U.S. Energy Corp. reported that the company has signed an agreement with another independent oil and gas company to participate in the joint development of mineral leases in Texas.
U.S. Energy Corp. signed a deal with Crimson Exploration Inc. (NASDAQ: CXPO) on 4,675 gross acres, or 1,402 net acres, located in Zavala County, Texas. The company can earn a 30% working interest in the acreage through the payment of cash up front and a future drilling carry. U.S. Energy did not disclose the financial terms of the deal due to competitive reasons.
U.S. Energy Corp. and Crimson Exploration Inc. plan to develop the Eagle Ford Shale formation on the acreage. This formation produces mostly oil in the area the two companies are working on, and the first well is planned in the second quarter of 2011. The well will be drilled to a total depth of 12,500, including the horizontal portion, and will be hydraulically fractured to maximize production.
U.S. Energy Corp. and Crimson Exploration Inc. said the results of the first well will be evaluated to determine a future development plan. The acreage has 26 gross or 7.8 net drilling locations into the targeted formation.
For more information on the companies, go to www.usnrg.com and www.crimsonexploration.com