U.S. Energy Joins Texas Woodbine Project With Mueller Exploration

Transaction Type
Announce Date
Post Date
Close Date
Estimated Price
2MM
Description

To acquire 26.5% WI in Woodbine Sub-Clarksville 7 project covering 6,766 gross acres in Anderson & Cherokee cos., TX

U.S. Energy Corp., Riverton, Wyo.,(Nasdaq: USEG) has entered a participation agreement in the Woodbine Sub-Clarksville 7 project in Texas with a privately held, Corpus Christi, Texas-based Mueller Exploration Inc. for $1.7 million.

U.S. Energy will earn a 26.5% initial working interest (19.6% net revenue interest) in approximately 6,766 gross acres (1,274 net) in Anderson and Cherokee counties in exchange for funding its portion of the costs for land, geological and geophysical work, as well as all dry hole costs for an initial test well in each of the seven prospects.

Upon payout of U.S. Energy’s initial well costs in each unit, its interest will be reduced to a 19.8% working interest (14.7% net revenue interest). Future infill drilling will be on a heads up basis, and U.S. Energy’s interest will be 19.8% working interest (14.7% net revenue interest).

Six of the prospects will target the Woodbine formation, and one is a Sub-Clarksville formation prospect. Mueller will operate the project and tentatively plans to spud the first well in the project at the end of this month. The operator has commenced construction of the drilling pads, and the drilling program is scheduled to drill all seven of the prospects back to back with the same drilling rig. If initially successful, the prospects individually can be down spaced to 40 acre spacing, providing multiple additional infill drilling locations.

U.S. Energy chief executive Keith Larsen says, "We are pleased to announce another oil venture in Texas with an aggressively paced drilling schedule which is planned to start in the coming weeks. If initial well results are successful, there is the potential for multiple infill drilling locations, which could provide additional production growth for us in the second half of 2012.”