Document:

Unassociated Document

    EXHIBIT
4.1

     

     

     

    THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THESECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND NEITHER THESECURITIES NOR
ANY INTEREST THEREIN MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION UNDER SUCH ACT OR AN
EXEMPTION FROM REGISTRATION, WHICH, IN THE OPINION OF COUNSEL REASONABLY
SATISFACTORY TO COUNSEL FOR THIS CORPORATION, IS AVAILABLE. UNLESS PERMITTED
UNDER CANADIAN SECURITIES LEGISLATION, THE HOLDER OF THIS WARRANT CERTIFICATE
MUST NOT TRADE THE PURCHASE WARRANTS REPRESENTED HEREBY OR THE COMMON SHARES
ISSUABLE UPON EXERCISE THEREOF BEFORE OCTOBER 11,2008.

    

    THE
PURCHASE WARRANTS REPRESENTED BY THIS CERTIFICATE WILL BE VOID AND OF NO VALUE
UNLESS EXERCISED DURING THE PERIODS SPECIFIED HEREIN, WHICH TERMINATE NO LATER
THAN (A) IF A "QUALIFYING SALE EVENT", AS DEFINED IN THIS WARRANT CERTIFICATE,
OCCURS ON OR PRIOR TO JUNE 11,2011,5:00 P.M. CENTRAL TIME ON THE DATE THAT IS
ONE YEAR FOLLOWING THE DATE ON WHICH SUCH QUALIFYING SALES EVENT OCCURS, OR (B)
IF NEITHER A QUALIFYING SALE EVENT OR A "TERMINATING SALE EVENT", AS DEFINED IN
THIS WARRANT CERTIFICATE, OCCURS ON OR PRIOR TO JUNE 11, 2011, 5:00 P.M. CENTRAL
TIME ON DECEMBER 11,2011.

    

    BY
ACCEPTANCE OF THIS WARRANT CERTIFICATE THE HOLDER ACKNOWLEDGES THAT THE
CERTIFICATES REPRESENTING THE COMMON SHARES ISSUABLE ON EXERCISE OF THIS WARRANT
CERTIFICATE, IF ISSUED AT A TIME WHEN THE COMMON SHARES ARE SUBJECT TO RESALE
RESTRICTIONS UNDER APPLICABLE UNITED STATES OR CANADIAN PROVINCIAL SECURITIES
LAWS, WILL BEAR A LEGEND TO THE FOLLOWING EFFECT: "THE SECURITIES REPRESENTED BY
THIS CERTIFICATE ARE LISTED ON THE TORONTO STOCK EXCHANGE ("TSX"); HOWEVER, THE
SAID SECURITIES CANNOT BE TRADED THROUGH THE FACILITIES OF TSX SINCE THEY ARE
NOT FREELY TRANSFERABLE, AND CONSEQUENTLY ANY CERTIFICATE REPRESENTING SUCH
SECURITIES IS NOT "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON
TSX."

     

    

    WARRANT
CERTIFICATE

    

    GASTAR
EXPLORATION LTD.

    (A
corporation subsisting under the laws of the Province of Alberta)

    

     

    
    

     

    
      	CERTIFICATE NO.
      2008-1	 	10,000,000 PURCHASE
      WARRANTS entitling the

              holder
      to acquire, subject to adjustment, one (1)
Common Share for each
      Purchase Warrant
represented
hereby.

            

    

     

    
    

    THIS IS TO
CERTIFY THAT GEOSTAR
CORPORATION, a Michigan corporation (hereinafter referred to as the
"holder"), in consideration of die payment of the sum of Ten Dollars ($10.00) in
the currency of the United States of America and otiier good and valuable
consideration, receipt and adequacy of which is hereby acknowledged by Gastar
Exploration Ltd. (the "Corporation"), is the registered holder of that number of
Purchase Warrants to acquire Common Shares (as hereinafter defined) of the
Corporation as set forth in this Purchase Warrant certificate ("Warrant
Certificate"). Each Purchase Warrant represented hereby entitles the holder
thereof to acquire, in the manner and subject to the restrictions and
adjustments set forth herein, one (1) fully paid and non-assessable common share
without nominal or par value, (together with any other securities which may be
issued or distributed by the Corporation with respect thereto or in substitution
therefor, the "Common Shares") of die Corporation, upon valid exercise in
accordance herewith during the following exercise periods and at the following
exercises prices:

     

    
      	

              (A)

            	

              if a
      "Qualifying Sale Event" (as defined in this Warrant Certificate) occurs on
      or prior to June 11, 2011, at any time on or after the date of the
      occurrence of the Qualifying Sale Event until 5:00 p.m. Central Time on
      the date that is one year following the date on which the Qualifying Sale
      Event occurs, at an exercise price of US$2.75 per share;
  or

            
	 	 

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
      	
              (B)

            	
              if
      neither a Qualifying Sale Event nor a "Terminating Sale Event" (as defined
      in this Warrant Certificate) occurs on or prior to June 11, 2011, at any
      time after June 11, 2011 until 5:00 p.m. Central Time on December 11,2011
      at an exercise price of US$3.00 per
share.

            

    

    
The right
to acquire Common Shares hereunder may only be exercised by the holder within
the time set forth above by:

     

    
      
        	
                a.

              	
                duly
      completing and executing the Exercise Form attached
  hereto;

              

      

    

     

    
      	
              b.

            	
              surrendering
      this Warrant Certificate to the headquarters office of the Corporation,
      currently located at 1331 Lamar Street, Suite 1080, Houston, Texas 77002
      Attn: Chief Financial Officer, or such other address as the Corporation
      may designate to the holder in writing;
and

            

    

     

    
      	
              c.

            	
              remitting
      cash, certified check, bank draft, money order in lawful money of the
      United States, payable to or to the order of the Corporation, where this
      Warrant Certificate is so surrendered, or submitting wire transfer of good
      funds to an account designated upon request by the Corporation, for the
      aggregate purchase price of the Common Shares so subscribed
      for.

            

    

    

    The
Purchase Warrants represented by this Warrant Certificate may be surrendered
only upon personal delivery hereof or, if sent by mail or other means of
transmission, upon actual receipt thereof by the Corporation at the office
referred to above.

    

    For
purposes of this Warrant Certificate and the Purchase Warrant represented
thereby:

    

    (a)         a
"Qualifying Sale Event" shall mean the time at which an asset sale or series of
asset sales by the Corporation or any of its subsidiaries during the period
commencing June 11, 2008 and ending on June 11, 2011 of up to and including all
or substantially all of its oil and gas interests in any properties owned,
purchased or acquired by the Corporation and its subsidiaries as of June 11,
2008 in Leon and Robertson Counties, Texas within the area of mutual interest,
or AMI, map as outlined by the Joint Operating Agreement dated July 7, 2000
among the Corporation and GeoStar Corporation (the "Qualifying Properties"), has
occurred in which total net proceeds from such sale or sales of Qualifying
Properties to the Corporation and its subsidiaries exceeds US$500,000,000.00 in
the aggregate;

     

    (b)         a
"Terminating Sale Event" shall mean the time at which an asset sale or series of
asset sales by the Corporation and any of its subsidiaries on or prior to June
11, 2011 of all or substantially all of the Qualifying Properties has occurred
in which total net proceeds of such sale or sales of Qualifying Properties to
the Corporation and its subsidiaries is less than or equals US$500,000,000.00 in
the aggregate, provided that the total net proceeds from an asset sale or series
of asset sales allocated to the Qualifying Properties shall be confirmed in
writing by an unrelated third-party investment banking firm or other unrelated
industry recognized professional firm in the business of sales of oil and gas
properties; and

     

    (c)         for
the purposes of the definitions of Qualifying Sale Event and Terminating Sale
Event, (i) such sales shall notinclude sales of production, entry into any
hedging contract, or the reimbursement of exploration, drilling, development or
production costs, in the ordinary course of business, or the issuance of a
production payment; (ii) "all or substantially all of the oil and gas interests"
shall mean at least 90 percent of the aggregate net mineral acres constituting
the Qualifying Properties; and (iii) net proceeds to the Corporation and its
subsidiaries from any asset sale or series of asset sales of Qualifying
Properties sold as a part of a transaction in which other assets of the
Corporation or its subsidiaries are sold shall be determined in a commercially
reasonable manner as confirmed in writing by an unrelated third-party investment
banking firm or other unrelated industry recognized professional firm in the
business of sales of oil and gas properties; provided that the determination of
net proceeds shall not include any deduction from proceeds for commissions or
transaction costs associated with the sale or sales of Qualifying Properties.
Nothing provided in this Warrant Certificate, by its terms or otherwise, shall
in any way obligate the Corporation or its subsidiaries to pursue or consummate
the sale of any of the Qualifying Properties. Upon the occurrence of a
Terminating Sale Event, the Purchase Warrants represented by this Warrant
Certificate shall terminate and be null and void. The Corporation shall mail to
the holder, or furnish for delivery by a national courier service, written
notice of the occurrence of a Qualifying Sale Event or a Terminating Sale Event
to the holder's address as it shall appear on the books of the Corporation
within ten (10) days of the occurrence of such event.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
Upon
exercise of the Purchase Warrants represented by this Warrant Certificate as
provided above, the person or persons in whose name or names the Common Shares
issuable upon exercise of the Purchase Warrants are to be issued shall be deemed
for all purposes to be the holder or holders of record of such Common Shares.
The Corporation covenants that it will cause a certificate or certificates
representing such Common Shares to be mailed or furnished for delivery to a
national courier service to the person or persons at the address or addresses
specified in the Exercise Form within five (5) Business Days. Any Common Shares
issued upon exercise of this Purchase Warrant shall be subject to any
registration rights agreement(s) between the Corporation and
holder.

    

    The
registered holder of this Warrant Certificate may acquire any lesser number of
Common Shares than the number of Common Shares which may be acquired for the
Purchase Warrants represented by this Warrant Certificate. In such event, the
holder shall be entitled to receive a new certificate for the balance of the
Common Shares which may be acquired. To the extent that the holder is entitled
to receive on the exercise or partial exercise thereof a fraction of a Common
Share, such right may only be exercised in respect of such fraction in
combination with another Purchase Warrant or other Purchase Warrants, which in
the aggregate entitles the holder to receive a whole number of Common
Shares.

    

    If the
holder is not able to or elects not to, combine Purchase Warrants so as to be
entitled to acquire a whole number of Common Shares, the Corporation shall make
an appropriate cash settlement. However, in respect of any holder, the
Corporation shall only be required to make such a cash adjustment once and for
one Purchase Warrant and no more. The amount of the cash adjustment with respect
to the Common Share shall be equal to the fraction of the Common Share to which
the holder would be entitled multiplied by the current market price of the
Common Shares as determined in good faith by the Corporation. The obligations in
this paragraph shall be required to be satisfied on the first day on which this
Purchase Warrant is exercisable in accordance with its terms.

    

    The
Corporation agrees that the Corporation will:

    

    
      	
              a.

