Australian minnow Tellus Resources farms into Utah oil play Singapore (Platts)--16Dec2013/1113 pm EST/413 GMT
Australian oil exploration and mining company Tellus Resources has farmed into an onshore US oil play and will become operator of the two leases there, the company said Tuesday.
Adelaide-based Tellus will raise $1 million via the issue of new shares to help fund the transaction.
Tellus did not name the other company involved, but said it had signed a participation agreement with a private US company whereby Tellus has the rights to acquire a participating interest of up to 83% and operatorship of the Covenant Mondo Project conventional oil play located in Sevier County, Utah.
"CMP consists of two leases with a total area of approximately 3,900 acres held over private lands. The leases are located on the well known 'hingeline' overthrust structure in the Rocky Mountains which trends in a North Easterly direction from Arizona in the South right up into Canada," Tellus said.
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"The overthrust belt has hosted a number of major oil discoveries including the massive Anschutz Ranch East field discovered by Amoco in 1979 as well as the recent  discovery of the Covenant field located some 4 km (2.5 miles) immediately to the South West of CMP," Tellus added.
The Covenant field is currently producing approximately 6,400 b/d of oil and contains an estimated 150 million barrels of recoverable oil.
Tellus plans to drill two wells on the leases, starting in March 2014.
It also plans to farm down its acquired interest and has been negotiating with Australian and US companies with "very favorable responses to date," the company said.
Tellus will issue 14.285 million shares at 7 cents per share to help fund the deal.