Xtract Energy (LON:XTR) shares got a boost this morning, after its 50.02 percent owned associate Elko Energy finalised a joint venture with US oil major Chevron (NYSE:CVX).
In September Elko agreed a deal for its two licenses in offshore Netherlands.
In return for its interests in the licenses, Elko will receive an overriding royalty up to 5 percent of the sales value from Chevron’s share of gas and condensate production. On top of that, Chevron will also pay Elko €4.3 million in cash for its share of past costs.
Yesterday, Elko announced that the transaction has now closed.
Xtract shares advanced around 7 percent this morning, and they were last changing hands at 1.875 pence.
Chevron’s first well on the acreage is expected to be drilled in 2011.
“We look forward to the results of the well planned for next year and to a successful ongoing business relationship with Chevron,” Elko chief executive Peter Moir said in September.