Lexington Resources Acquires First Barnett Shale Leases
Lexington Resources reports that it has closed the acquisition of its first Barnett Shale leases in the Dallas Fort Worth Basin of Texas. Under an existing agreement, the Company has now acquired approximately 2,325 acres of Barnett Shale gas targeted leases, located in Jack and Palo Pinto Counties, Texas, from Pathways Investments, L.P. ("Pathways"), for a total cost of $1,107,000.
This initial acquisition from Pathways has now allowed the Company to diversify its existing holdings from its Arkoma Basin based Coal Bed Methane gas targeted leases, located in Oklahoma, to the Barnett Shale gas play located in Texas. Part of the proceeds from the Company's recently announced funding were used to acquire the Barnett
Shale leases as well as provide drilling capital for its new planned drilling initiatives in the Dallas Fort Worth Basin. The acquisition is expected to provide the Company with up to 16 additional drilling sites with access to existing pipeline networks.
The securities issued by the Company pursuant to its recently announced funding have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
The Company announced in June that it had entered into a definitive agreement to acquire a 75% working interest in approximately 3,000 net leasehold acres located in Jack, Wise, and Palo Pinto Counties in the State of Texas as part of a 20 plus Barnett Shale gas well horizontal drilling venture with Pathways, comprised of Texas based Hunt family entities. Amendments to the original definitive agreement provide Lexington with a greater 75%-100% working interest in wells to be drilled and increased initial acreage of up to 3,600 Barnett Shale targeted acres in Jack and Palo Pinto Counties in the State of Texas with the potential to drill up to 22-26 wellbores. The Company's contract operator, Oak Hills Drilling and Operating, LLC. ("Oak Hills"), becomes the Operator for the project and contributes at least one drilling rig until project completion. Oak Hills is currently operating as a contract drilling operator of horizontal gas wells in the Barnett Shale.
From proceeds raised in the current financing, the Company will also repay outstanding debt of approximately $1.2 million. In addition, the Company will repay approximately $0.96 million in capital owed for drilling advances to Wagnon Lease equity drilling partners. The result will allow Lexington's back-in working interest in its four Wagnon Lease wells to vest. The Company's Wagnon Lease working interests, in addition to the Company's other current Arkoma Basin production, is expected to provide Lexington with an estimated $1 million in annual gross gas revenues from its current Arkoma Basin well interests.
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