GulfSlope Energy and Texas South Energy have entered into a strategic partnership with Delek Group to mutually pursue oil and natural gas opportunities in the Gulf of Mexico.
GulfSlope said on Monday that Delek GOM Investments LLC, a subsidiary of Delek, acquired rights to a 75% record title interest in nine prospects.
Namely, Delek will acquire a stake in the Photon, Quark, Pomeron, Tau, Tanker, Graviton, Tachyon, Selectron, and Canoe prospects in the shallow waters of the Gulf of Mexico. GulfSlope will retain a 20% record title interest while Texas South will retain a 5% record title interest in each of these nine prospects.
According to the conditions of the transaction, Delek will bear 90% of the gross cost and expense for each well until the test well reaches its objective depth. After that, Delek will be responsible for 75% of the costs and expenses and GulfSlope and Texas South will be responsible for their pro-rata ownership interest of all such remaining costs and expenses while partially carried and thereafter.
Delek will also pay $1.5 million to the two companies, 73% to GulfSlope and 27% to Texas South, upon the filing of each well’s exploration plan with BOEM.
John Seitz, chairman and CEO of GulfSlope and Michael Mayell, president and CEO of Texas South, said: “GulfSlope and Texas South are pleased to have Delek Group Ltd. join with us to drill our exciting portfolio of prospects in the US Gulf of Mexico which we estimate to contain almost 1 billion barrels of recoverable oil and gas equivalent.”
First two prospects
Initially, the parties will participate in two exploration wells in the Tau and Canoe prospects which the company estimates to contain more than 300 million barrels of oil and gas equivalent in aggregate.
The drilling at the Canoe prospect will target multiple shallow supra-salt formations whereas the objectives for the Tau prospect are multiple deeper, sub-salt formations.
GulfSlope will be the operator for these wells with permitting operations already underway. It is anticipated that drilling operations will begin in mid-2018. Upon completion of the drilling operations on the two prospects, Delek will have the right to participate in up to three additional phases of drilling in the two prospects.
The parties also agreed to establish an area of mutual interest to govern cooperative efforts on future lease and property acquisitions. Additionally, Delek will have the right to acquire up to 20% of the issued and outstanding shares of common stock of each of GulfSlope and Texas South based on achieving certain milestones.
This partnership with Delek follows an announcement by GulfSlope Energy and Texas South Energy that the two entered an exclusive letter of intent (LOI) with a “large international oil and gas company” in September 2017 to jointly drill and develop their oil and gas prospects located in the U.S. Gulf of Mexico. The term of the LOI was initially extended until the end of November and once again in December.