The Rodney South oil field lease has an estimated 3.65 MMStb of oil in place and can be expected to recover 1.33 MMStb if fully developed by standard waterflooding. It is anticipated that with the implementation of DeepWave(SM) during flooding, in excess of 2 MMStb of oil may be producible.
The companies have 120 days to enter into a Definitive Agreement, which will detail development plans, budgets, and responsibilities of each party. Under the terms of a Definitive Agreement Wavefront will provide up to $C 2.25 million for initial capital expenditures and working capital requirements. Additional development costs are expected to be derived from cash from operations. Greentree will act as the Operator of the lease and will contribute the petroleum leases, existing seismic and geological data, and the use of its existing field facilities. Greentree will also provide its field maintenance staff, administrative, and office support staff. In consideration for each party's contributions, cash flow from operating activities will be allocated 70% and 30% to Wavefront and Greentree, respectively, until payout of Wavefront's initial $C 2.25 million capital investment. Subsequent to payout, cash flow from operating activities will be allotted 50% to each of Wavefront and Greentree respectively.
Brett Davidson, President and CEO of Wavefront commented, "This is an exciting opportunity for the Company to widely deploy DeepWave(SM) in a historic region where in 1858 the first oil well in North America was dug fully one year before the Drake well in Pennsylvania. Entering an oil pool in early stage exploitation using DeepWave(SM) should result in significant recovery. The Company is pleased to be co-developing a field with a progressive Canadian junior producer who is looking to a proven technological edge to maximize oil recovery and build value for its shareholders. We look forward to successfully working with Greentree's President, Duncan Hamilton and his team."
Duncan Hamilton, President of Greentree stated, "This is an excellent prospect for a junior such as ourselves to utilize 'Cutting Edge' technology. The results that Wavefront have generated to date are unquestionably positive and we are pleased that they wish to co-develop the South Rodney field with us. Our joint preliminary modeling has indicated that DeepWave(SM) will potentially recover substantially greater reserves over a much accelerated time frame which will in turn significantly increase the value of the property".
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