Anadarko Petroleum Corp. (APC) has granted drilling rights to TXCO Resources Inc. and St. Mary Land & Exploration Co. to explore part of APC's leasehold in the Pearsall and Eagleford natural gas shale plays in the Maverick Basin of Texas, an area in which TXCO already has had success.
APC controls about 349,000 gross acres in the basin. No financial details were disclosed.
Under the joint exploration agreement, TXCO and St. Mary may earn a stake in Anadarko's leases by drilling four horizontal wells in the Pearsall and/or Eagleford formations by the end of this year. TXCO and St. Mary also hold an option to extend the drilling program through the end of 2013, at which time they could earn as much as a 50% stake, equally split, in the acreage.
"The Pearsall shale gas resource play is one of our key growth catalysts," said TXCO CEO James E. Sigmon. "TXCO's initial results in drilling the Pearsall shale have been encouraging, and we believe this unconventional, tight gas formation has great potential to create new production and reserves for TXCO and our two fine partners in this promising joint venture. The Eagleford shale is a major source for hydrocarbons in the Maverick Basin and has the potential of developing into a large resource play."
Once the wells are completed, APC would retain a 50% working interest and would serve as operator. TXCO would operate the drilling and completion of the four proposed wells this year, sharing costs equally with St. Mary. TXCO is preparing to spud the first of these wells this month.
Anadarko's leasehold is located in Maverick, Dimmit, Webb and LaSalle counties, generally south and east of the 708,000 gross acres TXCO holds in Maverick, Dimmit and Zavala counties. The Maverick Basin is considered to hold substantial sandstone reservoirs, but it remains under-explored, according to TXCO.
TXCO Resources, formerly The Exploration Company, has focused on the Maverick Basin for several years, marking one of its earliest successes almost 10 years ago. The independent also explores for oil and gas onshore on the Gulf Coast, in the Marfa Basin of Texas and in the Midcontinent region of Oklahoma.
TXCO reported in March that its proved reserves in 2007 increased sharply through both acquisitions and drilling. Net proved reserves at the end of 2007 were a record 91.8 Bcfe, up from TXCO's estimated proved reserves of 41.4 Bcfe at year-end 2006. Combined with record 2007 oil and gas sales of 7.9 Bcfe, gross reserve additions were 58.3 Bcfe, including 18.5 Bcfe via the drillbit, before acquisitions. TXCO had a 731% all-source reserve replacement rate last year, and its reserve life index rose to 11.5 years, compared with seven years at year-end 2006.
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