Innex California Inc., Dallas, has signed a definitive joint venture, operating, and acquisition agreement with Rango Energy Inc. that covers certain Innex assets in California and a project in western Oklahoma.
The California projects, most of which Innex originated, operates, and holds working interests of 10-100%, are in the San Joaquin, Ventura, and Eel River basins. The projects include nonoperated joint ventures with Occidental Petroleum Corp. and Hess Corp.
Rango will have the right to fund and earn a 50% working interest in nearly all of the Innex portfolio by funding 100% of the AFE costs submitted by Innex or to Innex by its partners. Rango will receive 75% of the cash flow from each well until it has recouped 125% of the AFE and will receive 50% of cash flow thereafter.
After three wells have been drilled at each target zone, Rango and Innex will go heads up on future drilling. Rango will contract Innex’s staff to execute all technical work. Innex will operate except where it has partnered with another company.
The Innex portfolio includes a 35,000-acre group of leases in the San Joaquin Valley that is being developed in partnership with Hess and a project at Kettleman Middle Dome partnered with Oxy.
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 producing.
In the first 2 years of the agreement, Rango will have the ability to acquire 100% of Innex under terms dependent on the results of the initial work program.
Excluded from the transaction are certain targets zones at Kettleman Middle Dome, Elk Hills, and South Tapo Canyon where Innex is under contract with another company, but these areas will be folded into the Innex-Rango deal if and when they become available.
The Innex portfolio includes a 10,000-acre joint development of the Kreyenhagen formation in the San Joaquin Valley with Oxy and others, the 35,000-acre San Joaquin joint development with Hess, and 2,300 acres in South Goodwin field in Oklahoma with Mewbourne Oil Co. and Chesapeake Energy Corp.