Priveco has agreed to farm-in on various exploration prospects assuming 100% of seismic and well costs. San Telmo will retain between 40%-45% working interest in each project. The joint venture agreement will enable the two companies to strategically expand their exploration and development opportunities.
The exploration prospects farmed out are Gold Creek, Boundary Lake, Morinville and Mitsue, all in the Peace River Arch area of Alberta. Priveco has agreed to purchase, reprocess and interpret a minimum of 2 miles of seismic over each prospect, and has the option, prior to November 15th, 2005 to elect to spud, and drill at Priveco's sole cost, a well on each prospect. San Telmo will retain interests varying from 40-45% in each prospect and an area of mutual interest that extends 1 mile around each prospect has been established. Farming out these prospects is strategic for San Telmo and will accelerate growth of the Company. San Telmo will continue to focus on its exploration and development plans in the established areas of Gordondale and Teepee Creek with one well in each area to be spudded in the next three weeks.
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