NFR Energy, LLC, a private company created to invest in worldwide oil and gas exploitation opportunities, has agreed to participate in 30 wells drilled by Gasco in 2007 and into early 2008. The terms of the agreement allow for NFR to earn two-thirds of Gasco's interest in each 40-acre drilling location, 100 feet below total depth drilled, in exchange for paying its share of the costs. Also included is a per-well location fee paid to Gasco as operator of project.
The agreement covers substantially all of Gasco's 2007 drilling program, retroactive for certain wells drilled year-to-date, and as such includes 13 gross operated wells spudded (3.5 net to Gasco's interest / 6.9 net to NFR) in 2007. Not included in the deal are the Federal #14-31 Mancos test and two Wilkin Ridge area wells drilled in 2007. At signing, Gasco received cash consideration of $19.0 million for the interest in the aforementioned wells and in wells expected to be spud prior to August 1, 2007.
PGasco Energy, Inc. today announced that it has entered into a definitive agreement with a subsidiary of NFR Energy, LLC whereby the subsidiary will participate in a 30-well drilling program in Gasco's Riverbend Project.
General Terms of the Agreement: -- Contract Area consists of Gasco Energy's leasehold position in portions of Uintah County, Utah. It does not include assets in California, Nevada or Wyoming. -- Program targets Wasatch, Mesaverde and Blackhawk development locations. -- Gasco can continue to independently develop its acreage. -- Upon completion of the 30-well program NFR will have earned 67% of Gasco's interest in 1,200 gross acres in the Riverbend Project.
Commenting on the new financial and drilling partner, Gasco CEO Mark Erickson said: "We are pleased to have a well-funded partner who can help us accelerate our development of the Riverbend Project. In addition, NFR brings additional drilling and operating experience as well as capital to our Utah project. We can now ensure that we can continue drilling ahead in Utah with three rigs into 2008. The additional activity allows us to capitalize on economies of scale and further drive down drilling and operating costs while proving up our large leasehold position. We own or control approximately 124,000 gross / 75,000 net acres in the Uinta Basin, yielding a very large number of potential locations. Today's agreement with NFR provides Gasco with a way to continue to exploit the stacked pay zones under our leasehold. The 30-well program represents a small fraction of our 75,000 net acres in the Uinta Basin and is consistent with our stated 2007 drilling Capex of approximately $40 million. We are also provided the flexibility to proceed with additional Riverbend drilling plans independent of this agreement."
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