Plans by Houston American Energy Corp. to build a portfolio of prospects in an overshadowed area of the Permian Basin are advancing with funding by the CEO and a principal shareholder.
The Houston-based independent said Friday it had monies in hand to complete an agreement to acquire a 20% stake in a 5,871 gross-acre block in the Northwestern Shelf of the San Andres.
With the deal, Houston American increased its position in the Permian and secured participation rights in an area of mutual interest, which altogether covers 20,367 gross acres.
CEO Jim Schoonover and a principal shareholder provided a loan to Houston Energy with warrants. Financial details were not disclosed.
"As evidenced by my commitment and that of our principal shareholder to provide financing for this acquisition, we are excited about the potential of this new acreage position,” Schoonover said. “Based on conversations with the operator, we expect drilling of an initial well on the acreage to commence by year-end 2019."
About two years ago, Houston American paid $1.1 million to Founders Oil & Gas III LLC to acquire a 25% working interest in about 800 acres in the West Texas county of Reeves, in the heart of the Permian. The independent has a property mix of assets with a focus on the Permian, Louisiana and in Colombia.
The San Andres fields for decades have produced from the Permian’s Central Basin Platform and the Northwestern Shelf, but the Delaware and Midland sub-basins have overshadowed gains in other formations. However, Permian pure-play Ring Energy Inc. is a big player in the region.
In addition, Energy Hunter Resources Inc. cut a deal last year to nearly double the size of its position in the San Andres. And to expand gathering from the fields, Stakeholder Midstream LLC and Santa Fe Midstream LLC two years ago separately began building out their natural gas and oil systems.