PostRock Energy Corporation has entered into a joint venture ("JV") with Silver Creek Oil & Gas, LLC ("Silver Creek") covering approximately 17,900 gross acres in Cleveland and Pottawatomie Counties in central Oklahoma. The JV, which will facilitate drilling of the initial Woodford horizontal tests in the area, includes a portion of the leasehold PostRock acquired in late 2013. The first two horizontal wells, both targeting the Woodford Shale, should be drilled and completed by year-end.
The JV includes an acre for acre swap between PostRock and Silver Creek of approximately 3,800 total net acres in 28 sections. The ownership split in the development area will be 30% PostRock and 70% Silver Creek, with Silver Creek serving as the operator. The trade broadens the Company's leasehold interest to an additional 16 sections. The covered acreage may increase through acquisition after poolings are completed. In connection with the JV, PostRock is selling approximately 1,150 net acres to Silver Creek for $466,000 in cash.
Commenting, PostRock's CEO, Terry W. Carter, said: "We are very pleased to enter into this agreement which will allow us to begin testing the Woodford on the leasehold we have acquired at an accelerated pace, while limiting risk and capital. It also aligns us with an experienced partner whose management and technical team have drilled over 50 horizontal Woodford wells in southeast and south central Oklahoma. If the wells drilled prove as successful as hoped, we can apply the knowledge and experience gained to our remaining Central Oklahoma acreage."
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