            	
              prior
      to June 30, 2008, have authorized and reserved, and will keep available,
      solely for issuance or delivery upon the exercise of the Purchase Warrants
      represented by this Warrant Certificate, the maximum amount of shares of
      Common Shares and other securities and properties as from time to time
      shall be receivable upon the exercise of the Purchase Warrants represented
      by this Warrant Certificate, free and clear of all restrictions on sale or
      transfer, except for:

            

    

    

    
      	
               
      

            	
              i.

            	
              the
      restrictions on sale or transfer set forth in the U.S. Securities Act of
      1933, the Business Corporations Act of the Province of Alberta or any
      other statute of Canada or a province thereof, and of regulations under
      any such act or other statute, relating to warrant agreements or to the
      rights, duties and obligations of trustees, or warrant agents, and of
      corporations under warrant agreements;
and

            

    

     

    
      	
               
      

            	
              ii.

            	
              restrictions
      created by or on behalf of the holder, and free and clear of all
      preemptive rights and rights of first
refusal;

            

    

     

    
      
        	
                b.

              	
                

                  prior
      to September 30, 2008 cause the Common Shares issuable upon exercise of
      the Purchase Warrants evidenced by this Warrant Certificate to be approved
      for listing on the primary stock exchange on which the Common Shares trade
      upon notice of official
issuance;

                

              

      

    

    
       

      
        	
                c.

              	
                it
      will comply with all filing and reporting obligations required to maintain
      in good standing the listing of its Common Shares on a major stock
      exchange in either the United States or Canada, which shall include at
      least one of the New York Stock Exchange, the American Stock Exchange, the
      Nasdaq Stock Exchange or the Toronto Stock
  Exchange;

              

      

    

     

    
      
        	
                d.

              	
                use
      its best efforts to make all requisite securities and corporate filings as
      a reporting issuer under the Securities Exchange Act of 1934, as
      amended;

              

      

    

     

    
      
        	
                e.

              	
                perform and carry out
      all of the acts or things to be done by it as provided under these terms
      and conditions.

              

      

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      
        	
                f.

              	
                

                  all
      of the Common Shares are validly authorized and, if and when the Purchase
      Warrants evidenced by this Warrant Certificate is exercised in whole or in
      part in accordance with the terms hereof, the Common Shares issued upon
      such exercise, upon receipt by the Corporation of the full exercise price
      therefor, shall be validly issued, fully paid, non-assessable, and will
      not be issued in violation of any preemptive rights or other rights of
      stockholders;

                

              

      

    

     

    
      
        	
                g.

              	
                

                  it
      will pay, when due and payable, any and all federal, provincial and state
      stamp, original issue or similar taxes which may be payable in respect of
      the issue of any Common Shares or any certificate thereof pursuant to the
      exercise of the Purchase Warrants;
and

                

              

      

    

     

    
      
        	
                h.

              	
                

                  at
      least fifteen (15) days prior to the closing date of any event which is
      intended to result in either a Qualifying Sale Event or a Terminating Sale
      Event, the Corporation shall give written notice to the holder at the
      holder's address as it shall appear on the books of the Corporation
      specifying the particulars of such
event.

                

              

      

    

     

     

    If the
Corporation at any time subdivides (by any stock split, stock dividend,
recapitalization, reorganization, reclassification or otherwise) the outstanding
Common Shares into a greater number of shares, then, after the date of record
for effecting such subdivision, the exercise price in effect immediately prior
to such subdivision will be proportionately reduced. If the Corporation at any
time combines (by reverse stock split, consolidation, recapitalization,
reorganization, reclassification or otherwise) the outstanding Common Shares
into a smaller number of shares, then, after the date of record for effecting
such combination, the exercise price in effect immediately prior to such
combination will be proportionately increased. Upon each adjustment of the
exercise price pursuant to the provisions of the Purchase Warrants, the number
of Common Shares issuable upon exercise of each Purchase Warrant shall be
adjusted by multiplying a number equal to the exercise price in effect
immediately prior to such adjustment by the number of Common Shares issuable
upon exercise of one Purchase Warrant immediately prior to
such adjustment and dividing the product so obtained by the adjusted exercise
price.

    

    In the
event of any alteration of the Common Shares, in the event of any form of
reorganization of the Corporation including any amalgamation, merger or
arrangement, or any dividend or distribution of other securities or property
(other than additional Common Shares, which are provided for in the previous
paragraph, or regularly declared cash dividends on Common Shares), or successive
transactions thereof, the holders of Purchase Warrants shall, upon exercise of
the Purchase Warrants following the occurrence of any of those events, be
entitled to receive the same number and kind of shares, securities or property
that they would have been entitled to receive had they exercised their Purchase
Warrants immediately prior to the occurrence of those events. The Corporation
covenants to take such steps as may be necessary to ensure that the issuer of
any shares of stock or other securities or property thereafter deliverable on
the exercise of the Purchase Warrants represented by this Warrant Certificate,
pursuant to any of the alterations described above, shall be responsible for all
of the agreements and obligations of the Corporation hereunder, and the
Corporation shall ensure that such issuer executes an agreement with the holder
providing that the holder has the rights thereafter to receive upon exercise of
the Purchase Warrants represented by this Warrant Certificate such shares,
securities or property. In case at any time the Corporation shall take any
action requiring an adjustment as described above, the Corporation shall mail or
furnish for delivery to a national courier service, a written notice thereof to
the holder at the holder's address as it shall appear on the books of the
Corporation, at least ten (10) days prior to the date as of which the holders of
record of the Common Shares are entitled to receive any shares, securities or
property.

    

    The
holding of the Purchase Warrants represented by this Warrant Certificate shall
not constitute the holder hereof a shareholder of the Corporation or entitle the
holder to any right or interest in respect thereof except as expressly provided
in this Warrant Certificate.

    

    The
Purchase Warrants represented by this Warrant Certificate may be transferred, on
the register kept at the principal offices of the Corporation in Houston, Texas
or such other place as designated by the Corporation, by the registered holder
hereof or its legal representatives or its attorney duly appointed by an
instrument in writing in form and execution reasonably satisfactory to the
Corporation.

    

    By
acceptance of this Warrant Certificate, the holder represents that the holder is
(i) an "Accredited Investor" (as defined in Rule 501 promulgated under the
Securities Act of 1933, as amended), and holder acknowledges that the Warrants
represented by this Warrant Certificate and the Common Shares issued upon
exercise will constitute "restricted securities" as defined under Rule 144
promulgated under the Securities Act of 1933, as amended, and may not be sold or
otherwise transferred except pursuant to an effective registration statement or
a valid exemption from registration thereunder, and (ii) acquiring the Purchase
Warrant evidenced by this Warrant Certificate as principal and not for the
benefit of any other person, and is an "accredited investor" within the meaning
of Canadian National Instrument No. 45-106.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
This
Warrant Certificate shall not be valid for any purpose whatever unless and until
it has been signed by or on behalf of the Corporation.

    

    Upon
receipt of evidence reasonably satisfactory to the Corporation of the loss,
theft, destruction or mutilation of the this Warrant Certificate, and upon
receipt of indemnity reasonably satisfactory to the Corporation, if lost, stolen
or destroyed, and upon surrender and cancellation of this Warrant Certificate,
if mutilated, the Corporation shall execute and deliver to the holder a new
Warrant Certificate of like date, tenor and denomination.

    

    This
Warrant Certificate and the Purchase Warrants represented thereby shall not be
transferable by the holder, except that (i) the holder may transfer all the
Purchase Warrants evidenced by this Warrant Certificate to a single successor,
heir or estate of the holder by operation of law and (ii) GeoStar Corporation,
as the initial holder, or its successor by operation of law, may transfer all or
a portion of the Purchase Warrants represented by initial Warrant Certificate
No. 2008-1 to no more than five affiliates or designees of GeoStar Corporation,
provided such
transferees represent to the Company in writing that they are Accredited
Investors.

    

    The
parties hereto irrevocably consent to the exclusive personal jurisdiction of the
courts of the State of Texas or federal court residing in the State of Texas in
connection with any action or proceeding arising out of or relating to the
Purchase Warrants represented by this Warrant Certificate, any document or
instrument delivered pursuant to, in connection with or simultaneously with the
Purchase Warrants represented by this Warrant Certificate, or a breach of such
Purchase Warrants or any such document or instrument. In any such action or
proceeding, each party hereto waives personal service of any summons, complaint
or other process and agrees that service thereof may be made to the respective
agents of the parties designated to receive service of process. Within thirty
(30) days after such service, or such other time as may be mutually agreed upon
in writing by the attorneys for the parties to such action or proceeding, the
party so served shall appear or answer such summons, complaint or other
process.

    

    The
resolution of any controversy or claim, whether based in contract, tort or
otherwise, arising out of or relating to this Warrant Certificate or the
Purchase Warrants represented hereby, shall be subject to, and governed by, all
of the dispute resolution provisions of Article X of that certain Final
Settlement Agreement and Comprehensive Mutual Release dated June 11, 2009 by and
among the Corporation, GeoStar Corporation and certain other parties thereto
(the "Settlement Agreement"), including the right to initiate, and obligation to
be bound by, binding arbitration under the rules of the American Arbitration
Association to the extent set forth in Article X of the Settlement Agreement.
Any such controversy or claim arising out of this Warrant Certificate or the
Purchase Warrants represented hereby shall be deemed a "Claim" within the
meaning of Article X of the Settlement Agreement. The holder of this Warrant
Certificate, by its acceptance hereof, shall be deemed to have agreed and
consented to being bound by the provisions of Article X of the Settlement
Agreement, a copy of which shall be provided to the holder by the Corporation
upon written request addressed to the principal offices of the
Corporation.

    

    No course
of dealing and no delay or omission on the part of the holder in exercising any
right or remedy shall operate as a waiver thereof or otherwise prejudice the
holder's rights, powers or remedies. No right, power or remedy conferred by the
Purchase Warrants represented by this Warrant Certificate upon the holder shall
be exclusive of any other right, power or remedy referred to herein or now or
hereafter available at law, in equity, by statute or otherwise, and all such
remedies may be exercised singly or concurrently.

    

    The
Purchase Warrants represented by this Warrant Certificate may be amended only by
a written instrument executed by the Corporation and holders of a majority of
the outstanding Purchase Warrants represented by Warrant Certificates. The
amendment shall be effective against all present and future holders when
executed. Notice of any such amendment shall be sent by the Corporation to all
registered holders of outstanding Warrant Certificates at the addresses set
forth in the books of the Corporation within ten (10) days of effecting any such
amendment.

    

    Unless
herein otherwise expressly provided, any notice to be given hereunder shall be
in writing and may be given by mail or by facsimile transmission or by personal
delivery:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      
        
          	s	 	

                  if
      to the Corporation, the headquarters office of the Corporation, currently
      located at 1331 Lamar Street, Suite 1080, Houston, Texas 77002 Attn: Chief
      Financial Officer, or if by facsimile transmission to the attention of the
      Chief Financial Officer at telephone no.: 713-739-0428, or such other
      address or facsimile number as the Corporation may designate to the holder
      in writing; or

                
	 	 	 
	s	 	

                  if
      to GeoStar Corporation, as the initial holder of the Purchase Warrants,
      the headquarters office, currently located at 2480 West Campus Drive,
      Building C, Mt. Pleasant, Michigan 48858Attn: Thomas E. Robinson, or if by
      facsimile transmission to the attention of Thomas E. Robinson at telephone
      no.: 989-773-0006, or such other address or facsimile number as GeoStar
      Corporation may designate to the Corporation in
writing;

                
	 	 	 
	s	 	

                  if
      to any other holder, at the address set forth on the books of the
      Corporation for such holder;

                

        

        
and shall
be deemed to have been given at the time of delivery or on the third Business
Day after mailing or on the Business Day of the facsimile transmission. Any
delivery made or facsimile sent on a day other than a Business Day, or after
3:00 p.m. (Central time) on a Business Day, shall be deemed to be received on
the next following Business Day.

