Under the agreement, Continental is to acquire a 50 percent working interest in the block for an undisclosed sum with closing scheduled to occur on or before Friday, April 21, 2006. Continental will serve as operator. A re-entry to test the Barnett and Woodford Shales is expected to begin during the second half of this year with a second well planned for late 2006.
TXCO acquired a 100 percent working interest in oil and gas leases covering approximately 140,000 gross acres (135,000 net acres) in Presidio and Brewster counties of West Texas in late 2005. The block is approximately 250 miles northwest of TXCO's core, Maverick Basin acreage. Lightly explored, the Marfa Basin is geologically similar to other, gas-prone areas along the Ouachita Overthrust, such as the Fort Worth and Arkoma basins. It has excellent geochemical characteristics; thick shales ranging from 400 feet to 1,200 feet thick; high gas-in-place potential; is organically rich with good total organic carbon; and a thermally mature gas window. It is prospective for the Barnett and Woodford Shales and other plays.
Continental Resources is an independent oil and natural gas exploration and production company with operations in the Rocky Mountain, Midcontinent and Gulf Coast regions of the United States. The firm is focused on large, repeatable resource plays where horizontal drilling, advanced-fracture stimulation and enhanced recovery technologies provide the means to economically develop and produce oil and natural gas reserves from unconventional formations, including projects targeting the Bakken Shale, New Albany Shale, Lewis Shale, Floyd Shale and Woodford Shale formations. At Dec. 31, 2005, Continental's estimated proved reserves were 116.7 million barrels of oil equivalent. For the year ending Dec. 31, Continental generated revenues of $375.8 million with operating cash flows of $265.3 million.
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