Exterra has signed an LOI to acquire 640 acres in the Barnett Shale. The assets have current net production of $22,000 per month. The horizontal Barnett Well, which is producing the majority of the revenue, has tremendous growth potential. Only one third of a 3000 ft. horizontal leg has been frac'd. Exterra expects to frac this leg in the very near term and increase production to approximately 1.2MMCFD or 1.5MMCFD. This would increase the net cash flow to approximately $100,000 per month.
In addition, Exterra acquired some work over opportunities with this purchase and believes this acreage should hold at least 8 drilling locations with initial production rates of an average 1.2MMCFD to 1.5MMCFD. Finally, the company feels that there is a large potential to increase its oil production from these wells. EOG has had success in this area whereby wells have come in at over 200-400 BOEPD.
The terms of this LOI have a very short window and the LOI has an expected closing date for the first week in October with a September 1st effective date. Exterra is also excited about this purchase due to the association with a large independent Barnett Shale producer from whom we are purchasing this package. We are expecting to have more opportunities with this group and feel that a nice synergistic opportunity could exist between the two companies.
Todd Royal, CEO/President commented, "Exterra plans to further enhance production by working over the current opportunities and fracing the rest of the 3000 ft. leg of the horizontal Barnett well. We also have future plans to drill additional Barnett wells when we feel the economics are appropriate."
Commenting further, Mr. Royal said, "This acquisition fits right in line with Exterra's plan to buy Proven Developed Producing (PDP) assets with upside growth potential, thus increasing revenues, net earnings and shareholder value."
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