Houston Energy believes the first well has a resource potential of 6.6 billon cubic feet (BCF) and 1,296 million barrels of oil (MBO). The well will be drilled to an initial depth of around 11,100 feet and the company’s commitment is around $216,000 to a casing point decision. Drilling is anticipated to be concluded in 30 days after initial spud.
As per the terms of the agreement, the company is responsible for 10% of the costs to drill an initial test well (ITW) to earn an 8.5% after casing point working interest (6.2% net revenue interest). There is also a 10% after prospect payout (APO) back-in working interest due the operator, which would decrease the company’s working interest to 7.65% (5.6% net revenue interest) APO.
Drilling this initial test well is an important step forward in our relationship with Houston Energy and key to our strategy to increase production by leveraging the expertise of our partners, stated Keith Larsen, chief executive officer of U.S. Energy. Depending on the success of this well, we’ll look at additional opportunities to participate in projects with Houston Energy on a going forward basis, he added.
