Stetson Oil & Gas has agreed to assume the interest of Vast Exploration Inc. ("Vast") in a joint venture arrangement with Samson Oil and Gas Inc. ("SOGI") in SE Saskatchewan (the "SamVast JV"). Stetson will be the operator of the joint venture and will have a 50% working interest. As consideration for the assumption of the Vast interest in the JV, Stetson will reimburse Vast for $137,500 of costs incurred to date on the JV and will reserve a 5.0% non-convertible gross overriding royalty.
The SamVast JV was created in September 2006 to jointly acquire and develop petroleum and natural gas rights with First Nations Bands in Saskatchewan by providing access to lands pursuant to the Treaty Land Entitlement ("TLE") process. Under the TLE process, open Crown mineral rights can be "frozen" for a term of 18 months whereupon, if surface rights are acquired, the mineral rights will be allocated to the First Nations Band that applied for the "freeze". The SamVast JV then has the right to farmin on these lands as to a 100% working interest subject to Saskatchewan Crown equivalent royalties, plus 5.0%. Stetson's assumption of Vast's interest in the SamVast JV is subject to the receipt of approval of the TSX Venture Exchange. The SamVast JV has signed agreements with four First Nations Bands, however, at present no land or mineral rights have been acquired by the SamVast JV.
In connection with the joint venture, Stetson intends to focus its exploration efforts on the Bakken production fairway in SE Saskatchewan. The Bakken formation produces light 42 to 44 degree API oil and has been developed primarily by horizontally drilling four wells per section. Newly developed fracturing technology has resulted in improved productivity rates and recoverable reserves, with individual wells initially producing at rates as high as 250 bopd.
The Bakken area has drawn significant interest in recent months, as prices paid for mineral leases in SE Saskatchewan at Crown land sales have been robust. The February 11, 2008 Crown landsale brought in bids totaling $132,399,338 on 43,784 Hectares of land from the SE Saskatchewan region alone, representing an average bid of $3,024 per Hectare. Stetson believes that the SamVast JV will provide a competitive advantage in acquiring mineral rights in this area.
Stetson is an emerging junior oil and gas company with exploration, development, and production programs in Saskatchewan and Alberta.
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