Edge has signed a significant farm-in agreement with a major Canadian-based E&P firm (the "Farmor"). The agreement encompasses a substantial footprint of undeveloped land in the Edmonton Sands project area.
The farm-in agreement allows Edge to almost triple its existing land-base and drilling inventory in, and very near to, its Gilby / Willesden Green core area. The Company has already identified several high-impact sections contiguous to its existing land and infrastructure.
Under the terms of the agreement, the Company has access to 125 gross (68 net) sections of undeveloped land in the heart of the Edmonton Sands fairway. By drilling and completing a well, the Company will earn 100% of the Farmor's interest to the base of the Edmonton Sands in the respective section, subject to a 5% Gross Overriding Royalty. There is no minimum drilling, completion, equipping or tie-in obligation, no penalty for failing to drill and the agreement has a four year term, after which, all un-earned land will return to the Farmor.
Combined with the Company's existing lands, including the recently-announced acquisition, the Company now has a total of 56 gross earned or acquired Edmonton Sands sections and, including those from this farm-in agreement, another 147 gross sections that can be earned by drilling a well on each respective section. Including potential down-spaced locations, Edge now has a drilling inventory of over 700 potential Edmonton Sands locations that can be drilled on highly-favorable economic terms, using Edge's unique mapping and completion techniques, accompanied by a magnanimous timeline.
Brad Nichol, President and CEO of Edge commented, "Inspired by the current cycle of low natural gas prices, Edge continues to see these times as an unprecedented occasion of opportunity. This could not be better demonstrated than by the terms of this farm-in transaction. Even in this low-priced commodity environment, we continue to be cash-flow positive by utilizing our unique competitive advantages. This allows us to (i) profit during these times when many companies cannot, and (ii) position the company for unprecedented growth when we exit this low point in the cycle." Nichol added, "This farm-in agreement affords Edge the luxury of fastidiously choosing drilling locations over the next four years and weighing commodity prices with capital deployment, without the burden of unyielding time-commitments that normally accompany farm-in agreements of this nature."
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