In the second phase of the JV, the company will drill a minimum of 10 natural gas wells with an option to drill another 10. Each well will cost approximately $500,000 to drill and complete. After payout, Pepper Rock Resources and Oxalis will each retain a 50% working interest in the producing wells.
Phil Kueber, president of Pepper Rock Resources, said: “This payment represents the first part of our agreement with Oxalis to re-work 2 initial natural gas wells on a property in West Texas and bring the gas production online. As part of our corporate strategy to acquire proven non-producing reserves and develop them, we believe this is a good step towards achieving our goals.”
Recent geological reports estimate proven undeveloped reserves of 100 billion cubic feet of natural gas. Another recent reserve report suggests a potential valuation of $285m to $423m, using a base price of $3.50 per thousand cubic feet of natural gas.
Pepper Rock Resources is currently completing geological and geophysical evaluation on these prospects to determine their cost and viability.
