Torchlight Energy Resources Inc. entered into a letter of intent (LOI) for a farm-In agreement on its Orogrande project in Hudspeth County, Texas, the company said Sept. 9.

By signing, Torchlight received a $100,000 deposit. Torchlight’s partner in the project would have to spend $50 million over the next few years to earn a 50% working interest, the company said.

CEO John Brda said Torchlight worked through discussions with many parties before selecting a group that is the oil and gas subsidiary of a public company whose management has more than 30 years’ experience in E&P.

Torchlight will be reimbursed for its capex to date of about $5 million and will be carried through the first $45 million spent on the project. Then, the companies will handle future development on an equal-cost basis.

The LOI is subject to the execution of a definitive agreement that is scheduled to be finalized before the end of September, the company said.

Plano, Texas-based Torchlight Energy Resources Inc. operates in the Eagle Ford, Mississippi Lime and Hunton plays.