Chesapeake owns 75,000 acres in Southern Reeves County in the state of Texas.
As per the agreement, Clayton Williams will drill up to 20 earning wells in the first year and will also have an option to drill an additional 20 earning wells per year during the next four years to earn all of Chesapeake’s acreage.
CWEI will carry one-quarter of the costs in earning wells, which will lead to CWEI gaining interest in 640 net acres.
Clayton Williams said the subsequent wells in an earned area will be drilled on a heads-up basis and it will receive credit towards its annual drilling obligations for drilling more than 20 earning wells in any year.
