Buffalo Herds into JV with Kadence for $30MM Drilling Program
Buffalo Resources Corp. has provided an update on its operational activities.
Drilling Joint Venture
Buffalo has entered into a Joint Venture with Kadence Limited Partnership of Vancouver, British Columbia. This JV will allow Buffalo to exploit its large inventory of drilling opportunities more efficiently and to expand the level of activity previously forecast. Buffalo and Kadence will commit up to $30 million for the purposes of completing a drilling program on certain Buffalo properties over the next 12 months. Kadence will farmin and pay 50%, to a maximum of $15 million, of all drilling, completion and equipping costs to earn 50% of Buffalo's working interest in the wells, subject to the payment of a 10% gross overriding royalty to Buffalo. After payout, Buffalo will retain 70% and Kadence 30% of the working interest in all wells. Under the terms of the JV, Buffalo will make an offer to Kadence not later than April 4, 2011, to purchase its interests in the JV properties.
Buffalo is currently finalizing its drilling programs for the remainder of 2008 and plans to drill between 60 and 70 wells. At Frog Lake, the Company will drill between 45 and 50 oil wells. The remaining 15 to 20 wells will be drilled in the Peace River Arch of northwest Alberta, at Whitecourt in west central Alberta, at Viking and Jenner in southeast Alberta and in southeast Saskatchewan.
Buffalo has completed, stimulated and tied-in its deep Mississippian horizontal well at Pincher Creek 13-28-004-29W4. The well initially produced natural gas at a rate of approximately 2 MMcf/d and has stabilized at a rate of 1 MMcf/d. In August, the Company plans to re-stimulate the well to improve productivity. In the Peace River Arch, a well drilled on Company owned land has been completed and tied-in and is currently producing natural gas from the Montney formation at a rate of 3 MMcf/d with 25 bbls per MMcf of associated liquids. The Company is currently evaluating follow up locations. Buffalo recently drilled ten wells at Frog Lake, Alberta resulting in nine oil wells and one abandoned location. It is expected that the oil wells will be on production by early August 2008.
Bill Trickett, the Company's CEO, commented, "Following the equity financing in May 2008, the sale of non-core assets in June 2008 and completion of the drilling JV, Buffalo is well positioned to aggressively pursue its large inventory of drilling opportunities."