The Board of Kilgore Oil & Gas is pleased to advise that it has entered an agreement to acquire an additional 5.2% WI in the West Klondike Exploration Prospect, which covers an area of 640 acres in Iberville Parish, Louisiana. Kilgore has acquired this additional 5.2% WI through reimbursement of back costs of approximately $40,000 and otherwise on materially the same terms as the recently announced acquisition of a 5% WI from Grand Gulf Energy Ltd.
Kilgore will now earn a cumulative 10.2% WI in the West Klondike prospect by paying 13.5% of the drilling and completion costs of the initial exploration well, due to be spudded in October 2011. The well is expected to take 30 days to be drilled to a total depth of 10,900ft. Kilgore’s share of the dry hole costs are approximately US$360,000.
Kilgore has now gained exposure to 2 significant onshore, exploration prospects in Louisiana, both of which will be drilled and tested in the next 2-3 months. This confirms the Company’s new strategic direction of combining the testing of high impact exploration prospects together with the realisation of value from its Duvernay Shale and Rock Creek Oil Projects in Canada through the partial sale/farmout process currently underway with Macquarie Capital in Calgary.
The West Klondike Prospect is a fault block closure which has been identified on 3D seismic data and is in close proximity to analogous offset production. The targeted sand sections are the Marg Tex, Lario and Upper and Lower Nod Blan. The likely resource potential is 2 million barrels of oil (MMBL) and 6 billion cubic feet of gas (BCF) with unrisked potential of 4.8 MMBL and 17 BCF gas. In addition to the main target there a larger, high pressure, prospect in the leased area that will require a separate deeper well. The target sands of this deeper feature (Bridas) have recently yielded a significant discovery approximately 2.5km to the North-East.
The West Klondike participation terms are favourable, with the Company paying 13.5% of the initial well and completion costs (US$360,000) to earn its 10.2% WI. In a success case the Company’s share of completion costs are estimated to be a further US$100,000.
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