      

    

    

    For the
purposes hereof, "Business Day" means a day which is not Saturday or Sunday or a
civic or statutory holiday in Houston, Texas.

    

    Time shall
be of the essence hereof. This Warrant Certificate shall be governed by and
construed in accordance with the laws of the State of Texas without regard to
the application of conflict of law principles of Texas, and shall be treated in
all respects as a Texas contract.

    

    IN WITNESS
WHEREOF the Corporation has caused this Warrant Certificate to be signed by its
duly authorized

    officers
as of June 11, 2008.

    

    

     

    GASTAR
EXPLORATION LTD.

     

    Per:         /s/  J. RUSSELL
PORTER                                              

    J. Russell
Porter, Chief Executive Officer

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    TRANSFER
OF PURCHASE WARRANTS

    

    NOTICE:
TRANSFERS OF THE PURCHASE WARRANTS EVEIDENCED BY THIS WARRANT CERTIFICATE ARE
LIMITED BY THE TERMS OF THIS WARRANT CERTIFICATE.

    

    

    FOR VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers
to.__________________________________. Purchase Warrants of Gastar Exploration
Ltd. (the "Corporation") registered in the name of the undersigned on the
records of the Corporation represented by the Warrant Certificate attached and
irrevocably appoints the Secretary of the Corporation the attorney of the
undersigned to transfer the said securities on the books or register with full
power of substitution.

    

    If less
than all the Purchase Warrants represented by this Warrant Certificate are being
transferred, the Warrant Certificate representing those Purchase Warrants not
transferred will be registered in the name appearing on the face of this Warrant
Certificate and such certificates (please check one):

    

    (a) ______
should be sent by first class mail to the following address:

     

    
      	 	 
	 	 

    

     

    
      (b) ______
should be held for pick up at the principal office of the Corporation, at which
this Warrant Certificate is deposited.

     

    DATED the
______ day of _____________, ______

    

     

    
      	

              Signature
      Guaranteed

            	 	 	 
	 	 	

              (Signature
      of holder - with title, if
appropriate)

            

    

     

    Instructions:

    

     

    
      	
              1.

            	
              Signature
      of the holder must be the signature of the person appearing on the face of
      this Warrant Certificate.

            

    

     

    
      	
              2.

            	
              If
      the Transfer Form is signed by a trustee, executor, administrator,
      curator, guardian, attorney, officer of a corporation or any person acting
      in a judiciary or representative capacity, the certificate must be
      accompanied by evidence of authority to sign reasonably satisfactory to
      the Corporation.

            

    

     

    
      	
              3.

            	
              The
      signature on the Transfer Form must be guaranteed by an authorized officer
      of a chartered bank, trust company or an investment dealer who is a member
      of a recognized stock exchange.

            

    

     

    
      	
              4.

            	
              Purchase
      Warrants shall only be transferable in accordance with applicable
      laws.

            

    

     

    
      	
              5.

            	
              The
      Purchase Warrants and the Common Shares issuable upon exercise thereof
      have not been registered under the United States Securities Act of 1933 ,
      as amended (the "U.S. Securities Act"), or the securities laws of any
      state of the United States, and may not be transferred in the United
      States or to a U.S. Person unless the Purchase Warrants and the Common
      Shares have been registered under the U.S. Securities Act and the
      securities laws of all applicable states of the United States or an
      exemption from such registration requirements is available. In connection
      with any transfer of Purchase Warrants, the holder will be required to
      provide to the Corporation an opinion of counsel, or other evidence, in
      form reasonably satisfactory to the Corporation, to the effect that such
      transfer of Purchase Warrants does not require registration under the U.S.
      Securities Act or any applicable state laws and regulations governing the
      offer and sale of securities.

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    EXERCISE
FORM

    

    TO:
GASTAR EXPLORATION LTD.

    

    
      	
              (a)

            	
              The
      undersigned hereby exercises the right to acquire Common Shares of Gastar
      Exploration Ltd.

            

    

    

    
      	
              (b)

            	
              The
      Common Shares (or other securities or property) are to be issued as
      follows:

            

    

     

    
      	Name:	 	 
	 	 	(print
    clearly)

    

     

    
    

    
       

      
        	Address in
      full: 	 
	 

      

       

    

    
Social
Insurance Number/Social Security Number/IRS Tax Identification Number:
_________________________________________

    

    Number of
Common Shares:_______________________________________________

     

    Note: If
further nominees intended, please attach (and initial) schedule giving these
particulars,

    

    
      	
              (c)

            	
              Such
      securities (please check one):

            

    

    

    ______
should be sent by first class mail to the following address:

    

    OR

    

    ______
should be held for pick up at the office of the Corporation at its principal
office at which this Warrant Certificate
is deposited.

    

    If the
number of Purchase Warrants exercised are less than the number of Purchase
Warrants represented hereby, the undersigned
requests that the new Warrant Certificate representing the balance of the
Purchase Warrants be registered
in the name of:__________________________________________________

    

    
       

      
        	Whose address
      is 	 
	 

      

    

    
 

    Such
securities (please check one):

     

    
      (a) ______
should be sent by first class mail to the following
address:

    

    OR

    

    
      	
              (b)

            	
              should
      be held for pick up at the office of the principal office of the
      Corporation at which this Warrant

            

    

    Certificate
is deposited.

    

    In the
absence of instructions to the contrary, the securities or other property will
be issued in the name of or to the holder hereof and will be sent by first class
mail to the last address of the holder appearing on the register

    maintained
for the Purchase Warrants.

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    DATED this
____day of ___________, _____

    

    

    
       

      
        	

                Signature
      Guaranteed

              	 	 
	 	 	

                (Signature
      of holder)

              
	 	 	 
	 	 	 
	 	 	

                Print
      full name and title, if appropriate

              
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	

                Print
      full address

              
	 	 	 
	 	 	 

      

       

    

     

    Instructions:

    

    
      	
              1.

            	
              The
      registered holder may exercise its right to receive Common Shares by
      completing this form and surrendering this form and the Warrant
      Certificate representing the Purchase Warrants being exercised to the
      Corporation at its principal office. Certificates for Common Shares will
      be delivered or mailed within twenty (20) business days after the exercise
      of the Purchase Warrants.

            

    

    

    
      	
              2.

            	
              If
      the Exercise Form indicates that Common Shares are to be issued to a
      person or persons other than the registered holder of the Certificate, the
      signature of such holder of the Exercise Form must be guaranteed by an
      authorized officer of a chartered bank, trust company or an investment
      dealer who is a member of a recognized stock
  exchange.

            

    

    

    
      	
              3.

            	
              If the Exercise Form is signed by
      a trustee, executor, administrator, curator, guardian, attorney, officer
      of a corporation or any person acting in a fiduciary or representative
      capacity, the certificate must be accompanied by evidence of authority to
      sign reasonably satisfactory to the Corporation. Houston
      3651079v5Unassociated Document

    Exhibit 10.1

    

    

    

    
 

    

    

    FINAL
SETTLEMENT AGREEMENT

    

    AND

    

    COMPREHENSIVE
GENERAL RELEASE

    

    

    

    

    

    

    

    

    

    

    between
and among

    

    

    

    

    GASTAR
EXPLORATION, LTD.,

    

    GEOSTAR
CORPORATION,

    

    AND
OTHER INDIVIDUALS AND ENTITIES SET FORTH HEREIN

    

    

    

    June
11,2008

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    This Final
Settlement Agreement and Comprehensive General Release ("Settlement Agreement")
is dated as of June 11, 2008 (the "Effective Date"). This is the same date as
the "Closing Date."

    

    ARTICLE
I

    Identification
of Parties and Definitions

    

    Section
1.01. Parties to the Settlement
Agreement. The following are parties to this Settlement
Agreement:

    

    
      	
              (a)

            	
              The
      "GeoStar Parties"
      are:

            

    

     

    
      	
               
      

            	
              (i)

            	
              GeoStar
      Corporation ("GeoStar");

            

    

     

    
      	
               
      

            	
              (ii)

            	
              First
      Source Texas, he.;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              First
      Source Bossier, LLC;

            

    

     

    
      	
               
      

            	
              (iv)

            	
              First
      Texas Gas, LP;

            

    

     

    
      	
               
      

            	
              (v)

            	
              CBM
      Resources Pty. Ltd.;

            

    

     

    
      	
               
      

            	
              (vi)

            	
              Associated
      Geophysical Services, Inc.;

            

    

     

    
      	
               
      

            	
              (vii)

            	
              Conquest
      Group Operating Company;

            

    

     

    
      	
               
      

            	
              (viii)

            	
              West
      Virginia Development, Inc.;

            

    

     

    
      	
               
      

            	
              (ix)

            	
              West
      Virginia Gas Corporation;

            

    

     

    
      	
               
      

            	
              (x)

            	
              Squaw
      Creek Development, Inc.;

            

    

     

    
      	
               
      

            	
              (xi)

            	
              Arkoma
      Basin Development, Inc.;

            

    

     

    
      	
               
      

            	
              (xii)

            	
              Royalty
      Acquisition Company;

            

    

     

    
      	
               
      

            	
              (xiii)

            	
              BNG
      Producing & Drilling;

            

    

     

    
      	
               
      

            	
              (xiv)

            	
              GeoStar
      Financial Corporation; and

            

    

     

    
      	
               
      

            	
              (xv)

            	
              GeoStar
      Financial Services Corporation.

            

    

     

    
      	
              (b)

            	
              The
      "Gastar Parties"
      are:

            

    

     

    
      	
               
      

            	
              (i)

            	
              Gastar
      Exploration Ltd. ("Gastar
      Ltd.");

            

    

     

    
      	
               
      

            	
              (ii)

            	
              Gastar
      Exploration USA, Inc., f/k/a First Sourcenergy Wyoming,
    Inc.;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              Gastar
      Exploration Victoria, Inc., f/k/a First Sourcenergy Victoria,
      Inc.;

            

    

     

    
      	
               
      

            	
              (iv)

            	
              Gastar
      Exploration Texas, Inc., f/k/a First Texas Development,
    Inc.;

            

    

     

    
      	
               
      

            	
              (v)

            	
              Gastar
      Exploration Texas LLC, f/k/a Bossier Basin,
LLC;

            

    

     

    
      	
               
      

            	
              (vi)

            	
              Gastar
      Exploration Texas, LP, f/k/a First Source Gas,
  LP;

            

    

     

    
      	
               
      

            	
              (vii)

            	
              Gastar
      Exploration New South Wales, Inc., f/k/a First Sourcenergy Group, Inc.;
      and

            

    

     

    
      	
               
      

            	
              (viii)

            	
              Gastar
      Exploration Power Pty. Ltd.

