Eagleford Enters San Miguel Farmout
Eagleford has entered into a Farmout Agreement from surface to the base of the San Miguel formation on the Matthews Lease located in Zavala County, Texas. Under the Farmout, the farmee may spend up to $1,050,000 on exploration and development of the San Miguel formation to earn a maximum of 42.50% working interest (31.875% net revenue interest).
Under the terms of the Farmout, the farmee may earn an initial 25% of the Company's working interest in the San Miguel by paying 100% of the costs to drill, complete, equip and perform an injection on a vertical test well to a depth of approximately 3,500 feet (the "Initial Test Well").
After the performance of the Initial Test Well, the farmee may increase its working interest to 50% of the Company's working interest by spending the entire $1,050,000 on additional operations on the San Miguel in a good faith effort to produce hydrocarbons.
The Company's Matthews and Murphy Leases are situated in northeast Zavala County, Texas, and is part of the Maverick Basin of Southwest Texas, downdip from the United States Geological Studies north boundary of the Smackover-Austin-Eagle Ford total petroleum system. This area is often referred to as the oil window of the present Eagle Ford shale play.