Lexington Resources forms CBM Drilling JV

Lexington Resources has entered into a definitive exploration agreement with Dylan Peyton, LLC and Avatar Energy, LLC, both of Dallas, Texas to jointly develop the Company's Coal Bed Methane ("CBM") targeted leases in Oklahoma. Under the joint venture, the Company will contribute its current inventory of Arkoma Basin Oklahoma CBM leases to jointly develop gas-producing wells with Dylan Peyton, LLC on a 50/50 equal working interest basis. Avatar Energy, LLC will become the operator for the project and contributes at least one drilling rig capable of working depths associated with the Company's lease targets also conducive to horizontal drilling. The Company's operating subsidiary, Oak Hills Drilling and Operating, LLC ("Oak Hills") will be utilized for well completion and service, as well as geological and engineering work associated with the joint exploration. The joint venture plans continuous drilling to begin on or before the end of March, 2006 on CBM, Caney Shale, Woodford Shale, Booch Sand, and other shallow sand gas targets identified by the Company's geological research.

The joint venture provides the ability for the Company to drill continuously and simultaneously on its leases in both the Arkoma Basin, Oklahoma through Avatar Energy, LLC, and the Barnett Shale in Texas through Oak Hills; the Company is concurrently drilling in the Barnett Shale on the Company's Oliver Lease in Tarrant County, Texas. The Company maximizes development potential of its current Arkoma Basin lease inventory through continuous development, which prevents lease expiration. It also decreases drilling risk via the 50/50 working interest partnership. The development includes hands on input by the Company into all aspects of the development cycle from target geology to pipeline completion through its close working association with designated operator, Avatar Energy, LLC. Lexington maintains its 100% working interest in Texas based Barnett Shale property development.

Management estimates the Company's extensive CBM inventory is capable of 70-100 well bores with current acreage. New possible leases for acreage within the area of mutual interest in Hughes and McIntosh Counties, Oklahoma will also be acquired on a 50/50 equal working interest basis.

The Company plans both vertical and horizontal drilling to begin on or before the end of March 2006, first targeting the Company's South Lamar CBM Prospect located in Hughes County, Oklahoma. The Company receives up to $600,000 as payment for prospect acreage assignments pursuant to the 50% working interest participation by Dylan Peyton, LLC.

Innovative technology is currently available to make CBM drilling and completions more economic in the face of rising service industry costs. New drilling and fracing techniques are being successfully applied to CBM drilling in the Arkoma Basin that increase the economics of the play by deceasing drilling costs while increasing production.


Our Privacy Pledge

Most Popular Articles

From the Career Center
Jobs that may interest you
Project Manager
Expertise: Engineering Manager|Project Engineer
Location: Columbia, SC
Project Manager
Expertise: Engineering Manager
Location: Atlanta, GA
Project Manager
Expertise: Engineering Manager|Project Engineer
Location: Raleigh, NC
search for more jobs

Brent Crude Oil : $51.78/BBL 0.77%
Light Crude Oil : $50.85/BBL 0.83%
Natural Gas : $2.99/MMBtu 4.77%
Updated in last 24 hours