Burleson Energy (BUR) has agreed to farmout a 30% stake in the Truchard #2H (horizontal) development well and Truchard Unit in Texas, US to Mogal Holdings.
Mogal Holdings will contribute $2.76m towards well costs to gain the stake in the area, spanning 664 acres across the producing Heintschel gas condensate field.
After the farmout deal, Burleson's stake in the prospect will be 50% while its paying interest will be 38.8%.
Burleson Energy managing director Michael Sandy said Mogal Holdings has undertaken a significant amount of financial and technical due diligence before deciding to farm in.
"This has added to Burleson's confidence in being able to develop the Heintschel field by horizontal wells and with very good financial returns," Sandy added.
"While Burleson was fully committed and prepared to drill the Truchard 2H well at the 80% level, the opportunity to reduce financial exposure and at the same time involve a technically strong partner in the development of the Truchard Unit provided strong incentives to proceed with this agreement."
Following T2H well exploration, Burleson Energy plans to spud two additional horizontal wells with Mogal in the unit, which encompasses about 15% of the Heintschel Field.
Burleson Energy noted the T2H well had reached 3,459m of its planned total depth of 3,500m when spudded last week and was being prepared for electric logging.
Truchard #2H work is estimated to cost $6.3m and will target 7 billion cubic feet of liquids-rich gas and 200,000 barrels of condensate.
The three-phased drilling will involve a near-vertical section drilled to about 3,500m, a horizontal 700m section and six-stage fracture stimulation in the horizontal section.