EP Energy and Tesoro have established a joint venture (JV) to drill 60 wells in the Uinta basin in Utah, US.
Texas-based midstream energy company, EP Energy owns 173,110 net acres in Duchesne and Uinta Counties in the Uinta Basin.
A total of 60 wells will be drilled by the JV for the oil and gas development in the Altamont field with the first wells planned to commence production from July.
As per the terms of the deal, EP Energy will have an average working interest of nearly 80% in the joint venture wells.
EP Energy chairman, president and CEO Brent Smolik said: "In the Altamont field we have a deep inventory of high-return drilling opportunities. This joint venture will enable us to significantly increase the well-level returns and capital efficiency of our program.
"We plan to keep two rigs active in the Uinta Basin and look forward to building a long-term relationship with Tesoro, an in-basin refinery partner."
EP Energy which will retain operational control of the JV assets will have a net share of capital at around $64m in the Uinta Basin drilling JV.
The companies have also signed a multi-year crude oil supply deal for the supply of yellow and black waxy crude oil to Tesoro's Salt Lake City refinery.
Tesoro chairman, president and CEO Greg Goff said: "This agreement with EP Energy is an important step to further enhance our integrated value chain in the Rockies by supporting the growth of waxy crude oil production in the Uinta Basin, and allowing us to secure additional supply of this advantaged crude oil to further optimize the operation of our Salt Lake City Refinery.
"We believe this investment in crude oil production in Utah is good for our shareholders, our communities and for the State of Utah as it supports economic development in the region."
Tesoro which will purchase all the oil produced by the JV wells will offer a capital carry in return of a 50% working interest of EP Energy in the joint venture. Currently, EP Energy's average working interest in the joint venture wells is nearly 80%.
Drilling in the Uintah Basin, Utah, USA. Photo: courtesy of Chovee/Wikipedia.org.