Canadian-based Aurex Energy Corp. landed the capital to rework natural gas wells in the Barnett Shale in North Texas through a potential joint venture (JV).
Aurex Energy, based in Saskatoon, Saskatchewan, said Oct. 8 it signed a letter of intent (LOI) to enter into the JV with an undisclosed private company to rework a number of natural gas wells located in the Barnett Shale within the Fort Worth Basin of North Texas.
Through its subsidiary Gas Tap Corp., Aurex Energy owns interests in 10 shut-in natural gas wells—eight horizontal and two vertical—in the Barnett Shale. The horizontal wells were originally drilled by Carrizo Oil & Gas Inc. and have been shut-in since 2008, according to the company’s October investor presentation.
The wells are located on 1,400 acres in Hill, Hood, Parker And Tarrant counties, Texas. Total proved plus probable reserves are 24.6 billion cubic feet of natural gas.
Per the framework set out in the LOI, the JV partner will contribute $2.5 million to rework shut-in natural gas wells, bringing them back into commercial production. The initial phase of work will focus on five of the 10 wells—one vertical and four horizontal.
“Aurex is pleased to have found a partner to contribute the capital to complete part of the initial work program,” Gary Billingsley, Aurex’s president, said in a statement. “This allows us to work towards our goal of achieving near-term cash flow to continue to develop and expand the project, including increasing the scope of our joint venture activity.”
Peak operating cash-flow (before income taxes), after reworking all wells, is estimated at $10.8 million per year.
The JV revenue sharing and operating details will be disclosed when the JV agreement is signed, which is expected “as soon as possible,” according to the company press release.
The discovery well was tested to produce an average of about 1,980 barrels of crude oil and 5.25 million cubic feet of natural gas per day.
Estimates vary, but the cold weather in Texas and the Plains states curtailed up to 4 million barrels per day of crude oil production and 21 billion cubic feet of natural gas, according to analysts.
The March 20 lease sale in the U.S. Gulf of Mexico brought in $244.3 million in high bids.