Magnum Hunter Resources (Magnum Hunter, or the Company) announced the execution of a new Joint Operating and Exploration Agreement (Joint Agreement) with a privately-held independent exploration and production company (the "Independent"). The Area of Mutual Interest (AMI) covers certain specific lease acreage positions currently owned by both Magnum Hunter and the Independent located in Gonzales and Lavaca Counties, Texas.
Terms include the parties agreeing to work together in the AMI on a "fifty-fifty" basis for all future leasing, exploration, drilling, completion and development costs and other expenses. Magnum Hunter will be the named Operator in the AMI. All contemplated wells under the Joint Agreement within the AMI will be horizontal Eagle Ford Shale wells. The effective date for the Joint Agreement is October 1, 2010.
Magnum Hunter and the Independent are each contributing approximately 1,500 net lease acres located in Gonzales and Lavaca Counties, Texas to the AMI under the new Joint Agreement. Any acreage differences will be balanced between the two companies with a cash payment to the other party.
Magnum Hunter and its partner will jointly drill a minimum of two wells in the AMI. Magnum Hunter plans to spud the first well under the Joint Agreement within the next two weeks, the Southern Hunter. Drilling operations have been completed on the Lagunillas Camp #2H located in Atascosa County (MHR's third Eagle Ford well) and the drilling rig is currently being dismantled to move to this new drilling location. The second well in the new AMI is contemplated to spud on or before 90 days after the completion, evaluation and start of production for the first well drilled under the Agreement.
Mr. H.C. "Kip" Ferguson, Executive Vice President of Exploration for Magnum Hunter, commented, "We are pleased to announce our second joint venture in the Eagle Ford shale play of South Texas. Magnum Hunter is continuing its efforts to spread our exploratory risk over a larger number of prospects in the Eagle Ford Shale play. With production results from the Gonzo Hunter #1H (currently producing) and the Lagunillas Camp #1H and #2H (both waiting on frac) to be released in the near future, we remain convinced that Magnum Hunter's continuing efforts in this emerging unconventional play will add significant incremental value to our shareholders."