Midnight Oil Exploration has issued an update of its recent activities including continued success in its Deep Basin program and the sale of its non-core West Central area assets.
In the Deep Basin area Midnight has assembled a large land base and plans an aggressive drilling and completion program this winter. Midnight continues to enjoy success applying new technologies to identify and unlock the potential of this tight gas resource play.
Midnight is confident in the potential of its Deep Basin lands and plans to pursue an aggressive drilling and completion program. In order to expedite this program and provide financial flexibility Midnight has agreed to the sale of its non-core assets in the West Central area of Alberta to Daylight Resources Trust ("Daylight") in exchange for $2.0 million cash and 3.75 million units of Daylight Resources Trust.
Midnight's West Central assets account for approximately 550 boe/d of Midnight's current production and 2 million boe of proved and probable reserves. Midnight plans to hold the units on a short term basis and will conduct an orderly sale of the units into the market. The sale is effective October 1, 2008 and is scheduled to close on or before October 31, 2008. The sale is subject to customary conditions including regulatory approval.
Midnight's drilling program targets both conventional and tight gas in the Deep Basin. As part of the company's winter program, Midnight has arranged a farm-out and participation with Daylight under standard industry terms in a portion of this program. Midnight plans to operate and drill 10 gross (4.0 net) wells and perform 6 (4.2 net) additional recompletions on existing wells prior to spring breakup. The tested and behind pipe volumes from the first two recompletions exceeds the production from the West Central disposition.
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