Caza Oil & Gas, Inc. entered into with Clayton Williams Energy, Inc.
As announced previously, the Parties had agreed to jointly develop CWEI's 14,738 leased net acres in Reeves County, Texas (the "Farmout Area"), subject to the terms of the Agreement.
These terms required, amongst other things, the drilling of an initial horizontal Wolfcamp well on or before February 1, 2015 (the "Initial Commitment Well") with CWEI as the operator. Caza was to provide 75% of the costs attributable for drilling, completing and equipping the Initial Commitment Well through production facilities to earn a 50% working interest (approximate 37.5% net revenue interest) in the well and the right to participate in the balance of the Farmout Area.
Beyond the Initial Commitment Well, Caza was obligated to drill and complete, as the operator, two additional horizontal Wolfcamp wells (Additional Commitment Wells) in the Farmout Area by December 31, 2015 in order to continue the Agreement beyond that date or otherwise pay a fee of $1.6 million for each Additional Commitment Well not drilled.