Gastar Exploration Ltd. said it entered into a settlement agreement effective Nov. 1 regarding seven lawsuits tied to the ClassicStar mare lease program.
The settlement agreement is contingent on approval by the United States Bankruptcy Court for the Eastern District of Kentucky, Gastar said in a Nov. 1 release. The agreement will be presented to the court on or after Nov. 19.
If approved by the bankruptcy court, Gastar will pay the plaintiffs a total of $21.15 million in cash, including an initial $18 million payment to be paid within 10 business days of the approval date. The remaining $3.15 million will be paid in 16 monthly payments, the first of which will be $150,000 and the next 15 of which will be $200,000 each.
The payments are in “exchange for dismissal of all existing and potential future claims of the plaintiffs in all seven cases filed against Gastar,” the company said. Gastar said it admits no liability in connection with the lawsuits.
“The resolution of this litigation was important to remove the risk of an adverse trial outcome, remove the ongoing cost of defending our position, and remove an impediment to Gastar moving forward with potential corporate actions,” Gastar president and chief executive officer J. Russell Porter said in a statement. “Gastar is well-positioned with attractive assets and a strong balance sheet that will allow us to take advantage of opportunities created by the current environment.”
Gastar is an exploration and production company focused on finding and developing natural gas assets in North America. Court documents claim Gastar was formed in 2000 by executives of GeoStar, parent company of ClassicStar and other affiliated entities. Further, until 2005, Gastar is alleged by plaintiffs to have been managed by GeoStar and was the beneficiary of millions of dollars gleaned from the broodmare lease program.
From 2000 to 2005, Gastar and GeoStar had some of the same people in executive roles, including defendants Thomas E. Robinson, John W. Parrot, and Tony Ferguson, managing member of ClassicStar. Robinson, who has been the CEO of GeoStar since 1994, was also the president and CEO of Gastar from 2000 to 2004, and chairman of the board at Gastar from 2001 to 2005, according to Securities and Exchange Commission filings.