The company will acquire and develop an operating working interest in about 23,000 net mineral acres of oil, gas and mineral leases that cover the Bakken and deeper formations in the East Poplar Unit and the Northwest Poplar Field in Roosevelt County (Poplar Field).
Vaalco is expected to acquire a 65% working interest in the Bakken and deeper rights of the Poplar Field.
The company will operate its deep rights in the subject acreage in return for cash consideration at closing and its funding of 100% of the cost to drill three wells by the end of 2012 at a cost to Vaalco of about $5m per well.
Magellan will retain its current ownership for all formations above the Bakken, including the currently producing Charles and Tyler formations, and will retain the remaining 35% of the Bakken and deeper rights.
In May this year, Vaalco acquired a 70% working interest in 5,214 acres in Sheridan County, Montana, which is adjacent to Roosevelt County.
