Molopo is partnering a US energy producer, Dallas-based Foree International, 50/50, in an oil and gas project with multiple targets in Mason County, West Virginia.

The first appraisal well is expected to be drilled in the September quarter and nearby infrastructure has enabled gas sales agreements to be negotiated, according Molopo.

The project contains multiple oil and gas targets in sandstones, shales and coals. Gas in the leases is currently being produced from the Ohio Shale zone.

Central to the US expansion is Molopo’s success in generating more gas from coal seams by horizontal drilling as opposed to more conventional coalbed methane fraccing methods.

Foree has farmed into the 8000-acre producing petroleum lease through an agreement with Base Petroleum, the current holder of the lease. Base Petroleum has 37 wells producing oil and gas in the joint venture’s leased area.

The Mason County region is a relatively mature oil and gas province in which hundreds of oil and gas wells have been drilled, said Molopo managing director Stephen Mitchell.

“While production from these existing wells and their surrounds is excluded from the farm-in, they clearly demonstrate the prospectivity of the area,” Mitchell said.

This arrangement leaves significant targets in the fractured Ohio Shale open to Molopo and Foree, allowing the partners to appraise and develop all the oil and gas potential of the Berea, Oriskany and Newburg Sandstones, and the coalbed methane prospectivity of the Freeport coal seams. In addition, the joint venture expects to add additional acreage in the vicinity, according to Mitchell.

“Although most current production in the leased area is gas from the Ohio Shale, all of the prospective formations produce hydrocarbons in West Virginia and surrounding states,” he said.

“As wells in the region are typically low pressure with modest production rates, we are particularly interested in whether the horizontal drilling techniques employed in Australia will substantially increase gas delivery in the three main objectives, namely the shallow sands, shales and particularly coals.”

Gas in the region typically trades at a premium to average US gas prices, which in turn were three or four times higher than Australian prices, according to Mitchell.

“With our technological expertise and low entry cost into this JV, the United States expansion adds significant upside for Molopo,” he said.

“Gas sales arrangements have been made with Base Petroleum Inc, which owns and operates existing gas infrastructure in the region, to take any initial production from the Molopo-Foree joint venture.”

Mitchell said the Mason County project fitted within Molopo’s longer-term strategy of building a quality portfolio of oil and gas assets where exploration risk was reduced by previous work or existing nearby production.

“While the development of our Australian projects in Queensland and NSW remains the company’s priority, we are constantly reviewing new opportunities in low cost, lower risk projects where our technical expertise can add value,” he said.

The new joint venture partners had also agreed to work together to seek and appraise oil and gas opportunities in selected regions of the US and South Africa.

Foree is an independent oil and gas company with production and exploration projects in the north-east US, Texas, the Czech Republic and South Africa.