Torchlight Inks Farmout LOI in Tx.
Torchlight has signed a Letter of Intent to Farmout 50% of its Working Interest in the 1080 +/- acre Marcelina Creek block in Wilson County Texas. The Farm-in Partner is Hockley Energy of Houston, Texas. The transaction calls for cash payments and a carry on 4 wells. The transaction is expected to close in November and it is subject to final Due Diligence and the signing of the Definitive Agreement.
Upon closing, Torchlight and Hockley expect to accelerate the drilling program and drill two vertical wells and two horizontal wells in early 2012. Although there are several target formations, including the Austin Chalk, Eagle Ford, Buda, Georgetown, and Olmos, we will likely be targeting the Buda formation for completion. We have the ability to drill 12-14 vertical wells penetrating all zones and over 30,000 feet of horizontal wells on this property. Vertical Buda wells in the area typically IP at 100 to 350 BOPD and have expected EURs of 100,000 barrels of oil.
When asked about the arrangement, Tom Lapinski, CEO stated, "We are excited about partnering with Hockley Energy on this first Farmout agreement. This partnership will form the basis of future transactions between the two parties on other parcels sourced by Torchlight for the benefit of both parties. Hockley, like Torchlight, believes that in order to grow companies, you have to be aggressive in your drilling programs and continuously increase net BOPD. We expect that together we will be increasing the drilling activity in Marcelina Creek immediately."