US player Synergy Resources has signed a joint development agreement to drill and develop shallow, conventional oil acreage in Dundy County, Nebraska.
The agreement with Colorado-based Johnson Production and Kodiak Petroleum covers a defined area of 8011 net mineral acres and provides for the drilling of up to 10 wells.
The partnership has an initial term of one year with annual extension provisions for another four years.
Johnson or Kodiak will operate all wells. For each well, the operator will pay five-eighths of the costs and earn a 50% working interest, as well as a 5% share in Synergy's interest in the remainder of the contract area.
If all 10 wells are drilled, Johnson and Kodiak will earn a 50% interest in Synergy's interest in the contract area.
"We are anxious to begin the development of our Nebraska assets with this agreement," said Synergy co-chief executive Ed Holloway. "We have been closely monitoring the increasing success by other operators in this area and believe this is an opportune time to begin deploying drilling capital to these assets."
Colorado-based Synergy holds 36,000 net acres surrounding the contract area and another 130,000 acres in nearby counties in Nebraska.
Global Hunter Securities analyst Mike Kelly praised the deal, saying it is "good to see developmental progress" in the area, as nearby operators are reporting investment returns of around 100%.