Denver-based Gasco Energy gained a partner in its Riverbend Project in the Uinta Basin of Utah after privately held NFR Energy LLC agreed to participate in a 30-well program in return for an interest in some of the wells. Once the program is completed, NFR will earn 67% of Gasco’s interest in 1,200 gross acres.
NFR paid Gasco $19 million in cash, and it also will earn two-thirds of Gasco’s interest in each 40-acre drilling location, 100-feet below total depth drilled, in exchange for paying its share of the costs. Also included is a per-well location fee paid to Gasco as operator of the project. The agreement covers substantially all of Gasco’s 2007 drilling program, retroactive for certain wells drilled year-to-date, including 13 operated wells (gross) spudded. Not included in the deal are Gasco’s federal No. 14-31 Mancos test and two Wilkin Ridge area wells drilled this year.
The contract area includes Gasco’s leasehold position in portions of Uinta County, UT, and the program will target Wasatch, Mesaverde and Blackhawk development locations. Gasco also may continue to independently develop the acreage. All together, Gasco owns or controls about 124,000 gross, or 75,000 net, acres in the Uinta Basin.
Gasco CEO Mark Erickson said NFR will help the company “continue to exploit the stacked pay zones under our leasehold.” He said the 30-well program “represents a small fraction of our 75,000 net acres in the Uinta Basin…”
NFR “brings additional drilling and operating experience as well as capital to our Utah project,” he said. “We can now ensure that we can continue drilling ahead in Utah with three rigs into 2008. The additional activity allows us to capitalize on economies of scale and further drive down drilling and operating costs while proving up our large leasehold position.”
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