GulfSlope Energy Inc. and Texas South Energy Inc. plan to partner with a "large international oil and gas company" for Gulf of Mexico (GoM) wells, the companies said Sept. 13.

Texas South Energy: GoM Projects Map

The companies, both based in Houston, executed an exclusive letter of intent for a joint venture (JV) with the undisclosed partner to jointly drill and develop their oil and gas prospects located offshore GoM.

The JV agreement includes a commitment to drill a minimum of three exploratory wells with the option to participate in additional three-well phases on the same basis.

The undisclosed partner will earn a 75% working interest in each prospect by paying 90% of the exploratory costs and making a cash payment of $1.5 million to be split between the GulfSlope and Texas South on a 73%/27% basis.

GulfSlope will be the initial operator and will retain a 20% working interest for the subsalt prospects included in the first phase. Texas South will retain a 5% working interested for the subsalt prospects included in the first phase.

Upon achieving certain milestones, the undisclosed partner will have the right to purchase up to 20% of the common stock in each GulfSlope and Texas South, according to the release.

John N. Seitz, chairman and CEO of GulfSlope, said in a statement, "We and Texas South are looking forward to working with our new partner, who is a highly accomplished oil and gas company with a great track record of finding and developing substantial oil and gas resources in offshore areas. Their technical capabilities have enabled them to recognize a unique opportunity, one where the seismic and drilling technologies have converged with today's lower costs of drilling with jackup rigs and development of large-scale reserve targets with fixed platforms in shallow water."

Provision for exclusive negotiations between the undisclosed partner and the companies expires Oct. 31, or such later time as they mutually agree, the release said.

Offshore