Louisiana-based independent PetroQuest Energy is teaming up with Florida Power & Light on dozens of wells in the Woodford shale to produce gas for the utility to provide electricity to its customers.
The partners will jointly develop up to 38 gas production wells in south-eastern Oklahoma. The wells will be operated by PetroQuest and Florida Power will receive an unspecified portion of the gas produced.
No financial terms were disclosed, nor was a breakdown in ownership stakes for the wells or a drilling schedule.
PetroQuest was not immediately available for comment.
The company signed a deal with Florida Power's parent company NextEra in 2010 that gave the utility a 50% interest in undeveloped Woodford acreage and in its proven-undeveloped reserves for a total of about $75 million and drilling funding.
Capital One Southcoast analyst Richard Tullis called the latest deal a "positive" for PetroQuest. The company's shares have rise around 13% since the deal was announced on Wednesday.
"PetroQuest could benefit from favourable drilling terms possibly" along the lines of the deal with NextEra, Tullis said. "There is potential for future expansion of the (Florida Power) venture given the utility purchases up to 2 Bcf per day for its natural gas-fired power plants."
Florida Power said the deal represents "the next logical step in providing clean electricity for our customers at affordable prices".
The company expects to save its customers up to $107 million over the life of the project.
It has also petitioned state regulators in Florida to approve guidelines for future natural gas production projects.