Gastar files for bankruptcy to implement restructuring plan

Gastar Exploration Inc. has filed chapter 11 bankruptcy cases in the Southern District of Texas to implement the terms of its restructuring plan.

The company also filed various motions in support of its financial restructuring, noting it intends to continue to pay employee wages and provide healthcare and other benefits without interruption in the ordinary course of business and to pay suppliers and vendors in full under normal terms provided on or after the chapter 11 filing date.

The restructuring has the support of the company’s largest—and only—funded-debt creditor and largest common shareholder, Ares Management LLC and its affiliated funds, as well as all other creditors entitled to vote to accept or reject the plan. Ares will provide $100 million in new financing to fund ongoing business operations as Gastar moves through the bankruptcy process, which it intends to conclude by yearend.

The plan, which is subject to confirmation by the bankruptcy court, will leave obligations owing to trade creditors and other operational obligations unimpaired, eliminate more than $300 million of the company's funded-debt obligations and preferred equity interests, and cancel existing common equity interests.

Early in the year, the company restarted its single-rig drilling program to more fully delineate and develop the Meramec and Osage formations in its core STACK position. Drilling and completions operations were halted in August.