The Company signed the agreement with Arrow River Energy LP and CMR Energy LP, both of Houston. TXCO receives a 50 percent working interest in all depths and formations in 174,460 gross acres located in Maverick, Dimmit and Zavala counties of Texas, south, east and mostly contiguous to TXCO's existing acreage block. TXCO also receives 140 square miles (89,600 acres) of recently acquired 3-D seismic data over a portion of the new acreage. TXCO will serve as operator and Arrow River reserves an after-payout, term net-profits interest in new wells drilled on the new acreage.
In exchange, Arrow River and CMR collectively receive a 50 percent working interest in 106,500 acres comprised of three tracts within TXCO's existing acreage block. These include shallow depths to the base of the San Miguel formation under 95,300 acres of the Comanche Ranch lease, shallow depths to the base of the San Miguel under 7,900 acres of the Chittim B lease, and all depths under the 3,300-acre Chittim C lease. CMR, which currently serves as operator on deeper portions of the Comanche Ranch lease, will assume operations on these tracts and all existing shallow wells.
"This transaction will be strongly additive, complementary and synergistic to the Company's Maverick Basin potential," said President and CEO James E. Sigmon. "The new acreage is on established trends currently in play and exposes TXCO to significant additional drilling prospects in our Georgetown, Glen Rose, San Miguel, Olmos coalbed methane and deep Jurassic plays."
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