The Newbrook oil prospect consists of a Leduc (D-3) structure identified by 2-D seismic and each section will be earned separately on a rolling option by drilling a test well to the target formation. The size of the prospective structure is yet to be determined, but a comprehensive geophysical and geological evaluation will be undertaken by Goldnev prior to drilling. A D-3 oil discovery would likely result in a development initially on 80-acre spacing, which provides the potential for numerous wells on the three sections.
Under the terms of the Farmout and Option Agreement, Goldnev and Zappa will each fund 50% of the capital requirements to drill and test the initial well to contract depth. After drilling the initial test well, Goldnev and Zappa will each have earned a 50% working interest before payout and a 30% working interest after payout in the test well production spacing unit. Upon completion of the initial test well, Goldnev and Zappa will have earned the right to exercise their option to participate in additional test wells on the other two sections under the same terms. The Option well must be committed to within 60 days of the initial well's commencement of production.
A review of other D-3 pools, considered to be similar and used as analogues to this prospect, reveals that a successful well may have productivity ranging from 50 bopd to 300 bopd, with a most likely rate of 100 bopd. Likewise, prospective resources ranging from 125,000 barrels to 825,000 barrels per well may be achieved, with a most likely value of 450,000 barrels. This is an exploration play and there is no guarantee that any wells drilled will be successful.
The Leduc formation has been one of the most prominent and prolific oil producing pools in Alberta since the Leduc #1 discovery well on February 13, 1947, which initiated oil exploration and development in Alberta. Goldnev' and Zappa's Newbrook Leduc oil prospect is located on trend geologically to other Leduc producing fields in north central Alberta".
TransAction Oil and Gas Ventures Inc., of Calgary has been contracted by Goldnev to operate the project and the first well is expected to be drilled during January and February 2008.
Marc Dame, President & CEO of Goldnev commented "The Newbrook oil exploration prospect has the potential to become a significant portion of Goldnev's future growth and if successful will complement the Corporation's existing natural gas and unconventional (oilshale) projects. As a Leduc reef prospect, it is a high reward, low risk exploration play with a shared drilling cost for each well of no more than $300,000 dollars individually to each of Goldnev and Zappa. This will allow each Corporation to easily manage an aggressive follow-up development drilling program."
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