The deal calls for Apache to pay 100 percent of the cost to drill the first well in exchange for a 66.6667-percent working interest. TME owns 15 percent of two joint ventures that each own a 1/20 of 1 percent over-riding royalty on the total acreage block.
Depending on the results from the 1st well, Apache may elect to drill a second well and pay 100 percent of the associated drilling cost. In addition, Apache will assume its share of royalty obligations to third parties.
Upon approval of this transaction by regulatory authorities, Apache will become operator of VIC/P45 and begin to select the drilling location for the first well. The well is slated for drilling once a suitable rig can be contracted.
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