Austin Exploration Limited (“Austin”) has agreed with a major US Oil and Gas company (Farm-in Partner”) to fund a three well farm-in at Austin’s 100% owned Birch Prospect in Burleson County Texas.
The two companies expect to finalise documentation by June 30, at which time the Farm-in Partner will be announced. Under the agreement the Farm-in Partner will fund 100% of the costs on the next three Eagle Ford wells that it drills and will earn a 70% interest in the Birch Project in return. The estimated well costs of the three horizontal wells are projected to be USD $24mil ($8 mil per well).
The three well farm-out agreement covers approximately 4295 acres with Austin retaining 100% of a 645 parcel of acreage. From well number 4 onwards the capital, production and profit will be shared on a 70% (Farm-in Partner) and 30% (Austin) basis. Additionally, Austin will receive a $1.95 million upfront one off payment for an 18month exclusivity option over the block during which it must complete the three well drilling program and for the sale of 70% of Austin’s Krueger and Schwartz Glabreath wells contained in that acreage.
Austin Exploration Chairman, Mr. Richard Cottee said Austin had received a significant amount of interest from major companies looking to acquire an interest in the highly prospective Eagle Ford Shale project. “Austin selected a Farm-in Partner of high commercial standing with a proven track of drilling successful wells in this area of Texas.
“We are proud of the success of our US based team which has enabled us to attract a huge partner to our Eagle Ford acreage and look forward to jointly developing this world class asset.”
In March 2011 Austin adopted a growth strategy via acquisitions in 2 of the most prolific oil and gas producing shale areas in the US (Eagle-Ford and Niobrara). This approach provided:
1) High Working/Net Revenue Interests and Operatorship so as to be in control of farm-out/sale process;
2) Low entry (price per acre) costs due to perceived “frontier” or underexplored areas that were on trend to current “hot spots” in the shale oil/ gas window; and
3) Establish a world-class team able to “work-up” assets to provide significant shareholder returns
For more information about related Opportunities and Key Players visit Oil Shale Projects