Brenham Oil & Gas Corp. reported that the company has executed a letter of intent to acquire a producing oilfield in the United States. The agreement is subject to a due diligence review of reserve, production and other data on the property.
Brenham Oil & Gas said that the property is located in the Permian Basin in Texas and consists of 200 oil wells situated on 5,000 acres of leasehold. The company will pay $6 million and commit to spending an additional $6 million for future development costs at the field.
Brenham Oil & Gas will allocate the $6 million to increase production at existing wells on the property and evaluate additional unconventional shale formations at the field.
The agreement calls for Brenham Oil & Gas and the seller to jointly operate the field with the company receiving 70% of working interest income. After Brenham Oil & Gas recovers its investment in the field, the company’s share of working interest income will be reduced to 50%.
American International Industries, Inc. (AMIN) is the parent company of Brenham Oil & Gas Corp., and owns 54% of the company.
For more information on the company, go to http://www.brenhamoil.com/index.html or http://www.americanii.com/