Austin Exploration, an Oil and Gas Company with wells in Colorado, Texas, Mississippi and Kentucky, has formed a Joint Venture with Pierre Energy Partners to develop its Pierre Shale prospects at the Company’s 100 per cent controlled 11,560 acre oil and gas property in Fremont County, Colorado.
Austin and Pierre Energy have agreed to terms for two Pierre wells to be drilled back-to-back in April and May.
Pierre Energy will carry Austin on the drilling costs to earn 50 per cent of the oil production from C18#3 and C18#4 exploration wells. Austin will pay for the completion costs of the wells in the event of a discovery. In connection with the development of the Pathfinder Pierre Prospect Denver-based Craig Energy has been engaged to provide drilling services to the Joint Venture.
Founded in 1981, Craig Energy provides construction, drilling, and water management services to its customers across basins including the Niobrara in Colorado, and the Bakken in North
“This agreement effectively advances the development of our Pierre shale opportunity without up-front cost or risk to Austin. We have worked with several companies on our Colorado property and this company drilled the last Pierre well on our Colorado property and performed a safe, efficient, cost effective and overall outstanding job and this provides us with great confidence that they are an efficient and superior partner to other interested parties,” said Guy Goudy, COO of Austin Exploration.
The two companies are also in advanced negotiations for a long-term partnership with the objective of a continuous drilling program for the property. This next phase of this program would see Pierre Energy drilling ten wells in exchange for a 50 per cent ownership of the Pierre formation over the 11,560 acre property. Pierre Energy would earn this 50 per cent upon drilling completion of the tenth well and until then would earn 50% of Austin’s NRI for each well bore.
After the ten wells are completed in phase two, Pierre LLC, will drill a minimum of two wells per year and Austin will complete the wells for production cash flow.
Dr Mark Hart, Austin’s Managing Director & CEO, commented that “This is a great deal for Austin and a win-win for all involved. We now have a highly experienced and high calibre drilling partner for our Pathfinder Pierre property – which lies in the second oldest producing oil region in the United States. This partnership means we can drill more wells and significantly ramp up production when oil prices return to normal status and continue the Company’s growth. We are focused on growing shareholder value and doing so without raising equity in this depressed oil price environment.”
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