Eureka announced completion of an option agreement to acquire 3,975 net acres in the Burleson and Washington counties, Texas. The acreage lies within the eastern liquids-rich fairway and potentially is within the gas-condensate window of the Eagle Ford shale.
The Eagle Ford shale in the Brioche Project area is typically some 250 feet thick and dips gently to the Southeast. It ranges in depth from 10,500 to 12,000 feet and displays the geological prerequisites seen in our existing Eagle Ford project areas.
The Brioche Project area is located in the northeast part of the Eagle Ford trend some 70km Northeast of Eureka's Pan de Azucar (Fayette Co.) acreage and about 200km Northeast of Eureka's Sugarloaf AMI (Karnes County) acreage.
Several vertical wells have been drilled in the general Brioche Project area – most of which date from the 1980s Austin Chalk exploration boom. These wells typically produced up to 50,000 barrels of oil along with up to 1.5 BCF of gas and are likely sourced from the underlying Eagle Ford shale. The chalk is expected to provide a secondary exploration target.
The option has been secured by payment of a non-refundable US $1 million deposit. The all up cost for the lease land is US $2,000 per net acre for a 75% NRI in 3 year leases. The option fee will be deducted from the total purchase price which must be paid by 1 May 2011. Eureka will fund the cost of the acquisition by an equity raising.
Eureka intends to develop the Brioche Project by repeating the strategy which has been successfully implemented at Pan de Azucar; firstly completing a geological review and then seeking to farm-out or pool the project assets to reduce capital costs of the initial development.
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