Drilling operations, using the Sedco 712 rig currently under contract to Oilexco, will commence on or before December 31, 2006. After drilling, working interests in the blocks will be held Oilexco - 45.00% (operator), Palace & Challenger - 26.00%, International Frontier - 10.4375%, Eternal - 9.1875% and Gulf Shores - 9.3750%. The agreement is subject to approval of the UK Department of Trade and Industry and execution of formal farm-in agreements.
The Company also reported that a seismic review - farm-in option letter agreement has been executed covering blocks 21/8, 21/14 and 21/15b located in the Central Graben area of the North Sea. Under the agreement International Frontier, Oilexco, Gulf Shores and Eternal have until July 15, 2006 to elect to drill a farm-in well on the Quad 21 acreage held by Palace and Challenger Minerals (North Sea) Limited.
Commenting on the agreements company President, Pat Boswell, said the company is pleased to partner with Oilexco who have gained the reputation of being one of the most innovative and aggressive exploration companies in the UK sector of the North Sea. Oilexco had the foresight to contract a drilling rig under a long term arrangement when demand for rigs in the North Sea has reached record levels. Having a rig under long term contract allows Oilexco to develop any exploration successes in a timely fashion.
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