Norstra Energy Inc. has entered into a farm-out agreement with Summit West Oil, LLC. for the South Sun River Bakken Prospect.
The South Sun River Prospect was identified by the Company's management as an excellent target for a Bakken well. It consists of over 10,000 acres of prime Bakken acreage with almost 10 years left on most of the leases. Bakken development is considered simple and basic horizontal drilling. Under the Farm Out Agreement Norstra will provide $200,000 for short term working capital and drill and complete a first well into the Bakken Oil Formation by Dec. 31; a second well into the Bakken Oil Formation by June 30, 2014 and drill and complete a third well into the Bakken Oil Formation by December 31, 2014. Upon completion of these drilling obligations, Norstra shall have earned 100 percent working interest in the entire acreage constituting the farm-out land. In the event that Norstra only completes the first and/or the first and second well, but elects not to proceed with the second and/or third well, Norstra will earn the above mentioned working interests only on the spacing unit on which well(s) have been drilled.
The Company's CEO, Mr. Glen Landry is a seasoned, third generation geologist who has spent 30 years exploring for oil and gas with a focus in Montana and North Dakota since 1980. Historical seismic, exploration and drilling records, some of which Mr. Landry was personally involved in, have been reviewed by the Company. The historical work was focused exclusively on deeper oil formations as the Bakken was not a commercially accessible oil formation at the time due to horizontal drilling and fracking technologies not being available. The technological revolution in the oil service industry has changed this. The sizable data provided through this existing historical logging and seismic work that covered the Bakken potential is now proving invaluable and during the last five years Mr. Landry spent significant time evaluating the Bakken Oil Formation in Montana and North Dakota.
A large blanket deposit covering hundreds of square miles is present and is currently being developed by over 200 drilling rigs in the Williston Basin of Montana and North Dakota. The Bakken Fairway in Northwest Montana, where the South Sun River Prospect is located, is very similar in geology and in log comparisons. Resistivity on logs, regional isopach maps of Bakken maturity, and the extensive existing seismic data guides the drill site selection for development of the project. The Company believes that the South Sun River Bakken Prospect is well within the maturity window and oil is confirmed with the offsetting Krone well that is just over 1 mile away that was drilled by Shell Oil Co. in the past while they were looking for deeper oil targets.
"This is a fantastic opportunity for Norstra and its shareholders," said Mr. Landry, the company's CEO. "I believe that this area of Montana could become the next Williston basin in time and we're well positioned to be a player in the area," he continued.
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