Gastar Exploration Announces 82% Increase in 2P Reserve Certification for Australian Coal Seam Gas Project

Gastar Exploration Ltd. announced an 82 percent increase in independently certified proved and probable (2P) natural gas reserves in the Narrabri coal seam gas project in New South Wales, Australia, where Gastar holds a 35 percent working interest in partnership with Eastern Star Gas (AX: ESG).

Independent estimates by Netherland Sewell & Associates, Inc. for 2P gas reserves in the Bohena Project Area of the PEL 238 license increased to 336 Bcf gross as of September 30, 2008, from 185 Bcf gross at December 31, 2007. Estimates of proved (1P) reserves – which follow Society of Petroleum Engineers guidelines – were unchanged, at 21 Bcf gross.

The increase in 2P certified natural gas reserves is based on results from only the first four coreholes drilled in the Dewhurst area, which demonstrated that the same thick, gas-saturated and highly permeable coals identified last year in the Bibblewindi corehole project also extend laterally into the Dewhurst area to the southeast.

“We expect additional increases in certified gas reserves at the end of this year and in 2009, as we include more data from other coreholes and production pilot wells, including our newest Edgeroi prospect area to the northeast of Bibblewindi,” said J. Russell Porter, Gastar President & CEO.

“Results of the first Edgeroi corehole, which we reported on last week, are additional confirmation of the significant coalbed methane potential of our PEL 238 license area. As we continue to prove up more of our play, we believe this asset will be a key driver of our future overall valuation,” he said. “As part of our ongoing development work in Australia, we expect to spud the first of four multi-lateral horizontal production projects later this month.

“First commercial natural gas sales to the Wilga Park power station are expected by early spring 2009, which would allow us to book a portion of our 1P reserves as proved reserves at year-end under U.S. Securities and Exchange commission guidelines,” Porter said.

The SEC has generally permitted oil and gas companies, in their filings with the SEC, to disclose only proved reserves that, under SEC definitions and guidelines, a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. This news release discloses proved reserves that do not meet SEC definitions and guidelines and “probable” reserves that the SEC’s guidelines would prohibit us from including in our filings with the SEC. All of these volumes and estimates are by their nature more speculative than estimates of proved reserves under SEC definitions and guidelines and accordingly are subject to substantially greater risk of being actually realized.

Gastar owns a 35 percent working interest (approximately 31 percent net revenue interest) in PEL 238, and Eastern Star Gas, (ASX: ESG ), the operator, holds the remaining interest.