Italy's Eni reported Tuesday that it has signed an agreement with Quicksilver Resources to jointly evaluate, explore and develop shale oil reservoirs onshore US.
The deal will see Eni earn 50-percent shares in an areas located in west Texas. Eni said it will earn a 50-percent share in 52,500 gross acres held by Quicksilver in the Leon Valley area, which is located in Pecos County approximately 500 miles northwest of Houston. The terms of the agreement calls for an initial three-phase program that includes the drilling of up to five exploration wells and the acquisition of a 3D seismic survey, both aimed at determining the hydrocarbon potential of the area and the subsequent development plan. In return, Eni will pay Quicksilver up to $52 million, covering drilling, completion and seismic survey costs, while any future expenditure will be shared equally between the two companies.
The agreement also allows Eni to earn, at no additional cost, 50 percent of Quicksilver's interest in another 7,500 gross acres in the Leon Valley area. Eni said in a company statement that the new project gives it "the opportunity of entering into one of the prolific unconventional shale oil plays in the US through organic growth and with a phased investment program". Current production in the Delaware Basin, where the Leon Valley acreage is located, currently amounts to nearly 500,000 barrels of oil equivalent per day, both from conventional and unconventional reservoirs. Eni holds a working interest in a total of 777 leases in the US. Of these, 233 are in the Guld of Mexico, 107 in Alaska's North Slope and 436 are onshore Texas.