Energas Signs KY Drilling Agreement

Energas Resources, through its wholly owned subsidiary AT Gas Gathering Systems, has reached an agreement with Double G Energy to drill up to 200 wells within the Company's Pulaski County leases in eastern Kentucky. Phase I of the program is for 55 wells to be drilled and completed in 2004. Double G will fund the drilling program carrying Energas for its part with a payout arrangement from production. Double G shall pay for the assignment of each individual well location and for the turnkey drilling costs for each well. Energas will refer to this project as the Bluegrass Drilling Program.

Double G further agreed to advance up to $200,000 to cover the costs of enhancing the gathering systems and compressor stations. Energas will continue to own 100% of the gathering system and compressor stations.

Energas, through its wholly owned subsidiary TGC Inc., a Kentucky Corporation, will be the operator of the field. Double G is to own 80% of the full working interest in each of the wells and Energas will own the remaining 20% of the working interest until payout. After payout, Energas will own 50% of the working interest and Double G will own 50% of the working interest. "This is a win-win plan for both Energas and Double G," stated President George Shaw, "This program will supplement our current project and accelerate the build up of production and reserves for Energas. Additionally, this frees up some working capital to further expand our Kentucky project."

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