TXCO Resources has signed an exploration agreement with Anadarko Petroleum to drill the Pearsall and Eagleford shale gas resource plays on Anadarko's 349,000 gross acres in the Maverick Basin of southwest Texas.
In addition, TXCO has entered into an agreement with St Mary Land & Exploration Company whereby St Mary will participate with TXCO in the development of the Anadarko acreage.
Under the joint exploration agreement, TXCO and St Mary can earn certain interests in Anadarko’s lease block by drilling four horizontal wells in the Pearsall and/or Eagleford formations by year-end 2008. TXCO and St Mary have the option to extend the drilling program through year-end 2013, at which time TXCO and St Mary could earn as much as a 50% working interest in the acreage that will be split equally.
After the wells are completed, Anadarko would retain a 50% carried working interest and serve as operator. TXCO will operate the drilling and completing of the four proposed 2008 wells, sharing costs equally with St Mary. TXCO is preparing to spud the first of these wells in April 2008.