Epsilon Energy (EPSN) on Wednesdays said it signed definitive agreements to form a joint venture in the Garrington and Harmattan areas of Alberta.
In partnership with a leading Calgary-based private operator, Epsilon will earn a 25% working interest in undeveloped lands covering approximately 30,000 gross acres in the Garrington area, targeting horizontal development of the liquids-focused Glauconitic and Ellerslie formations and approximately 130,000 gross acres in the Harmattan area, targeting horizontal development of the liquids-focused Upper Viking formation.
The company estimates the joint venture area holds over 25 drilling locations in the Mannville oil formation.
Consideration will be in the form of up to a $12-million development carry, with $10 million to be deployed over a minimum of 4 gross horizontal wells drilled and completed over a 12-month period from Dec. 1, with the operator's option for two additional gross horizontal wells drilled and completed over a 12 month period from Dec. 1, 2025.
Additionally, the company entered a joint venture in the Killam area of Alberta, in April . In partnership with a different Calgary-based private operator, Epsilon acquired a 50% working interest in undeveloped lands, covering 14,000 gross acres, targeting development of the liquids-focused Mannville formation.
Consideration was $1.4 million, and the company committed to participate in two wells during 2024.
"For a small amount of up-front capital, we will establish a third primary area to deploy capital in a proven hydrocarbon system and more than double our company leasehold (after the carry is satisfied), while also increasing our liquids exposure," says Chief Executive Officer Jason Stabell. "With the deal signed this week, we are partnered with a well-capitalized leading private player in the basin. Importantly, this acreage is largely held by production, affording the ability to opportunistically develop these resources as market conditions warrant."
Epsilon shares closed down US$0.13 to US$6.00 on the Nasdaq Exchange.
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