            

    

    

    Section 1
..02. Other
Definitions.

    

    (a) "Affiliate" means, with
respect to any person or entity, a person or entity that directly, or indirectly
through one or more intermediaries, controls, is controlled by, or is under
common control with such first person or entity ("control" in such context
meaning (i) to directly or indirectly own more than 50% of the outstanding
equity or beneficial interest of another entity, or (ii) having the authority,
power, or practical ability (through ownership of voting securities, by
contract, or otherwise), to direct or otherwise exercise a controlling influence
over the management or policies of the entity).

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    (b) The
"Closing Date" is June
11, 2008, provided that this Settlement Agreement and all other finalized
Closing Documents have been fully executed by all Parties to each such Closing
Document and the payment called for in Section 9.01 is made on or before June
12, 2008. Provided that these conditions for the Closing Date have occurred,
this is the date on which the Settlement Agreement becomes effective. This is
the same date as the "Effective Date."

    

    (c) The
"Closing Documents"
are:

    

    (i) this
Settlement Agreement;

     

    (ii) the
GeoStar Parties' Texas Assignments Without Warranty for Leon and Robertson
Counties;

     

    (iii) the
Gastar Parties' Texas Quitclaims and Assignments Without Warranty for Leon and
Robertson Counties;

     

    (iv) the
GeoStar Parties' West Virginia/Pennsylvania Assignment Without Warranty; the EL
4968 Transfer Form;

     

    (vi) the
EL 4968 Tenement Sale Agreement;

     

    (vii) The Gastar Warrant.
Notwithstanding anything to the contrary in this Settlement Agreement, the
Parties agree that if the Gastar Warrant is not approved by the Toronto Stock
Exchange by the Closing Date that the Closing Date shall not be delayed by such
lack of approval.

    

    (d) The
"Disputes"
are:

    

    (i) Cause
No. 07-12854; GeoStar Corp.,
et al. v. Gastar
Exploration Ltd., etal.; in the United States District Court for the
Eastern District of Michigan;

     

    (ii) Cause
No. 07-08-17,891-CV; Gastar
Exploration Ltd., et al. v. GeoStar Corporation, et al.; in the 82nd
Judicial District Court of Robertson County, Texas;

     

    (iii)
Cause No. 07-07-17,858-CV; Gastar Exploration, Ltd., et al. v.
GeoStar Corporation, et al.; in the 82nd Judicial District Court of
Robertson County, Texas;

     

    (iv) Cause
No. 50-181-T-00453-06; Gastar
Exploration, Ltd., and its Subsidiaries v. GeoStar Corporation and its
Subsidiaries; before the International Centre for Dispute Resolution;
and

     

    (v) Cause
No. 2007-46327; Gastar
Exploration Ltd., et al. v. GeoStar Corporation; in the 234th Judicial
District Court of Harris County, Texas.

     

    (e) Unless
the context requires otherwise, a "Party" is any of the parties
to this Settlement Agreement listed in Section 1.01, and the "Parties" are all of the
parties to this Settlement Agreement listed in Section 1.01,
collectively.

     

    (f) The
"POA" is that certain
Participation and Operating Agreement between GeoStar Corporation, and any and
all of its subsidiaries, and Gastar Exploration, Ltd., and any and all of its
subsidiaries, dated June 15, 2001.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    (g) The
"PSAs" are:

     

    (i) that
certain Purchase and Sale Agreement and Assignment of Interests—Texas Producing
Properties, executed June 16, 2005, and effective January 1, 2005, between
GeoStar Corporation, First Source Texas, Inc., First Source Bossier, LLC, First
Texas Gas, LP, Gastar Exploration Ltd., First Texas Development, Inc., Bossier
Basin LLC, and First Source Gas, LP; and

     

    (ii) that
certain Purchase and Sale Agreement and Assignment of Interests—Texas Non
Producing Properties, executed June 16, 2005, and effective January 1, 2005,
between GeoStar Corporation, First Source Texas, Inc., First Source Bossier,
LLC, First Texas Gas, LP, Gastar Exploration Ltd., First Texas Development,
Inc., Bossier Basin LLC, and First Source Gas, LP.

     

    (h) The
"Texas JOAs"
are:

     

    (i) that
certain Operating Agreement dated July 7, 2000 between First Source Texas, Inc.
as Operator and Navasota Resources, Inc., as Non-operator, as
amended.

     

    (ii) that
certain Operating Agreement dated November 4, 2005 between First Source Gas, LP
as Operator, and Chesapeake Exploration Limited Partnership, as Non-operator, as
amended.

     

    (iii) that certain Operating
Agreement dated April 1, 2008, between Gastar Exploration Texas, LP, as Operator
and En Cana Oil & Gas (USA) Inc., as Non-operator.

    

    ARTICLE
II

    Recitals

    

    WHEREAS,
certain of the Parties have asserted claims and/or counterclaims in the
Disputes, each alleging legal and/or equitable causes of action, and/or seeking
declaratory relief, equitable relief, and/or damages; and,

    

    WHEREAS,
the GeoStar Parties and the Gastar Parties dispute the claims and/or
counterclaims made against them in the Disputes; and,

    

    WHEREAS,
the Parties, without admitting any liability and without conceding the validity
of any of the positions or arguments advanced by any other Party, desire to
completely and finally settle the Disputes as well as all claims brought or that
could have been brought therein as of the Effective Date of this Settlement
Agreement among the Parties; and,

    

    WHEREAS,
the Parties desire to compromise any and all other claims, demands, actions and
causes of action of any nature whatsoever that they have had in the past or
presently have as of the Effective Date of this Settlement Agreement against one
another, whether or not asserted, known or unknown, by the Parties;
and,

    

    WHEREAS,
the Parties desire to fully and completely resolve all outstanding disagreements
and settle all outstanding accounts relating in any fashion to the affiliation
between the GeoStar Parties and the Gastar Parties, and the business formerly
carried on between them as of the Effective Date; and,

    

    WHEREAS,
the GeoStar Parties desire to fully convey all their remaining oil, gas, and
hydrocarbon interests in West Virginia, legal or equitable, to the Gastar
Parties; and

    

    WHEREAS,
the Gastar Parties desire to fully convey all their right, title and interests
in Victoria, Australia, specifically including without limitation, the Gastar
Parties' remaining oil, gas, mineral, brown coal, coal mine methane, coal bed
methane and hydrocarbon right, title, license, and/or interests in Victoria,
Australia, legal or equitable, to the GeoStar Parties, but acknowledging that
the Gastar Parties' interests in Australia outside the province of Victoria
(including without limitation PEL 238, PEL 433, and PEL 434) are not conveyed or
affected by this Settlement Agreement; and

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    
WHEREAS,
the GeoStar Parties and Gastar Parties desire to fully separate all their
remaining oil, gas, and hydrocarbon interests in Texas, legal or equitable, save
and except for the Belin Trust Farm-Out Agreement described herein;
and

    

    WHEREAS,
the Parties acknowledge that full, valid, and binding consideration exists for
the execution of this Settlement Agreement and that such consideration includes
the mutual promises contained herein;

    

    NOW,
THEREFORE, in consideration of the mutual terms, conditions, releases,
warranties, covenants and agreements contained herein, the Parties enter into
this Settlement Agreement
and agree as follows.

    

    ARTICLE
III

    Closing

    

    Section
3.01. Obligation to close.
The Parties will use their best efforts to close this Settlement
Agreement (i.e., to
complete the execution of the finalized Closing Documents and to make the cash
payment set forth in Section 9.01 such that the Closing Date has occurred) on or
before June 12, 2008.

    

    Section
3.02. Termination for failure
to close. If the Closing Date has not occurred by June 12, 2008, this
Settlement Agreement, each of the Closing Documents, and all rights and
obligations under any of them, shall terminate.

    

    ARTICLE
IV

    Releases

    

    Section
4.01. Releases by the GeoStar
Parties. The GeoStar Parties, on behalf of themselves, their Affiliates,
their predecessors, successors, principals, and in their capacities as such,
their officers, directors, agents (including, without limitation, attorneys,
advisors, and other professionals), employees, and assigns, do hereby release
and forever discharge the Gastar Parties, and their Affiliates, predecessors,
successors, officers, directors, agents, employees, and assigns (both past and
present, and in all capacities, including, without limitation, their capacities
as officers, directors, shareholders, or agents of the GeoStar Parties, and in
their individual capacities), from any claim, demand, suit, arbitration,
obligation, liability, or cause of action of any character, whether known or
unknown, fixed or contingent, asserted or unasserted, actual or potential, and
whether arising at common law, equity, or pursuant to any statute, rule or
regulation (including U.S., Australian, or Canadian federal, state, or
provincial statutes, rules and regulations), that the GeoStar Parties, or any of
them, (i) have or have had as of the Effective Date, or (ii) in the future may
have relating to any events that occurred prior to the Effective Date. Further,
the GeoStar Parties release any and all claims or potential claims against any
person or party who served in a dual capacity for both a GeoStar Party and a
Gastar Party. The GeoStar Parties hereby covenant not to sue the released
entities and individuals, or any of them, on the basis of any claim released
herein. Notwithstanding anything to the contrary herein, the GeoStar Parties
agree that this is a general release and is to be interpreted liberally to
effectuate the maximum protection for the released entities and individuals
against the assertion or prosecution of claims by or through the GeoStar
Parties.

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    Section
4.02. Releases by the Gastar
Parties. The Gastar Parties, on behalf of themselves, their Affiliates,
their predecessors, successors, principals, and in their capacities as such,
their officers, directors, agents (including, without limitation, attorneys,
advisors, and other professionals), employees, and assigns, do hereby release
and forever discharge the GeoStar Parties, and their Affiliates, predecessors,
successors, officers, directors, agents, employees, and assigns (both past and
present, and in all capacities, including, without limitation, their capacities
as officers, directors, shareholders, or agents of the Gastar Parties, and in
their individual capacities), from any claim, demand, suit, arbitration,
obligation, liability, or cause of action of any character, whether known or
unknown, fixed or contingent, asserted or unasserted, actual or potential, and
whether arising at common law, equity, or pursuant to any statute, rule or
regulation (including, without limitation, U.S., Australian, or Canadian
federal, state, or provincial statutes, rules and regulations), that the Gastar
Parties, or any of them, (i) have or have had as of
the Effective Date, or (ii) in the future may have relating to any events that
occurred prior to the Effective Date. Further, the Gastar Parties release any
and all claims or potential claims against any person or party who served in a
dual capacity for both a GeoStar Party and a Gastar Party. The Gastar Parties
hereby covenant not to sue the released entities and individuals, or any of
them, on the basis of any claim released herein. Notwithstanding anything to the
contrary herein, the Gastar Parties agree that this is a general release and is
to be interpreted liberally to effectuate the maximum protection for the
released entities and individuals against the assertion or prosecution of claims
by or through the Gastar Parties. Without limitation of this section or the
previous section, it is expressly agreed that Thomas E. Robinson, Frederick J.
Lambert, Jennifer Moeller, David Decker, Milton Evans, Alvin Hosking, Tony P.
Ferguson, and Dean Bohjanen, individually, are included within the scope of the
release described herein.

