Eagle Rock Exploration has entered into a farm-in agreement on freehold lands in the Jensen-Warner areas of Southern Alberta.
Under the terms of the farm-in, Eagle Rock will re-enter and re-complete three wells in the Jensen area by June 30, 2008. Eagle Rock will earn a 100% interest in the section of land on which each well is located, and will have a rolling option to drill and earn 100% in adjacent sections of land on which similar wells are located. Eagle Rock commenced operations on the first of these three wells in March, 2008, with the Mississippian zones being targeted for re-completion. The three wells targeted for recompletion were drilled in 1995, with one well testing at approximately 150 boe/d. Due to a lack of infrastructure in the area at that time, no further testing was conducted and the wells were shut-in.
Provided Eagle Rock completes its first well by August 30, 2008, the farm-in agreement also provides Eagle Rock with the opportunity to earn 100% interest on each section of land on which it completes a new well in the adjacent Warner area. Eagle Rock intends to target the Mississippian trend in the Warner area for its exploration drill, with drilling planned to commence in the second quarter of 2008.
Eagle Rock will be operator of the re-completed wells and on any new wells in the Jensen-Warner areas carried out under the terms of this farm-in agreement. The agreement encompasses freehold lands and therefore production from this area will not be subject to the higher crown royalties proposed by the Alberta Government for 2009. The freehold royalty rate is 25%.
"High commodity prices combined with recent infrastructure developments locally have improved the economics of exploration and development in the Jensen-Warner areas," commented Jim Silye, President and CEO of Eagle Rock. He explained that "this farm-in provides Eagle Rock with a relatively low risk opportunity to substantially expand its operations in Southern Alberta."
Eagle Rock Exploration has appointed BryanMillsIradesso (BMIR), a Calgary and Toronto-based investor relations firm, to help communicate with the investment community. The TSX Venture Exchange requires that the details of the arrangement between Eagle Rock and BMIR be disclosed. Eagle Rock retained BMIR beginning on March 1, 2008 at a rate of $4,000 per month for a minimum of eight months, after which the contract will continue indefinitely until either party gives 30 days' notice. The key individual from BMIR who will work with Eagle Rock is Stephanie Mesher, Vice President, Investor Relations and a former investment advisor.
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