Austin Exploration Ltd. (ASX: AKK.AX) formed a joint venture (JV) with Pierre Energy Partners to develop its Pierre Shale prospects in in Colorado, Austin said March 23.

Australia-based Austin is operator of an 11,560-acre Pathfinder oil and gas property in Fremont County, and it agreed to have Pierre drill two wells back-to-back in April and May. Pierre Energy will carry the drilling costs to earn 50% of the oil production from the C18#3 and C18#4 exploration wells. Austin will pay for the wells’ completion costs if there is a discovery.

Craig Energy, based in Denver, will provide drilling services for the JV, Austin said.

Guy Goudy, COO of Austin, said the agreement allows continued development of the property without upfront cost for the company.

The two companies are in advanced negotiations for a long-term partnership to continuously drill the property. Pierre would drill 10 wells in exchange for a 50% ownership of the formation. Pierre would earn the ownership after completing the last well, and until then, would earn half of Austin’s net revenue interest for each wellbore.

Pierre LLC will then drill two wells per year, minimum, and Austin will complete them for production cash flow.

Mark Hart, managing director and CEO of Austin, said the partnership means production will ramp up when oil prices return to normal.

Drilling results will be sent to the market when they become available.