    

    Section
4.03. Dismissal of Disputes.
Within five (5) business days after the Effective Date, the Parties will
file agreed motions to dismiss with prejudice all claims and counterclaims made
by each Party in each of the Disputes in the form agreed upon by the Parties'
litigation counsel. Each of the Parties covenants, warrants, and represents that
it has not filed or otherwise initiated any lawsuit, complaint, charge, or other
proceeding against the other in any local, state, or federal court, arbitration,
or agency based upon events occurring prior to the Effective Date, other than
the Disputes.

    

    Section
4.04. Costs. Each Party
shall bear its own attorneys' fees and all costs incurred in connection with,
relating to, or arising out of the Disputes or the Settlement Agreement,
including, but not limited to, its attorneys' fees, court costs, and arbitration
fees.

    

    Section
4.05. Ownership of Claims.
Each Party represents and warrants that it presently owns, free and clear
of any and all liens, encumbrances, rights of control, pledges, or other
burdens, one-hundred percent (100%) of the alleged damages and claims it
releases by this Settlement Agreement, other than interests held by its
attorneys, on whose behalf each such Party represents and warrants that it is
fully authorized to enter into this Settlement Agreement and release all such
damages and claims. Each Party further represents and warrants that, other than
such attorneys, no other person or entity owns any interest in the alleged
damages and claims released, whether by assignment, subrogation, constructive
trust, or otherwise.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    

    ARTICLE
V

    Texas
Properties

    

    Section
5.01. Assignments Without
Warranty by GeoStar Parties. Contemporaneously with the execution of this
Settlement Agreement, certain of the GeoStar Parties will execute the assignment
and quitclaim attached hereto as Exhibit A (the "GeoStar Parties' Texas
Assignment"), the purpose of which is to add to that certain Exhibit A to the
Assignment of Oil and Gas Leases and Other Agreements (itself an exhibit to the
Assignment and Bill of Sale attached to each of the PSAs as Exhibit 2) in order
to complete the conveyance of oil, gas, and hydrocarbon properties that were
intended to be conveyed under the PSAs save and except for the
properties addressed in Section 5.02, and subject to the agreement
described in Section 5.03. This assignment and quitclaim includes, without
limitation, any ownership of, claim (whether legal, equitable, or otherwise) to,
or assertion of, any past or present, known or unknown, existing or inchoate,
right, title, and/or interest. From and after the Closing Date, at the request
of the Gastar Parties but without further consideration, the GeoStar Parties
will execute and deliver or use reasonable efforts to cause to be executed and
delivered, such other instruments and take such other actions as the Gastar
Parties reasonably may request related to such interests in Leon and Robertson
Counties to effectuate and perform this assignment and

    quitclaim.

    

    Section
5.02. Releases and Assignments
by Gastar Parties.

    

    (a)
Contemporaneously with the execution of this Settlement Agreement, the Gastar
Parties will execute the quitclaim and/or release attached hereto as Exhibit B-l
(the "Gastar Parties' Texas Release") and the assignment attached hereto as
Exhibit B-2 (the "Gastar Parties' Texas Assignment Without Warranty") the
purpose of which is to quitclaim or release and/or assign to the applicable
GeoStar Parties at least 343.9522 net acres of leasehold interests in Leon and
Robertson Counties identified therein which are more fully described in the
lease schedules attached to Exhibit B-l and B-2. The Gastar Parties hereby
irrevocably and unconditionally assign these acres to the GeoStar Parties and in
so doing, relinquish, release, and quitclaim any right, title and/or interest in
the at least 343.9522 net acres of leasehold interests in Leon and Robertson
Counties which the Gastar Parties have or which could be asserted on their
behalf. This assignment and release includes, without limitation, any ownership
of claims (whether legal, equitable, or otherwise) to, or assertion of, any past
or present, known or unknown, existing or inchoate, right, title, and/or
interest. From and after the Closing Date, at the request of the GeoStar Parties
but without further consideration, the Gastar Parties will execute and deliver
or use reasonable efforts to cause to be executed and delivered, such other
instruments and take such other actions as the GeoStar Parties reasonably may
request related to the at least 343.9522 net acres of leasehold interests in
Leon and Robertson Counties-to effectuate and perform this assignment,
relinquishment, release, and quitclaim. The Gastar Parties shall covenant,
warrant, and represent that all costs associated with the at least 343.9522 net
acres of leasehold interests in Leon and Robertson Counties are paid in full as
of the Closing Date and that none of the leases have expired as of the Closing
Date. At or before closing, or as otherwise agreed between the Parties, the
Gastar Parties will turn over the complete lease files in the Gastar Parties'
possession associated with the at least 343.9522 net acres of leasehold
interests in Leon and Robertson Counties.

    

    (b) Within
five days after the Closing Date, the Gastar Parties shall give notice to the
successor of Navasota Resources, LP (the "Navasota Successor"), in accordance
with that certain Ratification and Assumption executed May 9, 2007 between
Gastar Ltd., Gastar Exploration Texas LP, and Navasota Resources, LP (as
amended), of cures to title as to 162.8061 net acres of leasehold interests in
Leon and Robertson Counties (the "Cured Acreage"), and permit the Navasota
Successor to exercise its rights to acquire the Cured Acreage.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    

    (i) If the Navasota
Successor timely closes its acquisition of the Cured Acreage, in whole or in
part, at their election, the GeoStar Parties may elect that (a) the Gastar
Parties shall deliver to the GeoStar Parties $20,000 per net acre for all net
acres sold to the Navasota Successor no later than forty-eight hours after the
election by the GeoStar Parties or (b) the Gastar Parties shall deliver to the
GeoStar Parties $10,000 per net acre for all net acres sold to the Navasota
Successor no later than forty-eight hours after the election by the GeoStar
Parties. Under this option (b), the Parties shall, as soon thereafter as is
practicable, amend the farm-out agreement referred to in Section 5.03 to include
a third and fourth 160-acre PUD location known as the "Belin Trust A-l W Offset"
and the "Belin Trust A-l N Offset," being locations to the immediate west and
north of the location of the "Belin Trust A-l." The GeoStar Parties shall have
commercially reasonable access (consistent with Gastar's seismic license) with
which to review the Gastar Parties' 3D seismic and decide which option to
exercise.

     

    (ii) If
the Navasota Successor elects not to acquire the Cured Acreage, or any portion
thereof, or does not timely close the acquisition of the Cured Acreage, or any
portion thereof, the Gastar Parties will promptly execute an assignment to the
GeoStar Parties of that portion of the Cured Acreage not acquired by the
Navasota Successor. To the extent that the Cured Acreage is assigned to the
GeoStar Parties, the Gastar Parties shall:

    

    (A)
irrevocably and unconditionally assign the Cured Acreage to the GeoStar Parties,
and in so doing, relinquish, release, and quitclaim any right, title and/or
interest in the Cured Acreage which the Gastar Parties have or which could be
asserted on their behalf;

     

    (B) the
assignment shall include, without limitation, any ownership of claims (whether
legal, equitable, or otherwise) to, or assertion of, any past or present, known
or unknown, existing or inchoate, right, title, and/or interest;

     

    (C) agree
that from and after the Closing Date, at the request of the GeoStar Parties but
without further consideration, the Gastar Parties will execute and deliver or
use reasonable efforts to cause to be executed and delivered, such other
instruments and take such other actions as the GeoStar Parties reasonably may
request related to the Cured Acreage to effectuate and perform this assignment,
relinquishment, release, and quitclaim;

     

    (D)
covenant, warrant and represent that all costs and liabilities associated with
the same are paid in full as of the Closing Date and that none of the leases
have expired as of the Closing Date; and

     

    (E) turn
over the complete lease files associated with the Cured Acreage.

    

    Section
5.03. Farm-Out
Agreement.

    

    (a) The
Gastar Parties agree to provide a farm-out to a designated GeoStar Party of all
of the Gastar Parties' existing interests in two 160-acre PUD locations
identified in the T.J. Smith reports as the "Belin Trust A-l R" and the "Belin
Trust A-l S Offset" (the "Belin Trust Farm-Out Agreement"). Within no more than
thirty days after the Effective Date for this Settlement Agreement, the Gastar
Parties will provide the initial draft and work together with the GeoStar
Parties to finalize the language of the separate document with all of the terms
of the Belin Trust Farm-Out Agreement, which will incorporate and merge the
terms set forth in this Section 5.03.

     

    
      
         

      

      
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    (b) The
Belin Trust Farm-Out Agreement will identify the relevant locations to be
farmed-out, which will be a replacement site for the location of the "Belin
Trust A-l" well and the adjacent 160-acre location to its immediate
south.

     

    (c) The
interests to be earned by the GeoStar Parties for both of the two 160-acre
farm-out locations must be earned by drilling one test well; to wit, a single
well on either 160 acre farm out location shall be sufficient to earn in the
GeoStar Parties1' interests on both 160-acre farm out locations. The designated
GeoStar Party will, prior to the second anniversary of the Belin Trust Farm-Out
Agreement (i) commence a test well on one of the 160-acre farmout locations,
(ii) use commercially reasonable efforts to prosecute drilling operations after
commencement for the test well or substitute test well to a depth sufficient to
test either the Travis Peak formation or the Upper or Lower Bossier formation as
shown on the log for the Anadarko Belin Trust "A" well located on the Jose Maria
Viesca Survey, A-30, Robertson County, Texas (the "Objective Formation"), (iii)
complete the test well or substitute test well capable of producing oil, gas or
related hydrocarbons in commercial quantities, (iv) the test well or substitute
test well must be producing hydrocarbons in accordance with the terms of the
Belin Trust Farm-Out Agreement and (v) the designated GeoStar Party must submit
to the applicable Gastar Party a written request for an assignment of the
interest earned. The Belin Trust Farm- Out Agreement will reserve unto the
applicable Gastar Parties all oil and gas rights in each applicable 160 acre
farm-out location conveyed, except those rights that may be earned by the
GeoStar Parties thereunder. If the GeoStar Party timely completes a producing
test well or substitute well in accordance with the terms outlined in (i)
through (v) above and otherwise complies with the terms of the Belin Trust
Farm-Out Agreement then the applicable Gastar Parties shall assign their entire
interest in the two 160-acre tracts at all depths, down to the Smackover
formation, plus 100 feet, reserving an overriding royalty interest of 1% of the
eighteighth's (1% of 8/8ths) with respect to the Gastar Parties' interest, with
the option to convert such overriding royalty interest to a 12.5% working
interest after payout of (x) 200% of all drilling and completion costs of such
test well and (y) 100% of all operating and other costs. The GeoStar Parties
shall pay or cause to be paid all of the costs of drilling, testing, completing
and equipping (or plugging and abandoning) of the test well. In addition, the
GeoStar Parties shall provide the Gastar Parties with access to all geological
information and other data related to any well from surface to total depth
including a complete suite of logs, core analyses, dipmeter, directional
surveys, velocity surveys, check shot corrected sonic, oil, gas, water analyses,
bottom hole pressure surveys and other information including daily production
information to be set forth in the Belin Trust Farm-Out Agreement.

