Houston American Energy Corp. has signed an agreement to participate in a new drilling program in the San Andres formation located in the Northern Shelf of the Permian Basin. Under the agreement, the company will acquire a 20% working interest in an existing 5,871 gross acre block. The agreement provides that Houston American will pay 26.667% of the costs of an initial test well through the point at which the well is drilled, completed, equipped and ready for operation, production or disposal. All additional operations will be conducted on a heads up basis.

The agreement also defines an area of mutual interest, or AMI, in approximately 20,367 acres in the area of, and including, the existing acreage covered by the agreement. The parties to the agreement will have the right to participate, at cost, in any interest acquired in the AMI over the following five years.

Jim Schoonover, CEO of Houston American Energy, stated,
“This agreement is the culmination of more than a year of effort to identify a suitable growth platform. We believe this agreement has the potential to be such a platform. We expect an initial horizontal test well will commence on the block before the end of 2019. If successful, we believe the existing acreage will support drilling of up to 50 wells over the next 4 to 5 years with the acquisition of additional acreage under the AMI supporting additional wells. Upon completion of our acquisition of this acreage, together with our existing holdings in Reeves County and Yoakum County, we believe we will be positioned to resume sustainable growth in production, revenues, reserves and shareholder value.”

KeyFacts Energy Industry Directory: Houston American Energy