American Exploration and Avere Energy have entered into a Letter of Agreement enabling Avere to farm-in to the Company's Haynesville acreage in Mississippi.
Avere will pay 20% of the costs of the initial deep gas well (an estimated US $2 million net to Avere) to earn a 20% working interest in the play. It must also make payments aggregating US $850,000 to American Exploration Corp., including a non-refundable US $75,000 deposit.
American Exploration signed an agreement with Mainland Resources Inc. in October 2009, whereby the two companies pooled their Mississippi lands totaling 13,325 acres. In this Farm-in agreement. Mainland Resources was named Operator of the project area and they agreed to pay 80% of the initial well (drilling and completion costs) for a 51% working interest in the well and total project area. American Exploration was to pay 20% of the initial well (drilling and completion costs) to earn a 49% working interest in the well and total project area. The additional costs (ie. drilling, completions etc.) for oil and gas activities on the 13,225 net acre project area will be split on a 49% / 51% basis between American and Mainland respectively.
Subsequent to this agreement, Mainland signed an agreement with Guggenheim Energy Opportunities LLC, whereby Guggenheim would pay 10% of Mainland's working interest, to earn a 5.1% net interest in the total project area.
With the new Avere agreement dated January 15th, whereby Avere pays 20% of the drilling costs, American will have no capital exposure in the initial well to earn a 29% revenue interest in the project.
Company President Steve Harding stated, "We are very pleased to bring Avere into the Partnership. They have a strong technical focus and will complement the alliance we currently have with Mainland and Guggenheim. Should we consummate this agreement, American will be in the envious position of earning a 29% interest in what could be a giant multi-TCF gas field, without bearing any financial exposure."
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