The acreage covers the Bakken and deeper formations in the East Poplar Unit and the northwest Poplar field in Montana’s Roosevelt County.
Magellan received $5m in cash upon closing of the agreement and Vaalco has also agreed to spend about $15m to drill three wells.
Vaalco will drill three wells to the Bakken formation and to formations below the Bakken (the Deep Intervals) in the Poplar field by the end of 2012.
One of these wells will be drilled horizontally to test the Bakken Formation, one well will be drilled vertically to test the Red River Formation, and the third will be targeted at Vaalco’s discretion.
Vaalco will hold a 65% working interest in the Bakken and Deep Intervals within the Poplar field, while Magellan will hold the remaining 35% interest.
Magellan will retain its current ownership for all formations above the Bakken, including the currently producing Charles and Tyler formations.
