Houston-based exploration and production company EP Energy Corp. said Thursday it has tapped private investor Wolfcamp Drillco Operating LP to form a 150-well joint venture (JV) in the Permian Basin.
The program will target the Wolfcamp interval and consist of two 75-well tranches in EP Energy's acreage in Reagan and Crockett counties, TX. Wolfcamp Drillco will invest $450 million in the JV, or about 60% of drilling, completing and equipping costs related to the program, while EP Energy will retain operational control of the wells.
The investor will earn a 50% working interest in the JV wells; once it has achieved a 12% internal rate of return its interest will revert to 15%.
The first wells included in the JV began production earlier this month, the companies said.
"We are pleased to announce our Permian drilling joint venture, which will enable us to accelerate the development of our largest strategic asset in a balance sheet friendly manner," said EP Energy CEO Brent Smolik. "During the past year, we significantly increased the value of our Wolfcamp asset with improved well performance, a lower cost structure and reduced royalty rates. This new capital commitment further improves and illuminates the acreage value of our Wolfcamp program."
Wolfcamp Drillco is managed and owned by affiliates of Apollo Global Management LLC, which "beneficially own approximately 45% of EP Energy's common stock and have representatives on its board of directors," according to Thursday's announcement.