Amarillo, Tex.- based Exterra Energy Inc. has signed an LOI to acquire 640 acres in the Barnett Shale. 

The assets have current net production of $22,000 per month. The company believes the horizontal Barnett Well, which is producing the majority of the revenue, has "tremendous" growth potential. Only one third of a 3000 ft. horizontal leg has been frac'd. Exterra expects to frac this leg soon and hopes to increase production to near 1.2MMCFD or 1.5MMCFD. If accomplished, the net cash flow would increase to roughyl $100,000 per month.

In addition, Exterra acquired some work over opportunities with this purchase and believes this acreage should hold at least 8 drilling locations with initial production rates of an average 1.2MMCFD to 1.5MMCFD.

Closing is expected in the first week of October. Exterra says the purchase is in association with “a large independent Barnett Shale producer” and that the company expects to have additional opportunities with the group.

According to the company website, Exterra owns working interests in over 50 producing wells in the Barnett with over 9 MMCF of gas production per day and some condensate. Exterra also has the right to acquire working interests in seven Barnett Shale Wells that are drilled, cased, and ready to be frac stimulated, as well as two Barnett Shale wells that are ready to be drilled.

In addition, Exterra owns a working interest carried through first sales in approximately 3,979 acres of proven undeveloped leases (PUDS) in Parker and Hood Counties, Texas. Currently, six Barnett Shale Wells on the leases have been placed into production and are producing significantly. The remainder of the lease will be the subject of a continuous drilling program conducted and operated by Carrizo Oil & Gas Inc. (Nasdaq "CRZO") and Sauder Management. This acreage could support numerous additional wells.

Source:  Exterra Energy Inc.