    

    (d) The
Geostar Parties acknowledge that on or after execution of the Belin Trust
Farm-Out Agreement they may be subject to the following agreements:

    

    (i) that
certain Stipulation of Interests, Cross-Assignment of Oil, Gas and Mineral
Leases and Agreement between First Source Texas, Inc., as Operator and First
Texas Development, Inc., et al., dated September 9, 2003;

     

    (ii) that
certain Agreement among Navasota Resources, Inc., Michael E. Ellis, Alta Mesa
Resources, Inc., Galveston Bay Resources, Inc., Buckeye Production Company,
Inc., Nueces Resources, Inc., Texas Energy Acquisitions, Inc., Aransas
Resources, Inc., Oklahoma Energy Acquisitions, Inc., Kentucky Energy
Acquisitions, Inc., Louisiana Exploration & Acquisitions, Inc., Petro
Acquisitions, Inc., Petro Operating Company, Inc., First Source Texas, Inc., and
First Texas Development, Inc., dated August 27, 2003;

     

    (iii) that certain Agreement
among Navasota Resources, Inc., Michael E. Ellis, Alta Mesa Resources, Inc.,
Galveston Bay Resources, Inc., Buckeye Production Company, Inc., Nueces
Resources, Inc., Texas Energy Acquisitions, Inc., Aransas Resources, Inc.,
Oklahoma Energy Acquisitions, Inc., Kentucky Energy Acquisitions, Inc.,
Louisiana Exploration & Acquisitions, Inc., Petro Acquisitions, Inc., Petro
Operating Company, Inc., First Source Texas, Inc., and First Texas Development,
Inc., dated June 30, 2004; (iv) that certain Operating Agreement between First
Source Texas, Inc., Operator, and Navasota Resources, Inc., and Kentex Energy,
L.L.C. as Non-Operators, dated July 7, 2000;

     

    
      
         

      

      
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    (v) those
certain ETC Gas Marketing Agreements among Gastar Exploration Texas, L.P., and
ETC Texas Pipeline, Ltd., et al, dated September 1, 2007;

     

    (vi) that
certain Purchase and Sale and Exploration and Development Agreement and
Operating Agreement between Gastar Exploration Ltd., First Source Gas L.P., and
Chesapeake Exploration L.P., dated November 4, 2005; and

     

    (vii) that
certain Operating Agreement between Gastar Exploration Texas, LP, Operator, and
EnCana Oil & Gas (USA) Inc., Non-Operator, dated April 1, 2008.
Notwithstanding the above, the Gastar Parties will be responsible for any
liabilities related to the properties covered by the Belin Trust Farm-Out
Agreement incurred before the effective date of the Belin Trust Farm-Out
Agreement.

    

    (e) The
Belin Trust Farm-Out Agreement will be subject to any required approvals by
participants in the Texas JO As and any necessary waivers of applicable
preferential rights. The Gastar Parties represent that they have obtained a
verbal agreement of waiver of preferential rights from Navasota Resources, LP,
or its Affiliate. The Gastar Parties represent that they will use commercially
reasonable efforts to obtain that waiver and all other necessary waivers of
applicable preferential rights in writing.

    

    (f) The
Gastar Parties will covenant, warrant, and represent to the GeoStar Parties that
the applicable Gastar Parties' interests have not expired and that to the extent
that the interest those parties will transfer under the Belin Trust Farm-Out
Agreement is insufficient to confer full operatorship status upon the designated
GeoStar Party, the Gastar Parties will use their commercially reasonable efforts
to obtain such a designation from the participants in the Texas JO
As.

    

    (g)
Subject to the reversionary interests retained by the Gastar Parties, the Gastar
Parties will transfer to the applicable GeoStar Party, to the extent allowable
under the Texas JOAs, that portion of the Gastar Parties' rights under the Texas
JOAs related to the property subject to the Belin Trust Farm-Out Agreement. At
the election of the applicable GeoStar Party, the Gastar Parties will also
assign to the applicable GeoStar Party, to the extent assignable and to the
extent not actually in use by Gastar Parties for their operations, the Gastar
Parties' rights to use, at the expense of the GeoStar Party, processing,
gathering, and transportation pipelines related to the property subject to the
Belin Trust Farm-Out Agreement. To the extent that the Gastar Parties' rights to
such processing, gathering, or transportation pipelines are fully utilized by
the Gastar Parties, the Gastar Parties will use commercially reasonable efforts
to facilitate obtaining additional processing, gathering, transportation
pipeline capacity for use by and at the expense of the GeoStar Party. In
addition, in the event that the Gastar Parties have available capacity with
respect to processing, gathering, or transportation pipelines owned by the
Gastar Parties related to the property subject to the Belin Trust Farm-Out
Agreement and not otherwise in use for their operations, the Gastar Parties
shall make such capacity available to the applicable GeoStar Party for use at a
market-based fee. The GeoStar Parties shall have the right, but not the
obligation, to use the capacity referred to in this paragraph, provided that notwithstanding
anything in this paragraph, the GeoStar Parties are obligated to comply with
those contracts, agreements, and dedications to which they are subject under
Section 5.03(d).

     

    
      
         

      

      
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    (h) In the
event that a third and fourth farm-out location are to be added to the Belin
Trust Farm-Out Agreement under Section 5.02(b), all terms of this Section 5.03
shall apply, mutatis mutandis,
to the third and fourth locations. For the avoidance of doubt, the
Parties agree that the test well satisfying the conditions in Section 5.03(c)
will earn the GeoStar Parties' interests in all four farm-out locations in the
manner described therein.

    

    (i) At or
before execution of the Belin Trust Farm-Out Agreement, or as otherwise agreed
between the Parties, the Gastar Parties will turn over copies of lease files
associated with the property subject to the Belin Trust Farm-Out
Agreement.

    

    ARTICLE
VI

    West
Virginia and Pennsylvania Properties

    

    Section
6.01. Assignments by GeoStar
Parties Without Warranty. Contemporaneously with the execution of this
Settlement Agreement, certain of the GeoStar Parties will execute the assignment
and quitclaim attached hereto as Exhibit C (the "GeoStar Parties' West
Virginia/Pennsylvania Assignment"), the purpose of which is to convey all of
GeoStar's oil, gas, and hydrocarbon properties held by GeoStar in West Virginia
and Pennsylvania, and to convey legal title to all oil, gas, and hydrocarbon
properties. This assignment and quitclaim includes, without limitation, any
ownership of, claim (whether legal, equitable, or otherwise) to, or assertion
of, any past or present, known or unknown, existing or inchoate, right, title,
and/or interest. The GeoStar Parties represent to the Gastar Parties that none
of the leasehold interests subject to the special warranty of title set forth in
the GeoStar Parties' West Virginia/Pennsylvania Assignment have expired. From
and after the Closing Date, at the request of the Gastar Parties but without
further consideration, the GeoStar Parties will execute and deliver or use
reasonable efforts to cause to be executed and delivered, such other instruments
and take such other actions as the Gastar Parties reasonably may request related
to such interests in West Virginia and Pennsylvania to effectuate and perform
this assignment and quitclaim. Within thirty days after the Closing Date, the
GeoStar Parties shall deliver to the assignee Gastar Parties original leases,
lease purchase reports, complete title reports, and plats in the GeoStar
Parties' possession for the properties assigned pursuant to

    Exhibit
C.

    

    Section
6.02. Pending West
Virginia/Pennsylvania assignments. The Parties acknowledge that at this
time the GeoStar Parties have pursued and are pursuing assignments of additional
interests in West Virginia and Pennsylvania to which the GeoStar Parties are
presently entitled. The GeoStar Parties agree to use commercially reasonable
efforts to continue doing so for a period of ninety (90) days after the Closing
Date, and that to the extent they, or any GeoStar Party Affiliate, obtain
assignment of any such oil, gas, or hydrocarbon interest in West Virginia or
Pennsylvania within those ninety (90) days after the Closing Date, the GeoStar
Parties covenant, warrant, and represent that they or their Affiliates will
assign that interest to the Gastar Parties within a reasonable time thereafter,
not to exceed thirty days. The GeoStar Parties further agree that from and after
the Closing Date, and continuing beyond the ninety-day period described in this
Section, at the request of the Gastar Parties but without further consideration,
the GeoStar Parties will execute and deliver or use reasonable efforts to cause
to be executed and delivered, such other instruments and take such other actions
as the Gastar Parties reasonably may request to convey any additional interests
in West Virginia and Pennsylvania that the Gastar Parties determine ought to
have been assigned to GeoStar Parties prior to the Closing Date but were not
otherwise conveyed to the Gastar Parties pursuant to this Settlement Agreement.
Gastar acknowledges that GeoStar makes no warranty (and expressly disclaims any
warranty) as to any right, title or interest obtained under Section
6.02.

    
      
         

      

      
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    Section
6.03. Release of claims related
to Gastar leasing activity in West Virginia and Pennsylvania. Without
limitation to the scope of the mutual releases set forth in Article 4, the
GeoStar Parties relinquish and release any claims to any rights or properties
held by or being sought by the Gastar Parties in West Virginia and
Pennsylvania.

    

    Section
6.04. Transition of
operatorship.

     

    (a) The
GeoStar Parties represent and warrant that all costs and liabilities associated
with the interests assigned and quitclaimed in Exhibit A of the GeoStar Parties'
West Virginia/Pennsylvania Assignment, including without limitation all
royalties on the interests, are paid in full, or are in process of being paid
and will be paid in full, through April 30, 2008.

     

    (b)
Notwithstanding anything to the contrary in this Settlement Agreement or the
Closing Documents, the GeoStar Parties remain liable for any costs or
liabilities associated with the interests assigned and quitclaimed in the
GeoStar Parties' West Virginia/Pennsylvania Assignment that were paid or are
owed to the GeoStar Parties, their Affiliates, or any of them.

     

    (c) At or
prior to the Closing Date, or as soon thereafter as can be accomplished through
the exercise of their best efforts, the GeoStar Parties shall turn over copies
of the following documents with respect to the interests assigned and
quitclaimed in the GeoStar Parties' West Virginia/Pennsylvania
Assignment:

    

    (i)
Current division orders and revenue decks;

     

    (ii)
Current billing decks;

     

    (iii) Name
and address information for all division orders and billing owners;

     

    (iv) List
of all vendors being utilized as to the interests, including the addresses
and tax identification numbers of those vendors;

     

    (v) The
most recent filings of each report filed with applicable state authorities,
including without limitation severance tax, production, state royalties, and any
other annual, quarterly, or monthly required filings regarding operation and
reporting of properties or interests assigned;

     

    (vi) The
detailed revenue suspense report, by owner and well, sometimes referred to as
OGSYS Report 440 (or its equivalent);

     

    (vii)
Gross revenue report for 2007 to the present, by property;

     

    (viii)
Lease operating expense report for 2007 to the present, by property and general
ledger account;

     

    (ix)
Royalty payment report for 2007 to the present;

     

    (x) All
contracts in force with respect to the interests;

     

    (xi)
Summary of utility services in use, including addresses and meter
numbers;

     

    (xii) List
of all purchasers or payors of revenue with addresses by property;

     

    (xiii)
List of all contract pumpers, with monthly rates and contact information for
each;

     

    (xiv) All
original well files, logs, seismic, and maps;

     

    (xv)
Report of revenues and expenses after April 1, 2008; and

     

    (xvi)
delay rental payment checks and receipts for same.

