ReoStar Energy Corporation, an oil and gas company engaged in the acquisition, development and production of natural gas and oil properties with operations primarily focused on developmental resource plays and enhanced oil recovery projects, has entered into a definitive contract to acquire 13,000 acres of Eagle Ford Shale leasehold in the Gulf Coast region of South Texas for $5.5 million.

The Company will receive a 75% net mineral interest in 13,000 acres of leases covering all depths for three-year terms. The transaction also grants ReoStar the right to acquire an additional 30,000 acres of surrounding mineral leasehold within an Area of Mutual Interest (AMI) known as the Hackberry Prospect and includes access to 44 miles of seismic data covering the same.

The Eagle Ford Shale, which is located in Gulf Coast region of South Texas near the State's border with Mexico, is an upper-cretaceous deposit that is approximately 100 million years old and ranges from 4,000 to 14,000 feet in depth, with thicknesses of 50 to 500 feet. Prospective target zones in the newly acquired block include the Wilcox, Edwards, Buda and Eagle Ford Shale.

The Company estimates potential reserves of 500 billion cubic feet equivalent (BCFE) in the initial 13,000-acre leasehold block, with individual well bore reserves ranging from 6 to 11 BCFE depending on the zone. Test wells will be drilled in both the Eagle Ford Shale and Edwards zones and estimated drilling and completion costs range from $5.5 million to $4.5 million per well, respectively.

A large, independent oil and gas company is actively drilling its very sizable leasehold block and recently completed its #1-H Butaud into the Eagle Ford Shale, which initially tested at 17.5 million cubic feet per day (MMCFD) and 2,500 bbls of condensate per day (BCD). Other operators in the area have reported initial production rates ranging from 5 to 9 MMCF and several hundred BCD per well, all of which are stated to be choked back to regulate production.

Mark Zouvas, CEO of ReoStar, stated, "We are very pleased to announce our entering into a definitive agreement to acquire the Eagle Ford shale assets, an area which has seen tremendous activity recently and is turning out to be one of the more rewarding unconventional gas plays in the US. This opportunity gives the Company low-cost access to this reserve-rich play and allows us to continue with the operational success we achieved in the Barnett Shale, where we have successfully drilled and completed over 70 deep (9,000') shale gas wells. An important part of this transaction is our affiliation with ZaZa Energy, LLC and our ability to leverage the talent and experience of its staff in developing this acreage. We will draw on ZaZa's vast knowledge of the area and bolster our own technical capabilities at the same time. This acquisition has the ability to launch the Company's reserves and profitability to significantly greater heights."

Tags: ReoStar Energy Corporation