Orchard Petroleum also becomes the operator of the Block A deep rights that cover the full extent of the Monterey Formation across the lease and, as a consequence, also takes over as operator of the recent Jack Hamar gas discovery.
NEG retains its 25% working interest and operatorship in the “shallow rights” across Block A and there is no change in the working interest or operatorship in the more southern Block B, where a three-well program was announced earlier this year.
Orchard has agreed to make a series of payments to NEG spread over 10 years, based on drilling activity, royalty and production, in addition to reimbursement of costs in the Jack Hamar 1-1 well. It also holds first right of refusal to purchase NEG’s interests in Block A and Block B.
“We all feel very confident in running the development of Jack Hamar and the surrounding acreage. There are many benefits to applying our new team of experts to both the Jack Hamar project at Southeast Lost Hills and the Sledge Hamar project at Southeast Belridge”, said Orchard chairman Steve Graves.
Southern California is one of the world’s richest hydrocarbon provinces, having produced over 12 billion barrels of oil and 11 tcf of gas to date, but the deeper sections of the San Joaquin and Sacramento Basins remain relatively lightly explored.
Nuenco NL has a 25% stake in the field.
