Eagle Rock Exploration Ltd. has entered into a binding letter agreement with an arm's-length party for the sale of its low working interest (approximately one third), non-operated assets in the fully developed field at Antelope Lake, southwest Saskatchewan in exchange for $6,880,000 cash and 100% working interest in 525 net acres of undeveloped land. The land acquisition will increase Eagle Rock's total undeveloped land in SW Saskatchewan to 2,365 net acres from 1,840 net acres.
Average daily production net to Eagle Rock from this field for March 2008 is estimated to be 135 bbls/d. Production has declined from 241 bbl/d in December 2007 due to higher water cuts and curtailments ordered by the regulator because of production over allowable limits in the past. The higher water cuts increase Eagle Rock's processing costs as Eagle Rock does not have a working interest in the facilities.
Closing of the disposition is subject to normal industry conditions and regulatory approval.
The combination of the sale proceeds with the net revenue received to March 31, 2008 returns 212% of the original investment in exploration and development cost in the Antelope Lake property since the discovery well was announced May 1, 2006.
"As a result of this transaction, Eagle Rock now operates virtually all of its properties, and these funds will enable us to accelerate our drilling program in southern Alberta and give us additional financial & operational flexibility. This divesture is consistent with the Company's strategic focus on 100% owned and operated land and facilities" said Jim Silye, President & CEO of Eagle Rock.
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