Australia’s Austin Exploration Ltd. has struck an agreement for Houston-based Halcon Resources Corp. to participate in its Birch Project in the northeastern Eagle Ford Shale. Halcon’s founders are Eagle Ford veterans, having pioneered the play with a previous company.

The acreage is in Burleson County, TX, north of Houston. Halcon is to earn a 70% interest in the Birch Project by funding 100% of the costs of the next three Eagle Ford wells in the play. The cost for the three horizontal wells is projected to be US$24-27 million, or $8-9 million per well, according to Austin. The agreement covers 4,221 acres.

Capital, production and profit for all subsequent wells drilled on the acreage are to be shared on the basis of 70% Halcon and 30% Austin. Austin is also to receive a US$1.9 million upfront payment for an 18-month exclusive drilling option during which time the farm-out wells must be drilled, Austin said. Also included in the deal is a 70% interest in Austin’s B1 Krueger and B3 Schwartz Galbreath wells and associated acreage. Due-diligence for the purchase of these wells is expected to be completed this August.

“This is a major vote of confidence in Austin’s Eagle Ford acreage and in our team’s ability to identify high-potential assets in key oil regions,” said Austin Chairman Richard Cottee. “Halcon is a proven operator with significant knowledge and expertise specific to the Eagle Ford Shale formation.”

Halcon senior executives are some of the same who led Eagle Ford pioneer Petrohawk Energy Corp. (see Shale Daily, Aug. 23, 2012), which was sold to Australia’s BHP Billiton Ltd. for north of $12 billion two years ago (see Shale Daily, July 18, 2011).

Austin has a portfolio of oil and gas assets in the United States. In 2010 it shifted its core focus toward unconventional shale exploration and production. The company has established a presence in two U.S. oil and gas basins and controls more than 11,000 acres in Colorado in the Niobrara Shale and more than 5,000 acres in the Eagle Ford Shale and the Austin Chalk (see Shale Daily, April 13, 2011). The company has producing oil and gas wells in Colorado, Texas, Mississippi and Kentucky.

“The financial benefit to Austin from the Birch farm-out is hugely significant. First, we continue to share the benefits of developing a world-class Eagle Ford Shale asset; second, Austin can concentrate our efforts on developing our much larger prospect in the Niobrara, which is already well advanced and has proven commercial hydrocarbons,” Cottee said.