PetroQuest Energy Inc. and Midstates Petroleum Co. Inc. have formed a joint venture (JV) to develop Midstates’ oily Fleetwood project in central Louisiana.

PetroQuest acquired a 50% stake in the Fleetwood project for $24 million, made up of $10 million cash and $14 million to be paid in future drilling, completion and lease acquisition costs. The company is getting an average 37% working interest in a 30,000-acre leasehold and has obtained exclusive rights, along with Midstates, to a 200-square-mile proprietary 3D survey, which has generated several conventional and shallow nonconventional oil-focused prospects, said PetroQuest.

The company will serve as operator of all but one of the drilling projects. The companies will partner to develop these Lower Oligocene and Eocene oil reservoirs. PetroQuest plans to drill two wells within the project area this year.

“[We]…have significant experience levels in this trend and have been directly involved in large Wilcox/Eocene oil discoveries,” said PetroQuest CEO Charles Goodson. “The opportunity to combine our resource project expertise of horizontal drilling and hydraulic fracturing, on another substantial acreage footprint like our tight sands horizontal Cotton Valley trend, draws us to this area.”

Midstates acquired the Fleetwood 3-D seismic data in 2012 and, after reprocessing the data, has identified more than 12 prospects and leads. It estimates that the gross unrisked resource potential of the area, which includes 30,000 acres under lease, exceeds 300 million boe.

“We have been excited about the organic growth opportunity this area possesses for quite some time but have been focusing our capital in our Midcontinent region,” said Midstates interim CEO Peter Hill. “This arrangement with PetroQuest, a well-respected and experienced Louisiana operator, is an important next step in our effort to unlock the value we believe exists in the area and offers Midstates’ shareholders exposure to significant exploration upside at minimal to no capital cost.”