PostRock Energy Announce White Deer Investing Equity 60 Million US Dollar

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White Deer Energy will purchase $60 million of the PostRock Energy 12% cumulative redeemable preferred stock. The preferred stock has a 7 1/2 year term and is callable after one year at par plus 10%. The Company has the option to pay the preferred dividends in cash or in kind until July 2013. In addition, White Deer will receive 7 1/2 year warrants to purchase $60 million of common stock. The exercise price of the warrants was set at $3.15 per share, which represents an approximate 5% premium to PostRock’s closing stock price on September 1, 2010.

White Deer Energy will be entitled to vote with the common stock on all matters based on its pro forma interest in the Company giving effect to the exercise of its warrants. However, it has agreed to limit its vote to 45% for a period of time. White Deer will designate Thomas J. Edelman, James D. Bennett and Nathan M. Avery as directors, expanding the Board to twelve. NASDAQ granted the Company a financial viability exception from the requirement to obtain shareholder approval of the transaction. PostRock’s Audit Committee approved the exemption request and the Board obtained a fairness opinion on the transaction.

White Deer Energy is an energy private equity fund focused on the exploration & production, oilfield service and equipment and midstream sectors of the oil and gas industry. With $821 million of capital commitments, the Fund is a long-term investor targeting equity investments of $50 to $120 million in 8 to 10 portfolio companies. With offices in Houston and New York, White Deer has a combination of industry expertise and capital that makes it an exceptionally attractive partner for rapidly growing North American energy companies.

PostRock Energy will use the proceeds to reduce debt and fund future growth. The investment and the debt restructuring are expected to close simultaneously in approximately three weeks, subject to the satisfaction or waiver of various closing conditions. As part of the transaction, White Deer has reserved an additional $30 million to invest in PostRock on mutually acceptable terms to fund future growth.

PostRock Energy Corporation is engaged in the acquisition, exploration, development, production and transportation of oil and natural gas primarily in the Cherokee Basin of Kansas and Oklahoma. The Company owns and operates over 2,800 wells and nearly 2,200 miles of gas gathering lines in the Basin. In addition, it owns 1,100 miles of interstate gas pipelines in Oklahoma, Kansas and Missouri.