The expanded joint venture will build on the 20,000 net acres (34,000 gross acres) currently held in Conway, Pope and Faulkner Counties, Arkansas where both companies now hold an equal 50% working interest. The new joint venture includes a fifty-two township Area of Mutual Interest ("AMI") in Conway, Faulkner, Pope and Van Buren Counties, which covers a significant portion of the core producing areas of the Fayetteville. The term of this agreement is for three years during which time both companies expect to initiate an aggressive drilling program.
Under the terms of this new joint venture agreement, Triangle is obligated to drill and complete one new net horizontal well. Triangle will pay 67% of the capped AFE costs to earn a 50% interest. All future operations under the joint venture between Kerogen and Triangle will be shared on an equal basis. The noted drilling commitment is a replacement for a previous drilling commitment on the acreage originally acquired by both companies. Triangle will also reimburse Kerogen for actual land costs, which total $458,000.
Currently, one vertical test Fayetteville well has been drilled in Conway County, on a location covered by a recently acquired 12 square mile proprietary 3-D seismic survey. An adjacent second 12 square mile proprietary 3-D seismic survey has been shot and is currently being processed and merged with the first survey. Kerogen, the operator, advises that completion of this vertical test well remains a high priority. This completion will be beneficial for providing key reservoir parameters needed to assist both Kerogen and Triangle in horizontal drilling programs in the AMI.
"Triangle and Kerogen will actively work with other industry parties to facilitate drilling by pooling, acreage purchases, farm-in and farm-out strategies all designed to support near term production goals" commented Ron Hietala, President of Triangle's operating companies. "The additional scope of our Fayetteville program with Kerogen will contribute to our primary goal of establishing Fayetteville production".
The Company also reports that Mark Gustafson, Chairman and CEO, and Andy Prefontaine, Land Manager, are presenting at the Canaccord Adams Global Energy Conference in Miami on Wednesday, October 24.
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