Oil and gas exploration and production company Nostra Terra has acquired the Mesquite Prospect in the Permian Basin in West Texas from Tall City Exploration III.

This prospect consists of 1,384 net acres, with the potential to drill an estimated eight horizontal wells on the leases.

Purchase of this prospect increases Nostra Terra’s net Permian Basin acreage by 308%.

Tall City is an oil and gas exploration and production company, which has identified new prospects in the Permian Basin that can be drilled horizontally.

The area where the Mesquite Prospect is located has producing wells that were drilled vertically on 40 acre spacing.

Recent years have seen operators successfully drilling wells with tighter 20-acre spacing.

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Based on this, the Mesquite Prospect is expected to have the potential to host a minimum 35 potential vertical well locations by drilling at 40-acre spacing, or a maximum 70 vertical well locations with 20-acre spacing.

“Only recent developments have enabled us to secure this opportunity.”

According to Nostra Terra, the Mesquite Prospect has greater development potential if it is drilled horizontally.

According to the US Energy Information Administration, horizontal drilling has driven significant production gains in the Permian Basin in recent years.

Under the deal, Tall City will keep a 1/8th carried working interest in the first horizontal well, which Nostra would drill at the Mesquite Prospect. In addition, Nostra Terra will pay $150,000 in cash consideration to Tall City.

Nostra Terra CEO Matt Lofgran said: “We first identified the Mesquite Prospect in early 2017 as a desirable acquisition target for Nostra Terra. However, only recent developments have enabled us to secure this opportunity.

“We are incredibly excited to have made such a substantial acquisition, quadrupling our Permian footprint and, much more importantly, now having the opportunity to drill horizontally. ”

He further added: “For a company of our size this is a huge opportunity, which we are now well positioned to take advantage of. Having successfully grown our cash flow on steady gains in production, it is now time for Nostra Terra to take its next leap forward.”

Nostra Terra plans to hire a firm specialist experience in horizontal drilling in the Permian Basin to create a field development plan for the prospect.

The company has identified several additional acquisition targets, suitable for horizontal drilling.