The first two horizontal wells of twelve prospective wells will target the Avalon shale portion of the Bone Spring zone, in which 67 wells have been completed till date.
In order to earn 50% working interest, Concho will pay 62.5% of the cost to drill and complete the two initial wells.
The joint venture of which Mexco is a member, will pay 37.5% of the cost to drill and complete two initial wells. It will retain 50% working interest and 50% net revenue interest in the wellbores.
Mexco, which has about 0.56% working interest in the development, is participating in other horizontal well developments on acreage in the Bone Springs formation of Lea County, New Mexico at present.
Cimarex Energy, in June 2013, announced plans to drill a third well on a 160 acre unit in this formation. Mexco owns .0469% working interest in the prospect.
In August 2013, Concho began drilling a second well on a 640 acre unit, in which Mexco has .1875% working interest.
The company has various interests in 18 horizontal wells and 138 vertical wells in Lea County, New Mexico as a whole.
Mexco is also participating in the development of two units containing about 1,000 acres in Winkler County, Texas. At present OGX Operating is drilling two horizontal wells in the Penn Detrital formation of the F A Hogg field.
Two other horizontal wells on this acreage are currently producing from this formation. Mexco’s working interest in all four wells totals .4167%.
