Kentucky USA Energy, Inc. (the "Company") on Thursday announced that the Company has entered into a joint venture (JV) agreement with 7921 Energy LLC to develop natural gas and oil prospects in, above and below the New Albany Shale formation on new acreage in Todd, Muhlenberg and Christian counties in western Kentucky where the Company recently acquired farm-out rights from Thomasson Petroleum Enterprises, Inc. (TPE).
The additional farm-out acreage is adjacent to the Company's existing leasehold property and the wells to be drilled under this JV agreement will utilize the Company's field gathering system that is currently in final phases of being connected to the Olive Grove Gathering & Treatment Facility owned by Seminole Gas Company, LLC.
Under the terms of the JV agreement, 7921 will have the right to participate with the Company in drilling and developing up to 40 wells on the newly acquired farm-out acreage. Phase 1 under this JV agreement will consist of drilling and completing ten (10) wells. Under the terms of the JV, 7921 will earn a 50% working interest in each of the first ten wells, which translates to a 37.5% net revenue interest, in exchange for providing the Company with $1,675,000 to acquire its interest in the Phase 1 wells.
Andrew Golden, President of 7921 Energy stated, "We have known the management of Kentucky USA for many years. That along with their proven track record in western Kentucky makes this an outstanding opportunity for both companies."
"This is an exciting opportunity for us to work together with 7921 on a new project in the New Albany Shale. In addition, on this new acreage from TPE, we have the opportunity to develop and produce all horizons above and below the New Albany Shale," said Steven Eversole, CEO of Kentucky USA Energy. "We feel that this partnership will allow us to capitalize on our experience to grow our portfolio of natural gas wells, to increase our reserves, and, we expect, to bring these wells to production as early as this year. This is yet another step to grow our Company and enhance shareholder value."
Headquartered in London, KY, Kentucky USA Energy, Inc. engages in the acquisition, exploration, and development of oil and natural gas resource properties, with a primary focus on New Albany shale gas in the Illinois Basin in western Kentucky. The Company is a growing, exploration stage independent energy company with, it believes, the experience and technological expertise to exploit the gas resources on its properties in the Illinois Basin's New Albany Shale.
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