Source: Clayton Williams Energy
Clayton Williams Energy, Inc. (NASDAQ:CWEI) has entered into an agreement with Chesapeake Exploration (NYSE:CHK), whereby Clayton Williams Energy can earn 75% interest in leases held by Chesapeake under approximately 75,000 net acres in the Delaware Basin oil play in southern Reeves County, Texas.
The acreage is in the center of a developing oil and gas play called the “Wolfbone” where wells produce from the Avalon Shale, Bone Springs and Wolfcamp formations at depths from 8,000 to 13,000 feet.
Clayton Williams has a commitment to drill at least 20 earning wells in the first year and an option to drill an additional 20 earning wells per year during the next four years to earn all of Chesapeake’s acreage. Clayton Williams will carry Chesapeake for one-quarter of the costs in earning wells, which shall earn it a 75% interest in 640 net acres. Subsequent wells in an earned area shall be drilled on a heads-up basis. Clayton Williams will receive credit towards its annual drilling obligations for drilling more than 20 earning wells in any year.
“This is a major opportunity for our company, and we will focus significant resources to this development project,” stated Clayton W. Williams, Jr.