The Prospect is Shallow Oil with the Test Well to commence on or before the end of 2006. PTCH is participating in the drilling and completion as to forty (40%) percent Working Interest and, in the event the Well is successful, its Interest reduces to twenty (20%) percent.
Upon completion of the Test Well, PTCH has an Option to conduct a 3-D Seismic Program or, alternatively, proceed to drill the Option Well. In the event PTCH elects to proceed with a 3-D Seismic Program, the Election to commence a well on the Option Lands will be extended accordingly.
An Area of Mutual Interest has been established and an active Acquisition program is currently underway.
Should drill results be positive and in view of reduced Spacing Unit Requirements, it is possible up to eight to sixteen wells could be drilled on the project with PTCH holding a twenty (20%) percent Working Interest.
Commenting on this opportunity, John Thornton, PTCH's President and Chief Executive Officer said, "With infrastructure already in place this is an excellent opportunity to participate in a project with the potential to provide cash flows very quickly to PTCH."
PTCH is a "junior" oil and gas company that currently earns oil revenue from a participation interest in 22 oil wells. These interests provide the company with some limited cash flow. PTCH is in various stages of its 2006 - 2007 oil and gas work program in Alberta, Canada. PTCH also has oil sands property interests in the heart of the Alberta oil sands, through a 75% majority ownership of Patch Oilsands Limited Partnership and on which it is planning a 2006 - 2007 oil sands work program. As at August 31, 2006 PTCH owned 6,091,937 Pharmaxis shares. It is the company's intention to complete the sale of these remaining Pharmaxis shares and use 50% of those net proceeds after tax towards PTCH's 2006 - 2007 oil and gas work program and for general working capital purposes; PTCH has also proposed a dividend of 50% of the net proceeds of all its Pharmaxis sale proceeds after taxes and costs, to shareholders of record as at July 30, 2004, subject to regulatory approval.
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