Rango Energy Inc. (OTC: RAGO) has signed a definitive joint venture, operating and acquisition agreement with Innex California Inc., an energy company with oil and gas leases covering approximately 40,000 gross acres in the San Joaquin, Ventura, and Eel River Basins in California and an additional project in Oklahoma. Innex is the originator of most of these ongoing projects and has retained from 10% to 100% ownership. All projects have significant oil, condensate, and gas potential.

Both companies are based in Dallas.

Highlights of the Innex portfolio include:

  • Joint development of approximately 10,000 acres of the Kreyenhagen Formation in San Joaquin Valley with partners including Occidental Petroleum.
  • Joint development of approximately 35,000 acres of the San Joaquin Basin with Hess Corp.
  • Joint Development of 2,300 acres with PUD and Potential oil and gas reserves in the South Goodwin Field in Oklahoma with partners Mewbourne and Chesapeake.

Under the terms of the agreement, Rango will have the right to fund and earn a full 50% working interest in nearly all of the entire Innex oil and gas portfolio. Rango will fund each well at 100% of the AFE costs submitted by Innex or to Innex by its partners and will receive 75% of cash flows from each well up and until they recoup 125% of the AFE, at which time cash flow will revert to 50%. After three wells are drilled at each specific target zone, Rango and Innex will go heads up on all future drilling.

Rango will contract Innex's expert and experienced staff to execute all technical work and Innex will be the operator of the projects, except where Innex is partnered with another company. Currently, within the Innex portfolio is an approximate 35,000 acre group of leases in the San Joaquin Valley that is being developed in partnership with Hess Corp. and a project at the Kettleman Middle Dome partnered with Occidental Petroleum. Under the terms of the JV agreement with Innex, Rango will have the ability to fund and earn 50% of the Innex position in the projects with these majors.

In developing the Innex portfolio, the Innex - Rango 2014 work program will focus on attaining near term production by initially drilling low risk offset wells in Oklahoma and Kettleman Middle Dome where discovery wells are currently producing.

In the first two years of the agreement, Rango will have the ability to acquire 100% of Innex California Inc., terms dependent on the results of the initial work program.

Specifically excluded from the transaction are certain targets zones at Kettleman Middle Dome, Elk Hills and South Tapo Canyon. Innex is currently under contract with another company on these prospects, but they will be folded into the Innex - Rango deal if and when they become available.