United States Exploration, Inc. Satisfies Commitment to Union Pacific Resources

Strategic Insights -

United States Exploration, Inc. announced that it has fulfilled its obligation under the Exploration Agreement with Union Pacific Resources, drilling 15 commitment wells and completing operations in the D-J Basin in Colorado. The agreement has been amended to allow for deepenings and re-entries of wells, which have been completed in the final stages of testing, completion, and hook-up. The company has also exercised its option to extend the agreement for an additional 12 months, requiring an additional 20 commitment wells to be drilled prior to December 1, 2000.

Key Takeaways:

  • United States Exploration, Inc. has satisfied its commitment under the Exploration Agreement with Union Pacific Resources by drilling 15 commitment wells.
  • The agreement has been amended to allow for deepenings and re-entries of wells, which have been completed in the final stages of testing, completion, and hook-up.
  • The company has exercised its option to extend the Exploration Agreement for an additional 12 months, requiring an additional 20 commitment wells to be drilled prior to December 1, 2000.
  • The agreement gives United States Exploration, Inc. the right to explore and develop approximately 400,000 acres owned by Union Pacific Resources in Colorado's D-J Basin.
  • The company has released its preferential right to acquire Kinder Morgan, Inc.'s Wattenberg gas gathering system in northeast Colorado in exchange for several concessions from HS Resources, Inc. and Kinder Morgan, Inc.
  • The concessions include a reduction in fees, elimination of fees for deepening wells, access to shallow reserves, and a fixed gathering charge for 10 years.

Statistics:

  • 15 commitment wells drilled prior to December 1, 1999.
  • 400,000 acres granted to United States Exploration, Inc. for exploration and development.
  • 20 additional commitment wells required to be drilled prior to December 1, 2000, under the extended Exploration Agreement.
  • 150 existing wells and certain future wells exempt from operator fees.
  • 10 years fixed gathering charge for the Wattenberg gas gathering system.

Sources:

  • Business Wire, December 1, 1999
  • American Stock Exchange, United States Exploration, Inc. (ASE: UXP)