Toreador and Hess have signed a definitive agreement, under which Hess may become co-holder of Toreador's exploration permits in the Paris Basin, France, which represent approximately 1 million gross acres (of which 680,000 acres awarded and 360,000 acres pending).
The partnership combines Toreador's position covering the Paris Basin shale oil resource with Hess' position as a leading shale oil producer in the United States along with its international operating and financial strengths.
Craig McKenzie, President and CEO of Toreador, said, "We are excited to have chosen Hess as our partner in the Paris Basin. The agreement is a significant step in the execution of Toreador's growth strategy and a strong source of value for our shareholders."
Greg Hill, President of Worldwide Exploration and Production of Hess said, "We are very pleased to join Toreador in France. The technology we use to produce oil in U.S. unconventional plays will have a direct application to the Paris Basin. Hess views this opportunity as an area of future growth for Hess, our partner and the industry in France."
Under the terms of the agreement, Hess will make a $15 million upfront payment and invest up to $120 million in fulfillment of a two phase work program. Phase 1 will consist of an evaluation of the acreage and drilling six wells, with the first well planned for later this year. Depending on the results of Phase 1, Phase 2 is expected to consist of appraisal and development activities. Following Phase 2, provided contractual obligations have been met, Hess will hold a 50 percent share of Toreador’s working interest in the covered permits.
The transaction is subject to French governmental approval.
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