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    (d) Prior
to closing, the GeoStar Parties shall execute letters in lieu to all natural gas
and crude oil buyers for the properties to which the GeoStar Parties' West
Virginia/Pennsylvania Assignment in a form acceptable to the Gastar
Parties.

     

    (e) At
closing, the GeoStar Parties shall deliver all legal revenue suspense amounts
(excluding the portion of same allocated to Gastar Parties) for the properties
to which the GeoStar Parties' West Virginia/Pennsylvania Assignment relate in
the amount of $19,966.65. The amount shall be paid by reducing the payment
otherwise due to the GeoStar Parties as further described in Section
9.01.

     

    (f) After
ninety days, the Gastar Parties may, at their option, obtain an assignment from
the GeoStar Parties of the GeoStar Parties' claims in, and assumption of the
GeoStar Parties' obligations in, Case No. 07-6077-CK, West Virginia Gas Corp. v. Spartan
Exploration, Inc., and Milton Otteman, in the Circuit Court for Isabella
County, Michigan.

    

    ARTICLE
VII

    Victoria
Properties

    

    Section
7.01. Assignments by Gastar
Parties. The Gastar Parties desire to fully convey all their right, title
and interests in Victoria, Australia to the GeoStar Parties, specifically
including without limitation, the Gastar Parties' remaining oil, gas, mineral,
brown coal, coal mine methane, coal bed methane and hydrocarbon right, title,
license, and/or interests in Victoria, Australia, legal or equitable, or any
mining license or extensions thereto. Contemporaneously with the execution of
this Settlement Agreement, certain of the Gastar Parties will execute the
Tenement Sales Agreement of EL 4968 attached hereto as Exhibit D-l (the "EL 4968
Tenement Transfer") and the Transfer Form for EL 4968 attached hereto as Exhibit
D-2, the purpose of which is to assign to the GeoStar Parties all of the Gastar
Parties' right, title, and interests in EL 4968, specifically including without
limitation, the Gastar Parties' remaining oil, gas, mineral, brown coal, coal
mine methane, coal bed methane and hydrocarbon right, title, license, and/or
interests in EL 4968, legal or equitable, or any mining license or extensions
thereto. In addition, as part of this Settlement Agreement, the Gastar Parties
also acknowledge that with respect to EL 4416, they have no right, title or
interest in EL 4416, specifically including without limitation, oil, gas,
mineral, brown coal, coal mine methane, coal bed methane and hydrocarbon right,
title, license, and/or interests in EL 4416, legal or equitable, or any mining
license or extensions thereto.

    

    Section
7.02. Release of claims related
to GeoStar holdings in Victoria, Australia. Without limitation to the
scope of the mutual releases set forth in Article 4, the Gastar Parties
relinquish and release any claims to any rights or properties held by or being
sought by the GeoStar Parties in Victoria, Australia, including but not limited
to any rights or properties related to exploration licenses EL 4416 or EL 4968,
and specifically including, without limitation, any claims to any oil, gas,
mineral, brown coal, coal mine methane, coal bed methane and hydrocarbon right,
title, license and/or interests, or any mining license or extensions
thereto.

    

    Section
7.03. Further Assurances.
From and after the Closing Date, at the request of the GeoStar Parties
but without further consideration, the Gastar Parties will execute and deliver
or use reasonable efforts to cause to be executed and delivered such other
documents effecting the Gastar Parties' release and relinquishment related to
the GeoStar Parties' holdings or instruments of conveyance or take such other
actions as the GeoStar Parties reasonably may request to more effectively put
the GeoStar Parties in possession of any property which was intended by the
parties to be conveyed by the Gastar Parties or to cure the title to any such
property.

    
      
         

      

      
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    Section
7.04. Indemnification.
NOTWITHSTANDING THE PROVISIONS OF ARTICLE IV AND SECTION 7.02 OF THIS SETTLEMENT
AGREEMENT AND CLAUSE 5.2 OF THE EL 4968 TENEMENT TRANSFER TO
THE CONTRARY, THE GEOSTAR PARTIES AGREE TO INDEMNIFY AND HOLD HARMLESS THE
GASTAR PARTIES FOR ANY CLAIMS MADE AGAINST THE GASTAR PARTIES ARISING BY THROUGH
OR UNDER THE GEOSTAR PARTIES' EXERCISE OF THE POWER OF ATTORNEY SET FORTH IN THE
PARTIES' TENEMENT SALE AGREEMENT FOR EL 4968.

    

    ARTICLE
VIII

    Termination
of Prior Agreements

    

    Section
8.01. Termination of prior
agreements. Without limitation to the scope of the mutual releases set
forth in Article 4, any remaining obligations under the following agreements are
hereby terminated and merged into this Settlement Agreement except as set forth
in Section 8.02:

    

    (a) the
POA;

     

    (b) the
PSAs; and

     

    (c) that
certain Loan Agreement between Gastar Exploration Ltd. and GeoStar Corporation
dated June 1, 2000, and Amendments to same dated December 1, 2000, and December
31,2002.

    

    Section
8.02. Survival of obligations
under terminated agreements. The agreements and obligations under the
documents identified in Section 8.01 (a) and (b) survive and are enforceable
only to the extent necessary to facilitate performance under this Settlement
Agreement, another Closing Document, or the Belin Trust Farm-Out Agreement. Any
enforcement of such obligations shall be subject to the procedures of Article
10.

    

    ARTICLE
IX

    Other
Consideration

    

    Section
9.01. Cash Payment.
Gastar Ltd. shall make a one-time payment in the amount of TWENTY-FIVE
MILLION, SEVEN-HUNDRED-FORTY THOUSAND AND NO/100THS U.S. DOLLARS
(US$25,741,695.36) to GeoStar, less the legal suspense amount of NINETEEN
THOUSAND, NINE-HUNDRED-SIXTY-SIX AND 65/100 (US$ 19,966.65), for a net payment
of TWENTY-FIVE MILLION, SEVEN-HUNDRED-TWENTY-ONE THOUSAND, SEVENHUNDRED
TWENTY-EIGHT AND 71/100 (US$25,721,728.71) wired as follows:

    

    Encore
Trust Account Number - 050003110

    Encore
Bank Route Number - 113093849

    For the
Account of Fred Hagans, P.C., d/b/a Hagans, Burdine, Montgomery,

    Rustay
& Winchester

    Federal ID
Number 76-0320978

    Encore
Bank - Contact person Vasthi Perez - (713) 658-0808

    

    Such
payment shall be made by initiating the wire payment in immediately available
funds no later than
10 AM June 12, 2008, Central Time.

    
      
         

      

      
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    Section
9.02. Warrants. Subject
to the approval of the Toronto Stock Exchange and the American Stock Exchange
(to the extent required by the rules and procedures of those exchanges), Gastar
Ltd. shall grant or issue to GeoStar a warrant in the form attached hereto as
Exhibit F (the "Gastar Warrant"), which shall be exercisable only on the terms
and conditions set forth therein. Notwithstanding anything to the contrary
therein or in the Settlement Agreement, the Parties expressly acknowledge and
agree that the Gastar Parties are not obligated, by this Settlement Agreement,
the Gastar Warrant, or otherwise, to pursue or consummate the sale of their oil
and gas interests in Leon and Robertson Counties, Texas, or to cause the
conditions for the exercise of warrants to occur. To the extent the approvals of
the Toronto Stock Exchange and/or the American Stock Exchange are required to
issue the Gastar Warrant, Gastar Ltd. will use its best efforts to obtain those
approvals as soon as possible, but obtaining such approval is not a precondition
to closing. Within ninety (90) days of the Closing Date, Gastar shall also issue
a Registration Rights Agreement for the benefit of the holders of the Gastar
Warrant in substantially the same form as that certain Registration Rights
Agreement issued as Exhibit 6 to the PSAs, provided that the
Registration Rights Agreement issued for the benefit of the holders of the
Gastar Warrant shall not include piggy-back registration rights.

    

    Section
9.03. Navasota litigation.
Gastar Ltd. and GeoStar will agree to cooperate in the use of
commercially reasonable efforts to obtain the voluntary dismissal, with
prejudice, of the GeoStar Parties and their Affiliates from Cause No. 0-05-451;
Navasota Resources, L.P. v.
First Source Texas, Inc., et al.\ in the 12th District Court of Leon
County, Texas, and all appeals related thereto. TO THE EXTENT THAT ANY GEOSTAR
PARTY OR AFFILIATE OF A GEOSTAR PARTY IS NOT DISMISSED FROM SAID LITIGATION WITH
PREJUDICE, GASTAR LTD. WILL FULLY INDEMNIFY SUCH ENTITY WITH RESPECT TO SAID
LITIGATION TO THE FULLEST EXTENT PERMITTED BY TEXAS LAW.

    

    Section
9.04. Representations of
affiliate status. The Gastar Parties and the GeoStar Parties
agree not to intentionally express or imply ownership or control of each other's
subsidiaries
or affiliates. No party shall be entitled to seek or recover punitive damages
for a breach of
this section.

    

    Section
9.05. Nondisparagement.
Each Party agrees that it will not, directly or indirectly, make any
derogatory or disparaging written, oral, or electronic statements about the
other, provided that this obligation does not prohibit truthful statements by
any party that are required or permitted by law or valid legal
process.

    

    Section
9.06. Updated S.E.C.
disclosures. By the fifteenth day after the Closing Date, GeoStar will
update any filings it has made with the United States Securities Exchange
Commission which disclose the number of shares of common stock held by GeoStar,
including without limitation GeoStar's Schedule 13D as filed on July 24,
2006.

    

    Section
9.07. Further Assurances.
In connection with this Settlement Agreement, the Closing Documents, and
the transactions contemplated by them, each Party shall execute and deliver such
additional assignments and other documents, and take such other action, as shall
be reasonably requested by any other Party to effectuate and perform the
provisions of the Settlement Agreement, the Closing Documents, and those
transactions, including any such steps as may be necessary to remove any clouds
on any Party's titter or to more effectively put the receiving party in
possession of any property which was intended to be conveyed by the Settlement
Agreement, the Closing Documents, or the PSAs, including without limitation any
interests in Wyoming or Montana.

     

    
      
         

      

      
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    ARTICLE
X

    Dispute
Resolution

    

    Section
10.01. Initiation of
arbitration. In the event of any controversy or claim, whether based in
contract, tort or otherwise, arising out of or relating to this Settlement
Agreement, the Closing Documents, or the Belin Trust Farm-Out Agreement or the
scope, breach, termination or validity of same (a "Claim"), then either Party
may initiate binding arbitration under the rules of the American Arbitration
Association ("AAA") as follows

    

    (a) The
Party desiring to initiate arbitration in connection with any Claim shall notify
the other Party in writing, demand arbitration, and include a statement of the
matter in controversy. The responding Party shall answer in the manner and in
the time required by the AAA rules.

