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(Sharecast News) - Exploration, development and production company Mosman Oil and Gas updated the market on the 'Winters' lease in Polk County, east Texas on Tuesday, including increasing its working interest in the lease and the timing of drilling the Winters-2 well.
The AIM-traded firm acquired a 23% interest in the Winters lease as part of its recent purchase of Nadsoilco in June.
Nadsoilco is now a subsidiary of Mosman, and is the operator of the lease, which is held by production with around 969 barrels of oil sold in the last 12 months from the Winters-1 well.
Mosman said it had now agreed to farm-in to acquire an additional 6% working interest in the Winters lease.
"The key terms are payment of $12,000 for past costs, and Mosman to pay 8% of the next well costs," the board said in its statement.
"This will increase Mosman's interest in the lease, including the Winters-1 well from 23% to 29% before royalties."
Nadsoilco was now preparing to drill the Winters-2 well on the lease, Mosman said.
Due to the well location, the Winters leaseholders had agreed to share participation in the Winters-2 well with the adjacent leaseholder, Arcadia.
The Winters leaseholders will have 78%, and Arcadia will have 22% of the well, and as a result, Nadsoilco would have a 23% working interest in the well.
"Winters-2 is a development well targeting the Wilcox formation - the same zone that is producing in adjacent wells on other leases not held by Mosman," the board explained.
"The well will be drilled as soon as site preparation has been completed, and the drilling rig is available, which Mosman anticipates will be in a few weeks' time.
"The budget to drill and case the Winters-2 well has been set at $0.6m."
Funding of the farm-in and the drilling costs of $0.15m would be from existing cash resources, the company confirmed.
A positive drill result, in line with an existing adjacent well which was producing at about 190 barrels of oil per day, should result in the well costs being recovered from production in the current year.
At 1200 BST, shares in Mosman Oil and Gas were down 0.97% at 0.17p.
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