Calgary-based Triangle Petroleum Corp. made a new joint venture agreement with Fayetteville Shale operating partner Houston-based Kerogen Resources Inc., the company said last week. The expanded joint-venture will build on the 20,000 net acres (34,000 gross) held in Conway, Pope and Faulkner counties, AR, where both companies now hold a 50% working interest.

The joint venture includes a 52 township area of mutual interest (AMI) in Conway, Faulkner, Pope and Van Buren counties, which covers a significant portion of the core producing areas of the Fayetteville Shale play. The agreement is for three years during which time both companies expect to initiate an aggressive drilling program.

In December Triangle outlined initial plans for its Fayetteville program (see NGI, Dec. 25, 2006).

Triangle is obligated to drill and complete one new net horizontal well. Triangle will pay 67% of the capped authorized costs to earn a 50% interest. All future operations under the joint venture between Kerogen and Triangle will be shared equally. The noted drilling commitment is a replacement for a previous drilling commitment on the acreage originally acquired by both companies. Triangle will also reimburse Kerogen for actual land costs of C$458,000.

Currently, one vertical test Fayetteville well has been drilled in Conway County on a location covered by a recently acquired 12-square-mile proprietary 3-D seismic survey. An adjacent second 12-square-mile survey has been shot and is being processed and merged with the first. Kerogen, the operator, advises that completion of this vertical test well remains a high priority. This completion will be beneficial for providing key reservoir parameters needed to assist both Kerogen and Triangle in horizontal drilling programs in the AMI.

"Triangle and Kerogen will actively work with other industry parties to facilitate drilling by pooling, acreage purchases, farm-in and farm-out strategies all designed to support near-term production goals," said Ron Hietala, president of Triangle's operating companies. "The additional scope of our Fayetteville program with Kerogen will contribute to our primary goal of establishing Fayetteville production."

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