Austin Closes Eagle Ford Shale Farm-Out Deal with Halcon

Source: 7/30/2013, Location: North America

The Board of Austin Exploration Limited announced signing of an agreement with Houston-based Halc?n Resources Corporation for further drilling in the Eagle Ford shale at the Company’s Birch Project in Burleson County, Texas.

Under the farm-out agreement, Halcon will earn a 70% interest in the Birch Project by funding 100%of the drilling costs on the next three Eagle Ford wells.The total estimated cost for the three horizontal wells is projected to be USD 24$ - 27$ million (8- 9 million per well). The three well farm-out agreement covers approximately , acres.

The capital, production and profit for all wells drilled after the three aforementioned wells will be shared on a % (Halc5n)/30% (Austin) basis.

Austin will also receive a $1.9 million upfront payment for an 18 month exclusive drilling option during which time the farm-out wells must be drilled. Also included in the sale is a 70% interest in Austin’s B1 Krueger and B3 Schwartz Galbreath wells and associated acreage. Due-diligence for the purchase of these wells is expected to be completed in August 2013.

Austin Exploration Chairman, Richard Cottee, commented, “This is a major vote of confidence in Austin’s Eagle Ford acreage and in our team’s ability to identify high potential assets in key oil regions. Halc?n is a proven operator with significant knowledge and expertise specific to the Eagle Ford shale formation. “The financial benefit to Austin from the Birch farm-out is hugely significant. First, we continue to share the benefits of developing a world class Eagle Ford shale asset; second, Austin can concentrate our efforts on developing our, much larger prospect, in the Niobrara which is already well-advanced and has proven commercial hydrocarbons”, Mr Cottee said.

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