Magnum Hunter Resources Corp. has signed a joint operating and exploration agreement with privately-held Hunt Oil based in Dallas, Texas. In the April issue of OGFJ, Hunt Oil ranked No. 12 in the list of top privately held companies based on year to date production.
The area of mutual interest (AMI) covers existing mineral lease acreage positions currently owned by both companies in Gonzales and Lavaca Counties, Texas.
The agreement has Magnum Hunter and Hunt Oil working together within the area on an equal and joint basis throughout the two counties for a period up through December 2014. Magnum Hunter and Hunt Oil will share all future leasing, exploration, drilling, completion and development costs and other expenses in the area 50/50.
Each company has agreed to allow the other company to be the designated operator for all wells on lease acres specifically contributed by each company to the area under the agreement.
The agreement covers 28,187 (gross acres) and 26,822 (net acres) with 50% ownership interest owned by each company being 14,094 (gross acres) and 13,411 (net acres), and potentially allows for two wells to be drilled on the acreage position during 2010.
One exploratory well, the Magnum Hunter operated "Gonzo Hunter #1-H" well, located in Gonzales County, is currently anticipated to be spudded around the first of June 2010.
There is an option of a second well to be drilled on the Hunt Oil acreage in the area during 2010 with Hunt Oil as operator. It is presently anticipated that Magnum Hunter and Hunt Oil will own a 50% working interest in each of the contemplated wells.
Magnum Hunter has allocated nearly $30.7 million out of its fiscal year 2010 total capital expenditure budget of $55.0 million (55.7% of the total capex budget) for the Eagle Ford Shale oil-window of South Texas. Approximately $10.6 million out of the $30.7 million capex budget for 2010 will be for purposes of horizontally drilling three unbooked Eagle Ford Shale exploratory locations. The amount allocated for the Eagle Ford is up significantly from its February estimate of $7 million.
The balance of the company's 2010 capex budget is dedicated to the Eagle Ford Shale play for additional leasing related activities that are currently ongoing.
