08/08/2008 - 09:38

Red Fork secures $33m for gas project

08/08/2008 - 09:38

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Subiaco-based Red Fork Energy has secured $33 million for the exploration of a new gas project in Oklahoma after signing a joint venture deal with a Dallas-based company.

Red Fork secures $33m for gas project

Subiaco-based Red Fork Energy has secured $33 million for the exploration of a new gas project in Oklahoma after signing a joint venture deal with a Dallas-based company.

Both companies have identified an initial 200,000 acre area in the US prospective for unconventional gas, with 18,000 acres already leased.

Red Fork said up to $US30 million will be available for the initial leasing and development phase of the project.

Under the JV deal, Red Fork will receive about 20 per cent carried working interest in the leases acquired (18,000 acres), and will have its interest adjusted when up to 200,000 acres is obtained.

Red Fork will also be carried on the first 10 wells and will be reimbursed for direct costs incurred to date, totalling about $US800,000.

The Australian company will be the operator through the exploration and production phases.

 

Below is the full announcement:

US-focused oil and gas exploration and production company Red Fork Energy Limited ("Red Fork" or the "Company") (ASX: RFE) is pleased to announce that it has secured a United States based joint venture partner for a major new gas project located in Oklahoma.

Red Fork has reached agreement with a Dallas based group for a joint venture to lease and develop a new unconventional gas project in Oklahoma. This group has a strong track record for developing large onshore gas projects, including leasing, drilling, development and production. Up to US$30 million will be available for the initial leasing and development phase of this new project.

Red Fork and its joint venture partners have identified an initial 200,000 acre AMI in Oklahoma in an area prospective for unconventional gas. Leasing has already commenced, with approximately 18,000 acres leased.

Under the terms of the joint venture agreement Red Fork will receive approximately 20% carried working interest in the leases acquired. Red Forks' interest will be adjusted based on the total acreage acquired up to 200,000 acres. Red Fork will also be carried on the first ten wells and will be reimbursed for actual direct costs incurred to date in generating this project, including preparatory land and title expenses (totalling approximately US$800,000).

Red Fork in turn will provide the joint venture with all the technical and operational expertise required to establish, develop and operate this project. Red Fork will be the operator through the exploration and production phases.

The parties have also agreed to incorporate a separate entity to own future gas gathering and compression infrastructure to service this new project.

Commenting on the transaction, Red Fork Managing Director David Prentice said, "This is a very exciting development for Red Fork. We are very pleased to have secured a high quality well funded partner to assist us with this exciting new project, which has the potential to significantly expand our acreage position and our reserves.

"This is a further endorsement of the work of our Tulsa based team and our ability to deliver high quality projects. This joint venture is an important addition to our three existing (100% owned) project areas in Oklahoma (Osage, West Tulsa and Eastern Oklahoma). Importantly, all of our projects are located in established plays with demonstrated production potential and access to sales".

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