Samson O&G Enters JV for Hawk Springs Development
Samson O&G has entered into a three-party participation agreement with Halliburton and its existing private company partner for the evaluation and development of the Niobrara Formation and other conventional targets in the northern Denver-Julesburg Basin for part of Samson's Hawk Springs Project in Goshen County, Wyoming.
Under the agreement, Samson and its partner will be free carried through the drilling and completion of two wells with approximate 4,500' laterals and will be reimbursed for a portion of the cost of the North Platte 3-D seismic survey. Halliburton will acquire 25% equity in the farm-in area (a net 2,819 acres). The transaction has been structured such that the acquisition cost can be valued at a rate of $3,275 per acre. Halliburton retains the option to not drill the second farm-in well; in which event its 25% equity would be reduced to half the project area. (a net 1,410 acres)
The Halliburton farm-in area consists of a gross area of 11,277 acres, including 6,589 net acres currently held by Samson. Assuming completion of both farm-in wells, Samson's acreage inside the Halliburton farm-in area will be reduced to 4,942 net acres, and Samson's total holdings in the Hawk Springs Project will be reduced to 14,883 net acres, versus the approximately 16,530 net acres currently held.
Following the completion of the earn in program Samson will retain a weighted average royalty of 3% within the farm in area.
Samson will remain operator of the farmed-in acreage, however as part of the Agreement, Halliburton will be providing project management services, as well as regular oil field services, in support of the drilling, completion and fracture stimulation of the wells. The Agreement also includes a provision requiring that the service rates charged by Halliburton are market based.
Samson believes that the Agreement delivers a number of significant benefits to Samson:
- Partnering with a premier service provider in unconventional reservoirs.
- Validation of the acreage value established in the Chesapeake transaction.
- Retention of operator status and, with its private company partner, majority control of the Joint Technical Team that will govern the strategic direction of the project after Halliburton's farm-in wells have been finished.
As previously reported, the North Platte 3-D seismic data is being processed and the first-pass processing products have been delivered and the conventional plays are being mapped. The data quality is excellent and therefore the fracture identification processing is expected to be definitive. These more sophisticated processing products will be delivered in the coming weeks. It is Samson's intention to commence the drilling campaign at the end of the first quarter, however this timing is subject to permitting, drilling equipment availability, and the interpretation of the processed data.
- Samson O&G Updates Montana, Wyoming Ops (Feb 28)
- Flow Back Ops Continue at Samson's Hawk Springs Proj. (Nov 28)
- KKR to Buy Samson for $7.2B (Nov 23)