The pair signed a letter of intent to form an exclusive JV, planning to use MGX's "rapid lithium extraction technology" at Eureka's treatment plants to recover the battery material ingredient.
Eureka said it converted 10,000 barrels a day of "produced water", from oil and gas operators in the Marcellus and Utica shale formations, into valuable co-products including fresh water and high-purity sodium chloride.
"Through this joint venture, Eureka will begin extracting lithium as well," the companies said.
MGX president and CEO Jared Lazerson said the JV would not only look to install an initial rapid recovery system immediately but viewed it as "the first step in executing the strategic vision of petrolithium".
"The extraction of lithium from oil and gas well sources is a broad paradigm shift for the energy sector," he said.
"There may be a lot of lithium in the eastern U.S. Our clean technology unlocks this potential."
Eureka president and CEO Dan Ertel said through the JV, the company could help meet the growing need for lithium while simultaneously making a positive environmental impact.
MGX shares fell from C$1.44 a year ago to a low of 30c in December.
They rose 9.8% yesterday to 39c to capitalise it at $54.2 million.