The first agreement, with Shanpet Resources Ltd., will allow Mystique to follow up on its recent drilling success offsetting the Lochend Cardium M/O pool. The agreement obligates Mystique to drill one well and provides options to drill another three wells. By fulfilling its obligations, Mystique would earn 75% of Shanpet's working interests subject to a gross overriding royalty payable to Shanpet. The successful offsetting well that Mystique drilled in late 2004 is presently being tied into the Provident Energy Ltd. ("Provident") Lochend gathering system and facilities.
The second agreement was executed with Kaiser Energy Ltd. Kaiser's lands directly offset the three successful wells that Mystique drilled in late 2004 in the Harmatten area. The agreement obligates Mystique to drill one well and provides options to drill another two wells. By fulfilling its obligations, Mystique will earn 60% of Kaiser's working interests. Provident is currently constructing a six-inch pipeline to connect their well and Mystique's three wells to Provident's Lochend gathering system and facilities. Production from successful wells resulting from the Kaiser farm-in will also be tied into Provident's six-inch line.
According to Mystique president, Vic Luhowy, "We are pleased with the drilling results to date in our Harmatten/Lochend project. These new farm-ins will allow us to expand on our drilling successes and increase our productive capability in the area in addition to the option wells that we will continue to drill under the farm-in agreement with Provident."
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