Wexpro Company and Piceance Energy in western Colorado joint venture
Wexpro will partner with Piceance Energy, a subsidiary of Laramie Energy II, a company developing low-cost drilling and completion strategies in the basin.
Wexpro expects to spend $60 million to $70 million on an 80-well drilling program targeting the Mesaverde formation. The partners will begin drilling in the Collbran Valley in Mesa County in early October 2015, and continue through early 2017.
The joint-development agreement also provides Wexpro options to acquire development rights for deeper formations and, with mutual consent, to significantly extend and expand the drilling program up to 300 wells, depending on commodity prices.
Under the terms of unique agreements in Utah and Wyoming, Wexpro currently produces gas from certain properties at cost of service benefiting Questar Gas’s utility customers.
Wexpro believes that similar cost-of-service arrangements can benefit customers or partners who purchase volumes of natural gas production and would like to create an effective long-term price hedge on a portion of their supply needs.
A current partner of Wexpro is in the process of obtaining board approval to participate in the production from these wells on a cost-of-service basis. ■