Under the terms of the agreement, Golden Spirit can earn up to 47.5% working interest after the first two wells are drilled. Golden Spirit will deliver 1,000,000 shares of its common stock to Avalon and pay US$750,000 on or before December 10, 2004. In return, Avalon will issue and deliver 2,000,000 shares of its common stock to Golden.
The Unita lease comprises 13,189 acres with a potential 4 TCF recoverable gas and is overpressured by a 0.55 - 0.85 gradient.
"This was such an outstanding opportunity in the company's continuing efforts to grow and diversify that we could not pass it up," says Robert Klein, President of Golden Spirit Mining.
Available seismic data, covering several hundred miles, confirms the thick Emery pay zone and shows several sediment wedges in the prospect area suggesting a basin-wide, deep gas accumulation covering the entire field. This giant gas lease borders other leases owned by EOG Resources and EnCana.
The US Geological Survey estimated (in 1995) basin-center and deep-basin gas resources in the Rocky Mountain Laramide basins to be 250 TCF. The Drunkards Wash Field, just south of the prospect area is estimated to have between 2-4 TCF of recoverable gas. The Jonah Field Overpressured Gas Plain, which is analogous to this prospect area, has similar overpressuring, depth, reservoir rocks and is estimated to be 2.5+ TCF.
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