     

    (b) Unless
otherwise agreed by the parties to the arbitration, the arbitration shall be
before a panel of three arbitrators, each of whom shall have a minimum of five
years' commercial experience in the oil and gas industry or the equivalent of
five years' litigation experience principally in the oil and gas sector. Each
party shall appoint one arbitrator under the AAA rules for direct appointment,
and each arbitrator so appointed shall be neutral and independent as provided in
the AAA rules. The chairperson shall be appointed by the partyappointed
arbitrators or the AAA as set forth in the AAA rules.

    

    Section
10.02. Conduct and result of
arbitration.

    

    (a) The
arbitration shall be conducted in accordance with the procedures and evidentiary
standards in the AAA rules except as set forth herein.

     

    (b) Any
decision by a majority of the arbitration panel may be filed in any court of
competent jurisdiction and may be enforced by any Party as a final judgment in
such court.

    

    ARTICLE
XI

    Additional
Terms and Conditions

    

    Section
11.01. Authority. The
boards of directors of GeoStar and Gastar Ltd., respectively, have approved the
terms of the Settlement Agreement as reflected in the corporate resolutions
attached hereto as Exhibits G and H. The persons executing this Settlement
Agreement have all proper authority to execute it on behalf of the Parties they
represent.

    

    Section
11.02. Adequacy of
Consideration. The Parties acknowledge and agree that full, valid, and
binding consideration exists for the execution of this Settlement Agreement and
that such consideration includes the mutual promises contained
herein.

    

    Section
11.03. No Admission of
Liability. The execution of this Settlement Agreement shall not be
construed as an admission of liability or an admission of the validity of any
claim on the part of any Party hereto in any respect. Each Party expressly
acknowledges that the consideration exchanged herein is exchanged in full accord
and satisfaction of all of claims arising out of the Disputes. Each Party also
expressly acknowledges that each other Party denies any liability for the claims
or counterclaims made in the Disputes, that none of the consideration exchanged
pursuant to this Settlement Agreement is paid to compromise actual or potential
liability in the Disputes, and that each Party is settling this case to avoid
the time and expense necessary to litigate or arbitrate the Disputes and to
advance the final resolution of the commercial relationships between the
Parties.

     

    
      
         

      

      
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    Section
11.04. Settlement Agreement
Inadmissible. This Settlement Agreement shall not be admissible in any
action, suit, or proceeding, whatsoever, as evidence or as an admission of any
claim or liability, provided, however, that any Party hereto may use all or part
of this Settlement Agreement to the extent necessary to enforce any right or
obligation conferred upon such Party by this Settlement Agreement.

    

    Section
11.05. Successors and Assigns.
Except as set out more specifically herein, this Settlement Agreement
shall be binding upon and inure to the benefit of each Party's heirs, devisees,
agents, representatives, successors and assigns, trustees, attorneys, members,
legal representatives, controlled or controlling persons, and/or any
corporation, partnership, or other entity into or with which such Party has
merged, consolidated, or reorganized, or to which it has transferred all or
substantially all of its assets.

    

    Section
11.06. Entire Agreement and
Merger. The Parties agree that this Settlement Agreement and the
documents executed pursuant to it constitute the full, final, and complete
settlement of the Disputes and other matters addressed herein, and supersedes
all other written or oral exchanges, arrangements, or negotiations between them
concerning the subject matter of the Disputes or this Settlement Agreement,
including without limitation that certain Rule 11 Agreement dated June 5, 2008.
The Parties further agree that there are no representations, agreements,
arrangements, or understandings, oral or written, concerning the subject matter
of this Settlement Agreement that are not fully expressed, merged into, and
incorporated herein.

    

    Section
11.07. Reliance. The
Parties acknowledge that they are not relying upon any statement or
representation of any other Party or its agent or representatives, except as
expressly set forth herein, but are instead relying solely on their own judgment
and investigation of the matters at issue. Each Party is represented by legal
counsel who has read and explained the entire contents of this Settlement
Agreement and the documents executed pursuant to it in full, as well the legal
consequences of same.

    

    Section
11.08. Accounting. For
accounting purposes, the Parties acknowledge that the value of the various forms
of compensation received or paid by either Party are deemed to apply to the
resolution of claims related to the look-back provisions of the
PSAs.

    

    Section
11.09. No Advice Regarding Tax
Liability. Each Party understands and agrees that it is solely and
completely responsible for any tax liability the Party may incur resulting from
this Settlement Agreement; that it is not relying on any statements,
representations or admissions on the part of any other Party concerning any tax
consequences or tax issues; and that it is each Party's responsibility to seek
competent tax advice concerning this matter as needed.

    

    Section
11.10. Participation of
Counsel. The Parties acknowledge that they have had an opportunity to
fully develop and discover any and all of their actual and potential claims that
are settled by this Settlement Agreement. The Parties further acknowledge that
they have received advice of counsel in the negotiation, preparation, drafting,
and execution of this Settlement Agreement, which was prepared by the combined
efforts of all Parties pursuant to arms-length negotiations. The rule of
"construction against the drafter" shall not be employed in the interpretation
of this Settlement Agreement.

    

    Section
11.11. Amendments and
Modifications. This Settlement Agreement may not be modified, altered, or
changed except upon express written and signed consent of all Parties in a
document that makes specific reference to this Settlement Agreement. The Parties
further agree that, in any dispute concerning this Settlement Agreement, they
will not assert an amendment or modification except one made in accordance with
this section.

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

     

    Section
11.12. Construction and
Severability. This Settlement Agreement shall be construed, in any case
where doubt may arise, in such a manner as will make it lawful and fully
enforceable. The language of all parts of this Settlement Agreement shall in all
cases be construed as a whole, according to its fair meaning. In the event any
part of this Settlement Agreement is found to be void, voidable, or
unenforceable, then it is the intention of the Parties that such part be severed
and the other provisions shall remain fully valid and enforceable.

    

    Section
11.13. Notices. All
notices or other communications required or permitted to be given under this
Settlement Agreement shall be sufficiently given for all purposes hereunder if
in writing and personally delivered, delivered by recognized courier service
(such as Federal Express) or certified United States mail, return receipt
requested, or sent by facsimile communication to the appropriate address or
number as set forth below. Notices and other communications shall be effective
upon receipt by the person to be notified.

    

    If to any
of the GeoStar Parties:

    

    Thomas E.
Robinson

    2480 West
Campus Drive, Building C

    Mt.
Pleasant, Michigan 48858

    Fax: (989)
773-0006

    

    with a
copy to:

    

    Fred
Hagans

    HAGANS,
BURDINE, MONTGOMERY, RUST AY & WINCHESTER

    3200
Travis, Fourth Floor

    Houston,
Texas 77006

    Fax:(713)547-4950

    

    If to any
of the Gastar Parties:

    

    J. Russell
Porter

    Gastar
Exploration, Ltd.

    1331
Lamar, Suite 1080

    Houston,
Texas 77010

    Fax: (713)
739-0458

    

    with a
copy to:

    

    James D.
Thompson, III

    VINSON
& ELKINS, L.L.P.

    1001
Fannin, Suite 2500

    Houston,
Texas 77002-6760

    Fax:(713)758-2346

    

    Section
11.14. Governing Law.
This Settlement Agreement (and any attachment hereto, unless otherwise
set forth in the attachment) shall be governed by, enforced, and construed in
accordance with Texas law, without regard to the application of Texas' conflict
of laws principles. Subject to and without waiving the dispute resolution
provision contained herein, the Parties consent to personal jurisdiction in the
federal and state courts in Texas for purposes of enforcement of this Settlement
Agreement.

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

    Section
11.15. Confidentiality of this
Settlement Agreement.

    

    (a) This
Settlement Agreement shall be considered confidential information and will be
maintained as confidential by the Parties. No media release or public disclosure
relating to or announcing this Settlement Agreement shall be issued by either
Party unless the wording thereof has been first agreed by the other
Party.

     

    (b)
Notwithstanding the foregoing, any Party to this Settlement Agreement may make
whatever disclosure it, in its sole discretion, considers necessary to comply
with: the Party, or

    

    (i) any
requirement of U.S. or Canadian securities law,

     

    (ii) any
requirement of a regulatory agency having jurisdiction over

     

    (iii) any
requirement of any stock exchange on which securities issued by the Party are
traded, including, without limitation, any disclosures necessary for the purpose
of obtaining approval for the issuance of warrants called for in this Settlement
Agreement.

    

    (c) Any
Party may disclose the terms of the Settlement Agreement to its own counsel,
accountants, and agents, provided that the person to whom that information is
disclosed owes a contractual or fiduciary obligation to the disclosing Party to
maintain the confidentiality of the information disclosed.

    

    Section
11.16. Return or Disposal of
Confidential Information Produced in the Disputes. Upon entry of the
dismissals in each of the Disputes, the Parties will return or dispose of
discovery material in their possession and that was obtained from the other
Parties per the terms of the confidentiality agreement entered into between the
Parties with respect to discovery. The Parties, through their litigation
counsel, may by mutual agreement (i) vary the procedure in said confidentiality
agreement for the return or disposal of discovery materials, or (ii) waive the
return of documents from a Party to the extent the documents relate to interests
retained by that Party as a result of this Settlement Agreement.

    

    Section
11.17. Title and Headings.
Title and headings are inserted for convenience of reference only and are
not intended to be a part of or to affect the meaning or interpretation of the
Settlement Agreement.

    

    Section
11.18. Counterparts.
This Settlement Agreement may be executed in one or more counterparts,
all of which together shall be one instrument, and all of which shall be
considered duplicate originals.

    

    IN WITNESS
WHEREOF, the Parties, through their duly authorized representatives, have signed
and acknowledged this Settlement Agreement as shown below:

     

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    GEOSTAR
CORPORATION,

    on behalf
of itself and First Source Texas, Inc.; First Source Bossier, LLC; First Texas
Gas, LP; CBM Resources Pty. Ltd.; Associated Geophysical Services, Inc.;
Conquest Group Operating Company; West Virginia Development, Inc.; West Virginia
Gas Corporation; Squaw Creek Development, Inc.; Arkoma Basin Development, Inc.;
Royalty Acquisition Company; BNG Producing & Drilling; GeoStar Financial
Corporation; and GeoStar Financial Services Corporation, and with all due
authority to execute on behalf of each of them,

     

     

    /s/  THOMAS E.
ROBINSON                                                                

    Thomas E.
Robinson

    President

    Date:  06/11/08

    

    

    GASTAR
EXPLORATION, LTD.,

    on behalf
of itself and Gastar Exploration USA, Inc.; Gastar Exploration Victoria, Inc.;
Gastar Exploration Texas, Inc.; Gastar Exploration Texas LLC; Gastar Exploration
Texas, LP; Gastar Exploration New South Wales, Inc.; and Gastar Exploration
Power Pty. Ltd., and with all due authority to execute on behalf of each of
them,

    

    

    /s/  J. RUSSELL
PORTER                                                                

    J. Russell
Porter

    President,
Chief Executive Officer and Chairman

    Date:  06/11/08

    
 

     

     

     

    20

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