COGC's partners ("Partners") and Chevron will contribute approximately 16,000 and 3,000 gross acres of mineral leases respectively for a 33 square mile high definition 3D exploration seismic survey. After processing and interpretation of the seismic data, COGC and the Partners will drill 3 wells on mutually agreed prospects. The Partners as a group and Chevron will then each hold a 50% interest in the lands and wells.
The 3D high definition survey will be the first modern data acquisition over the survey area. Drilling targets are highly porous and permeable sandstone reservoirs containing 15 degrees API to 25 degrees API crude oils at depths of 1,200 feet to 3,000 feet, and are therefore relatively inexpensive to drill.
It is expected that the seismic survey will commence in the third auarter of 2007.
COGC has an option to earn a 12.5% interest (after recovery of 200% of costs) in the seismic area leases and wells by paying 25% of the cost of 3 wells in each of 3 prospect areas covered by the seismic survey.
California Oil & Gas Corp. will be the operator for the seismic survey and the drilling. Producing wells will be operated by Chevron utilizing their extensive facilities and personnel in the area. Crude oil will be sold to Chevron at posted market prices.
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