PED - Evolution Petroleum and PEDEVCO Enter into Strategic Partnership to Jointly Develop PEDEVCO's Chaveroo Field in the Permian Basin | Benzinga
HOUSTON, Sept. 13, 2023 (GLOBE NEWSWIRE) -- Evolution Petroleum Corporation (NYSE:EPM) ("Evolution") and PEDEVCO Corp. (NYSE:PED) ("PEDEVCO") today announced entry into a definitive Participation Agreement to jointly develop PEDEVCO's Chaveroo oilfield in the Northwest Shelf ("NWS") of southeastern New Mexico, a conventional oil-bearing San Andres field in the Permian Basin located in Chaves and Roosevelt Counties. The Chaveroo field was originally developed with vertical wells on 40-acre spacing. PEDEVCO has drilled ten horizontal infill wells on ~20-acre spacing which yields most of the field's current production. The agreement covers approximately 16,000 acres with average working interest ("WI") and net revenue interest ("NRI") of 100% and 82%, respectively, all currently owned by PEDEVCO. Evolution will farm-in for an average 50% WI in future horizontal drilling locations on a block-by-block basis with PEDEVCO remaining the operator.
Key Highlights
- Represents significant collaboration between two experienced independent U.S. publicly traded onshore oil and gas companies.
- Potential to unlock significant value from the Chaveroo field which has an estimated original oil in place (OOIP) of over 700 million barrels with less than 5% recovered to date.
- "Block-by-Block" farm-in agreement at fixed price per net acre payable by Evolution to PEDEVCO over 12 development blocks with up to nine drilling locations per development block.
- At closing, Evolution will fund its share of the acreage portion for the initial two development blocks, covering nine total drilling locations.
- Evolution, upon funding of its proportionate share of the development of the wells within a development block, becomes eligible to farm-in to the next development block.
- Learnings from recent horizontal development combined with the extensive vertical delineation of the field has proved up the field for full development via horizontal infill drilling.
- Strategic partnership further diversifies and increases Evolution's oil commodity exposure, while allowing PEDEVCO to more aggressively develop the Chaveroo oilfield while freeing it to allocate capital to growth initiatives in the DJ Basin of Colorado and Wyoming.
- Strategic partnership increases both parties' ability to throttle organic development, while continuing to pursue accretive M&A activities as they become available.
Kelly Loyd, President and Chief Executive Officer of Evolution, commented, "We are excited to announce our strategic ...