Under the terms of the farmout agreement, the company has farmed in the right to explore for natural gas and oil, at no upfront cost to the company, in 33 sections (21,000 acres), with current leases totaling approximately 16,000 gross acres. The farmor reserves an overriding royalty interest equal to the difference in lease burdens and 25%, thereby turning to the company a 75% net revenue interest. Goodrich will own a 100% interest in the initial well drilled in each of the 33 sections and the Farmor shall have the right to participate for up to 50% on subsequent wells drilled in each section or unit. To maintain the rights to the entire acreage block, the company must drill one well every 90 days from completion date of the previous well.
Commenting on the transaction, Robert C. Turnham, Jr., Goodrich's President stated, "We are pleased to announce this agreement, which expands our gross Cotton Valley trend acreage position by approximately 11% to 160,000 gross (103,000 net) acres, which if fully prospective, would add up to 400 additional vertical well locations on 40 acre spacing. We remain focused on developing our existing acreage, but will continue to add to our drilling inventory when opportunities arise."
Goodrich Petroleum is an independent exploration and production company listed on the New York Stock Exchange. The majority of its oil and gas properties are in Louisiana and Texas.
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