Under the terms of a purchase agreement with REO Energy, Ingenium Capital has the right to participate as direct working interest owner in all of the wells drilled on the acquired acreage. Additionally, Ingenium will receive an acreage fee for every well drilled on the acquired acreage as well as an overriding royalty interest derived from the production of those wells.
With this purchase, REO owns or controls approximately 8,000 acres of mineral leases in the Barnett Shale and will continue its exploration program, which is scheduled to drill and complete 30 wells this year. Ingenium has already participated as working interest in REO's wells in the Barnett and plans to continue its strategy of using REO as its operator in the area.
The Barnett Shale is the largest natural gas play in Texas. It is presently producing 900 MMCF of gas per day and is considered one of the largest U.S. domestic natural gas plays with sizable remaining resource potential.
Petroleum and natural gas production in the Barnett Shale play has been increasing steadily year after year. This is by far one of the most active and prolific oil and gas fields in America. Ted Kozub, President, states, "The significance of this acquisition is that we can participate in each well on an unlimited basis, whereas the present Barnett Shale drilling program has been sold out over the next several wells. This acreage acquisition will be able to host up to 50 wells. We plan to continue pursuing other promising prospects that should help us build a diverse portfolio with long-term value for our shareholders."
The company has requested a name change to Nitro Petroleum Inc. This is to correctly reflect the nature of the company business. Approval for the change is expected in February.
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