The company said that this farmout will allow the company to develop a portion of its lease acreage that was otherwise subject to continual drilling obligations or primary lease term expirations.

If alloptions in the farmout agreements are exercised, TARH will farmout 50% of its interest in approximately 6,075 leasehold acres prospective for the Eagle Ford and Buda formations.

According to the company, all of the consideration in the transaction is in the form of a drilling carry.

The drilling carry will fund the majority of the company’s 2011 South Texas capital expenditure budget.

Texas American Resources Company is a privately-held independent energy company headquartered in Austin, Texas.