Under the partnership, a participation agreement has been executed, with Delek GOM Investments having acquired rights to a 75% record title interest in nine prospects in the Gulf of Mexico’s shallow waters.
Under the deal, GulfSlope will retain a 20% record title interest, while Texas South will hold a 5% record title interest in each of these nine prospects.
GulfSlope Energy chairman and CEO John Seitz and Texas South Energy president and CEO Michael Mayell said: “Our partnership brings together management and technical teams who have enjoyed great success in discovering and developing world-class fields.
“This partnership is designed to create significant shareholder value through new field discoveries and production from high-quality conventional reservoirs.”
Initially, Delek is required to fund 90% of the gross cost and expense for each well until the test well reaches its objective depth.
Furthermore, Delek will have to bear 75% of the costs and expenses, while GulfSlope and Texas South will meet expenses based on their pro-rata ownership interest.
Once the filing of each well’s exploration plan with the Bureau of Ocean Energy Management (BOEM) is complete, the company is required to make an additional payment of $1.5m to GulfSlope and Texas South.
The companies will initially drill two exploration wells in the prospects, named ‘Tau’ and ‘Canoe’, which are estimated to contain more than 300 million barrels of oil and gas equivalent in the aggregate.
Once the drilling operations have been completed on the initial prospects, Delek will earn the right to increase its participation by up to three additional phases of drilling for the remaining prospects.
Delek will also have the right to acquire up to 20% of the issued and outstanding shares of common stock of each of GulfSlope and Texas South subject to the achievement of certain milestones.