Rolland Energy Inc. has signed a farm-in agreement with Severo Energy Corp. to participate in the drilling and development of four shallow gas wells in east-central Alberta.
Each of the wells is targeted for shallow Cetaceous and Devonian zones in an established field and has multi-zone potential and seismic support, reducing the geological risk. None of the wells has a target depth greater than 900 meters, and each of the wells is within one mile or less of a gas pipeline with availability, translating into low drilling and tie-in costs.
Severo will be the operator for the program. The drilling will take place on four Crown P&NG leases at Abee, Balloque, French and Thorhild. The first well is expected to commence drilling during December 2007, and the last three wells should be drilled in January or early February, subject to rig availability, surface access and weather conditions.
Under the terms of the agreement the corporation will contribute 25% of the capital costs required to drill and complete each of the wells for an undivided 25% working interest before payout subject to a pro rata share 15% gross overriding royalty. After payout, subject to an election by Severo, Roland's working interest may be reduced to 15% upon conversion of the gross overriding royalty. Two other Partners will contribute 60% of the capital costs for a 60% working interest and Severo will contribute 15% of the capital costs. Upon program completion the Corporation will earn in 2,560 gross acres.
"This is a low-risk, bread-and-butter development opportunity for Rolland Energy with no operating requirements and with the potential to increase the size of our asset base and our revenue-generating capacity", said Michael McLellan, president and CEO.
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