The deal gives Victory Energy the exclusive right to acquire the oil and gas lease for a period of one year.
The company will have full access to the land and may conduct geophysical or seismic testing of the land to ascertain the potential gas reserves.
The Padre Island gas field is located 15 miles north of Port Isabel, Texas, which was discovered by Gulf Oil in 1960.
Three wellbores are currently shut-in and will be re-evaluated for activation, and these wells were producing 14 million cubic feet per month when they were shut-in in 2002.
One of the wells can be recompleted at 6,000ft, and another can be put on pump to flow gas up the backside.
In addition, there is a four-foot gas sand on water at 1,712ft indicated by well logs and a gas core that has not been previously produced, and a formation test of this sand had immediate pressure of 465psi.
A successful completion of this sand could have potential of 2bcf proved undeveloped reserves of natural gas, the company said.
The optioned property contains three previously producing gas wells and the delivery infrastructure to transport the gas to onshore facilities.
Victory Energy will have a 100% working interest and 75% net revenue interest in this project.
