Underground Energy Corp., Santa Barbara, Calif., signed a letter of intent with AmRich LLC, private Santa Maria, Calif., operator, under which AmRich will farm in on and have the right to earn up to a 75% working interest in Underground’s and its joint operating partners’ interest in 1,062 gross acres of the central southern section of the Zaca field extension project in Santa Barbara County, Calif.
Underground holds 80% of the leasehold interest in the farmout lands and a total 10,482 net acres across its Zaca assets. Final documentation for the farmout is to be signed by Nov. 21.
It is proposed that AmRich drill and place on production as many as three back to back wells to earn its full working interest and acreage position in the farmout lands.
Included in the farmout lands are two Hathaway wells drilled by Texaco in the mid-1980s. Amrich will be required to recomplete the Hathaway wells to a depth of at least 5,990 ft each as part of its three- well commitment. AmRich will also be required to carry Underground on the drilling and completion costs of these initial three wells and the costs of installing facilities and infrastructure to support the wells.
The first recompletion is to commence by Mar. 1, 2013. AmRich will only earn interests down to the Upper Monterey block at Zaca. Should AmRich decide that it would like to earn interests in the deeper subthrust play recently discovered by Underground, then it will be required to drill and carry Underground on a fourth well, to be drilled by the end of 2014, to a sufficient depth to test the subthrust play.
AmRich said its own exploitation and exploration operations at Midway-Sunset field in Kern County and in Casmalia and Santa Maria Valley oil fields in Santa Barbara County have been successfully implemented and that it brings in-depth knowledge of unlocking oil production in the Santa Maria basin.