Palm Beach, FL 5/21/12 (StreetBeat) -- GreenHunter Energy, Inc. (NYSE: GRH), a diversified renewable energy company predominately focused on water resource management in the unconventional oil and natural gas shale resource plays, announced today that its wholly owned subsidiary, GreenHunter Water, LLC, has entered into a definitive Joint Venture Agreement (“JV”) to develop seven Class II salt water disposal (SWD) wells to be located in Gonzales, Karnes, DeWitt, Frio and La Salle counties of South Texas. These new wells will be strategically located in the heart of the Eagle Ford Shale Play and will establish GreenHunter as the dominant operator of SWD capacity and a leading provider of Total Water Management Solutions™ in this very active region.
When fully operational, management expects aggregate commercial disposal capacity from these wells to exceed 140,000 Barrels per day (BBL/D). For its 75% ultimate share in the JV, GreenHunter will pay total consideration to the JV partners of approximately $3.6 million in a combination of cash, newly issued GRH restricted common stock (valued at $2.06 per share) and Series C perpetual cumulative preferred shares. Management is presently budgeting capital expenditures of approximately $1.75 million for each SWD facility location.
The seven properties are very strategically located and include leases on a combined 84 surface acres that will be developed under a drilling and completion program scheduled to immediately commence development. The portfolio of seven properties includes four fully permitted wells and three wells in various advanced stages of the application and approval process with the Texas Railroad Commission (TRRC). GreenHunter will manage all aspects of the JV including the drilling, completion, facility equipment installation, and operations of the SWD wells and facilities.
Commenting on this significant transaction, Jonathan D. Hoopes, GreenHunter President and COO stated, “There were 138 drilling rigs running in the five counties that comprise our Eagle Ford joint venture territory as of the end of April. This represents a 20% increase in drilling rig count since the beginning of the year and we expect the number of rigs to keep growing throughout the year as operators reposition capital budgets into this prolific resource play. A further indication of the potential future drilling activity in this five-county area is the number of oil and natural gas drilling permit approvals, which is up 76% for the three month period ending April 30 compared to last year. Significant disposal capacity restraints continue to exist in this region as produced water grows due to this increased new well activity. By combining these new joint venture SWDs with our existing Eagle Ford operations, GreenHunter Water will become a major service provider with its Total Water Management Solutions TM in the evolving Eagle Ford Shale Play.”
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