The prospect is a Horizontal San Andres prospect located in the Northwest Shelf at the northern portion of the Midland Basin (which is a sub-basin of the Permian Basin) in west Texas. Principal features of the prospect include:
Seller will serve as operator of the acreage with drilling of an initial well expected to commence during July 2018 targeting the potential resources in the San Andres Formation;
Purchase price is $1,665 per net mineral acre, or a total of $135,329;
Lease has a three-year primary term, expiring October 1, 2019, and a 75% net revenue interest (9.375% net to our interest);
Four horizontal wells will hold the entire acreage block upon the establishment of production;
Houston American will pay its proportionate share of actual costs of drilling and completing all wells; and
Houston American’s interest is subject to a reduction for a 10% back-in after payout for the benefit of the operator after Houston American recovers its purchase price and drill and complete costs for the first four wells to be drilled.
John Boylan, Chairman and CEO of Houston American Energy stated: “We are very pleased to have identified and agreed to participate in the Horizontal San Andres prospect and to develop a long term relationship with another high quality operator in the Permian Basin. Our strategy of growing via relationship driven, affordably sized and lower risk drilling opportunities is in the works and we look forward to an active summer of drilling.”
Source: Company Press Release
