At this time, I will turn the call over to Energen Chairman and CEO, James McManus. James?
Thanks, Julie, and good morning to you all. This agreement with the quality industry partner is a great opportunity for Energen. In short, BHP and Energen Resources have the opportunity to co-own and jointly develop 56,549 net acres in the Delaware basin. Almost all the potential JV acreage is in Reeves County, West of the Pecos River, and represents the leasehold we’ve acquired over the last several years. For Energen Resources, this agreement means that any development West of the River, in the Wolf Camp shale, 3rd Bone Springs or the Avalon shale, will be at a faster pace than if we developed the acreage alone. And on multiple levels this agreement means that Energen is minimizing its risk while preserving substantial upside.
Let’s take a look at some of the specifics of the agreement that we signed yesterday. BHP has agreed to purchase three wells that we’ve already drilled, for approximately 18 million. BHP will carry us in horizontal completion operations in two of the wells. In the third well, we will split completion costs.The map on our website indicates the three wells with a green dot. Once BHP completes the purchase of the three wells and initiates horizontal completions in the two wells, they will have earned a 50% undivided interest in 4,829 net acres. By May 1, 2012, BHP has the option to purchase from Energen Resources a 50% undivided interest in 51,720 net acres. To earn the right to exercise this option, BHP must begin horizontal completion in one of the wells it has purchased. Should BHP exercise this option, we would expect to recoup all of our investment to acquire the acreage, and still have a 50% interest in the acreage. On a go-forward basis, the two companies would have rights to the Wolf Camp shale, 3rd Bone Springs and Avalon shale.