Houston American Energy has signed an agreement with Plains Exploration and Production to sell its holdings in Karnes County, Texas.

The planned purchase and sale are part of Plains’ $578m cash acquisition of interests in approximately 60,000 net acres in the Eagle Ford oil and gas condensate windows in south Texas.

Under the agreement, the company will sell 2.5% working interest in more than 6,000 gross acres in Karnes County for approximately $1.65m in cash less customary closing costs.

As part of the transaction, Houston American will retain a 1.25% of 8/8’s Overriding Royalty Interest (ORRI) in this acreage.

In addition, the company will retain its 1.25% ORRI on any additional acreage Plains acquires within the prospect area up until 2 April 2012.

The transaction is expected to close during the fourth quarter of 2010, subject to customary closing conditions and adjustments.