Under the agreement, the farmee may spend up to $1.05m on exploration and development of the San Miguel formation to earn a maximum of 42.50% working interest.
The farmee may earn an initial 25% of Eagleford’s working interest in the San Miguel by paying 100% of the costs to drill, complete, equip and perform an injection on a vertical test well to a depth of about 3,500ft.
After the performance of this well, the farmee may increase its working interest to 50% of Eagleford’s working interest by spending the entire $1.05m on additional operations on the San Miguel in a good faith effort to produce hydrocarbons.
Eagleford’s Matthews and Murphy leases are situated in northeast Zavala County, Texas, and is part of the Maverick basin of Southwest Texas.
