Nwest Energy has received approval from the Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB) for the consolidation of the company's four Exploration Licences 1097, 1098, 1103 and 1104 situated offshore western Newfoundland.
Under the terms of the consolidated Exploration Licence 1097R ("EL 1097R"):
1. Nwest will surrender 456,711 hectares (1,128,557 acres) from Exploration Licences 1097, 1098, 1103 and 1004;
2. Nwest will retain 202,838 hectares (501,223 acres) in the consolidated EL 1097R;
3. Period I of EL 1097R will expire on January 15, 2012;
4. Nwest may, at its option, extend Period I for additional two years by providing to the C-NLOPB before the end of Period I either:
(i) a description of 50% of contiguous lands to be surrendered together with a refundable drilling deposit of $250,000
(ii) a $1,000,000 refundable drilling deposit
5. Period II of EL 1097R shall immediately follow Period I and will expire on or before January 15, 2015;
6. In order to validate all sections of this Licence for Period II, Nwest must have:
(a) Drilled a well or the well has either been completed or has been commenced on the Licence and continue to be drilled in accordance with the Board's rules for during a period transition.
(b) adequately tested a valid geological target to be declared to the Board by Nwest prior to the commencement of the well.
7. All other licences terms and conditions in EL 1097 will conform to the most recent call for bids held by the C-NLOPB in November 2011.
The Exploration Licence consolidation will allow for the Company to focus specifically on the near shore development of the Green Point oil shale unconventional resource across all four licences. The near shore acreage will allow for the unconventional potential to be tested by drilling from onshore locations.
The Green Point shale is the proven oil source rock in the region. The recent AJM Petroleum Consultants Report ("AJM Report") provided a Best Estimate (P50) Undiscovered Petroleum Initially-in-Place Resource Best Estimate of 18.8 billion barrels.
The consolidated Exploration Licence also retains acreage over the "T prospect" covered in the 2008 E3D seismic program.
The details of both EL 1097R and the AJM Resource Report can be found on the Company's website (www.nwestenergy.com).
Nwest is evaluating its options regarding further exploration and determination of resource potential. The Green Point unconventional resource exploration program is at an early stage; significant work is required to determine the potential for commercially viable resource recovery.
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