (AU $300) million purchase price at closing and is scheduled to receive the balance upon receipt of certain government approvals. Total net proceeds after payment of Australian income taxes are expected to be approximately US $170.5 (AU $219) million prior to transaction costs. The Company may be paid an additional US $16 (AU $20) million in early 2010 if the independently certified gross 2P reserves (SPE proved plus probable) for the PEL 238 coalbed methane project are at least 1.3 Tcf at year-end 2009.

Using a portion of the proceeds, Gastar will retire its $25 million secured term note and pay down the current outstanding balance of $13 million under its secured revolving credit facility. The Company intends to immediately offer to repurchase all of its outstanding $100 million of 12-3/4% senior notes with remaining proceeds in accordance with the governing indenture and expects to retire its $30 million convertible subordinated debentures upon their maturity in November 2009. Successful redemption of the 12-3/ 4% senior notes and repayment of the convertible subordinated debentures at maturity would result in the elimination of substantially all of Gastar's currently outstanding debt.

In addition, the Company completed the previously announced voluntary de-listing of its common shares from the Toronto Stock Exchange (TSX) effective July 6. Gastar also previously announced that it intends to implement a 1-for-5 reverse share consolidation, leaving approximately 49.6 million basic common shares outstanding. The share consolidation is expected on or about July 31, 2009.

J. Russell Porter, Gastar's President and Chief Executive Officer, said, "This transaction transforms Gastar's balance sheet and puts the Company in a strong position going forward, concentrating our development and growth efforts in the United States. I want to express my sincere thanks to our partners at Eastern Star Gas. David Casey and his talented team have shown commitment and expertise that have been instrumental in demonstrating the world-class potential of PEL 238, and we wish them and Santos continued success as they develop a unique and uniquely positioned asset."

About Gastar Exploration

Gastar Exploration Ltd.