Blackrock Petroleum Corp. reported that it has entered into a Farmout and Participation Agreement, which is effective as of February 26, 2008, with Montello Resources (USA) Ltd., a subsidiary of Montello Resources Ltd., Park Place Energy Corp., an Alberta corporation, and Austin Developments Corp., an Alberta corporation, with respect to two test wells on the oil and gas lease dated December 22, 2007 between Southeast Ventures, Inc., as lessor, and Montello Resources (USA) Ltd., as lessee, located in Morgan County, Tennessee.
Under the Farmout Agreement the participating interests are as follows: Montello Resources (USA) Ltd., as operator, is paying 15% of all costs associated with the test wells to earn a 35% interest in the associated production spacing units; Austin Developments Corp. is paying 20% of the costs to earn a 30% interest; Park Place Energy Corp. is paying 5% of the costs to earn a 5% interest; and the Company is paying 60% of the costs to earn a 30% interest.
The first test well, Morgan Highpoint # 3, located in Morgan County, Tennessee is strategically located approximately one mile west of the John Bowen # 1 & # 2 Wells and one mile north-west of the Howard White # 1 Well. From a geological standpoint this is significant as the Howard White # 1 Well, that was drilled in 2002, resulted in a blowout flowing over 500 barrels/hour of light crude oil (12,000 barrels of oil per day for two days) before being capped. Environmental and legal issues relating to the blowout have to date precluded the re-drilling of the Howard White # 1 Well.
After encountering hydrocarbons below the intermediate casing in the Morgan Highpoint #3 test well, as a precautionary measure, Montello, the operator, has secured the well and suspended operations. The drilling rig has been released and moved to the second test well location, which is named Morgan Highpoint # 4. The Morgan Highpoint #4 test well, which is located approximately half a mile south of the suspended Morgan Highpoint #3 test well, has been spudded on March 10, 2008.
Montello, the operator, is now in the process of mobilizing additional safety and under balanced equipment to be placed on the Morgan Highpoint # 3 test well after which drilling operations will recommence.
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