Stetson Oil & Gas has signed letter agreements with Red Willow Great Plains that provide for joint ownership and development of oil and gas mineral rights on lands situated on the Fort Berthold Reservation in North Dakota.
Red Willow Great Plains is a wholly owned business enterprise of the Southern Ute Indian Tribe. Red Willow currently has net daily oil and gas production of approximately 29,000 boepd. In addition to substantial natural resources on their own reservation lands, the Southern Ute Indian Tribe has significant commercial enterprises in oil and gas off the Reservation, gas gathering and treating, real estate, sand and gravel, alternative energy, and private equity investments in a number of additional industries.
Stetson has agreed to assign 50% of its interest in oil and gas mineral rights covering 12,696 acres of Allotment Lands to Red Willow. In consideration, Red Willow will pay for 50% of the costs incurred in relation to purchasing these lands, and will farm-in and cover the first US $3,500,000 of Stetson's share of drilling, completing and equipping costs on well(s) drilled on jointly owned lands. Stetson will be the initial Operator of the Allotment Lands. Red Willow has agreed to repay Stetson its share of the costs incurred in connection with purchasing the Allotment Lands within 15 days of receipt of all necessary approvals.
Stetson has also agreed to assign 60% of its interests in oil and gas mineral rights on 8,185 acres of Tribal Lands to Red Willow. Red Willow will pay for 60% of the costs incurred in relation to purchasing these lands, and will also be required to share in the obligations of the Tribal Lands, which includes, among other things, the commitment to drill three wells during the initial term of the leases. Stetson and Red Willow have received consent and approval for the assignment of the Tribal Lands from the Tribal Business Council of the Three Affiliated Tribes and have also made the requisite payment for the leases to the Bureau of Indian Affairs. Red Willow will be the initial Operator of the Tribal Lands.
Stetson and Red Willow intend to commence shortly planning for joint drilling operations on the lands. The assignment of the interest in the Allotment Lands and the Tribal Lands is subject to approval of the TSX Venture Exchange.
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