By OGJ editors
HOUSTON, Mar. 24 -- Clayton Williams Energy Inc. is to earn a 75% interest in 75,000 net acres of leases held by Chesapeake Exploration LLC in southern Reeves County, Tex.
The Delaware basin acreage is in the center of a developing oil and gas play known as Wolfbone, where wells produce from the Avalon shale, Bone Spring, and Wolfcamp formations at 8,000-13,000 ft.
CWEI committed to drill at least 20 earning wells in the first year and an option to drill 20 wells/year for the next 4 years to earn all of Chesapeake’s acreage. CWEI will carry Chesapeake for one-quarter of the costs in each earning well, which will earn CWEI a 75% interest in 640 net acres. Later wells in an earned area are to be drilled on a heads-up basis.
CWEI will receive credit towards its annual drilling obligations for drilling more than 20 earning wells in any year.