The properties, acquired by Ryland's wholly owned subsidiary Pebble Petroleum Inc., are comprised of two blocks of Crown PNG leases in Saskatchewan totaling 7,998 acres. The properties are contiguous to the company's existing leasehold interests and have increased Ryland's total acreage in Saskatchewan to 299,231 acres contained in a block spanning approximately 85 miles in length and an average of 10 miles in width.
The asset purchase included one wellbore with established production from the company's objective formation. Ryland paid $1,200,000 cash for a 100% working interest in the properties. In addition, the sellers have retained a 1% gross overriding royalty on one block of acreage and a 2% GORR on the second block.
The acquisition of the assets provides a valuable means to enhance the evaluation of the company's holdings. Current plans call for fracture stimulation of the newly acquired wellbore to improve the productivity from the objective formation. This work is expected to commence within the next two weeks. Ryland believes that successful re-completion of this well will confirm additional development drilling opportunities on both the newly acquired acreage and the company's adjacent properties.
As previously announced, the company has also planned an additional four-well drilling program, slated to begin in mid-November, for the purpose of further testing of the objective formation on the southeastern extent of the company's leasehold block. The preliminary evaluation program has also led to the identification of three more prospective horizons that will be assessed as part of this drilling program. The company continues to be optimistic about the potential for significant development drilling in 2008.
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