Cotulla approves production‑sharing agreement with EP Energy for Harper pooled unit

Cotulla’s Board of Aldermen voted July 11 to approve a production‑sharing agreement (PSA) with EP Energy that will allow the company to drill directional wells in the Harper pooled unit and share production royalties with the city.

The agreement, presented by a council member and explained to the board by John Hamon of EP Energy, covers drilling that taps acreage the city owns but which is too small or oddly shaped to host a standalone well. Hamon said the proposed well sites will be off‑lease from city surface parcels and that the company has already drilled in adjacent locations.

Council members asked how royalties would be handled where the planned lateral runs under parcels with special accounting rules, including the municipal airport. A council member noted that any revenues attributable to airport property that had previously received federal funding must remain with the airport fund; staff and EP Energy said they will work through the accounting and lease details before production begins.

The board voted to approve the agreement after questions from council members and a brief presentation. The council’s approving remarks said the PSA will not alter existing leases but will make producible acreage revenue available to the city that otherwise would remain dormant because the parcels are too small to host their own wells.

What’s next: EP Energy representatives said permits are filed and the tentative timeline calls for drilling in the fourth quarter of the year. City staff will finalize accounting guidance for airport acreage and ensure any lease or federal‑grant restrictions are honored.

Attribution: John Hamon, representing EP Energy, provided the company’s technical overview; council members and staff raised questions about airport accounting and royalty splits.