Torchlight Energy Resources Inc. (TRCH) said Sept. 29 it has entered into a $50 million joint venture (JV) to develop its Orogrande Project mainly in the Texas Permian Basin.
As part of the JV, Founders Oil and Gas LLC will buy 50% working interest in the project for $45 million in developmental capital to be deployed during the next two years.
After reaching the total agreed expenditure, Torchlight and Founders plan to fund future development costs equally on a "heads up" AFE basis.
The terms of the agreement also include a $5 million reimbursement to Torchlight for initial project costs incurred. Upon closing, Plano, Texas-based Torchlight received a $1 million cash payment.
Founders, based in Midland, Texas, will be the operator of record beginning with the fracking and completion of the previously drilled Rich A-11 well.
Following completion of the first project well, Founders plan to further define the science and move into full-scale development, said Brian M. Sirgo, president of Founders.
"Controlling an entire undeveloped basin under favorable lease terms and having access to the technical data from the Rich A-11 made our decision to be collaborative an easy one," Sirgo said in a statement.
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