Gulf Energy Management's obligations under the agreement include funding 100% of the initial $7.5 million of costs to carry out the joint exploration and development of the project in return for a 65% interest in the Posey Prospect Area. The agreement also provides that Gulf Energy Management receive an 82.5% net revenue interest. Gulf Energy Management's funding obligation is to be allocated among three separate technical phases of the project. At the conclusion of each of the first two phases, Gulf Energy Management may elect to terminate the agreement, thereby reducing its commitments. Complete details of the agreement may be found in the Form 8-K filed today with the Securities and Exchange Commission.
Commenting on the acquisition Jim Denny, President of Gulf Energy Management, said, "The acquisition in the Posey Prospect Area is an opportunistic transaction that adds to and diversifies our existing oil and gas holdings located along the Texas and Louisiana Gulf Coast. Although we are just in the early stages of our Posey Prospect Area coal bed methane development program, we are excited about the potential and believe it provides an attractive opportunity for growth."
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