Admiral Bay Resources has acquired 280 net acres and three wells adjacent to its Thayer Project for $100,000 (US) from a third party. The wells presently sell into the Thayer gathering system and are capable of producing over 80 MMCFGPD and have one proven undeveloped drilling location based on Company estimates.
Related to its previously announced acquisition of the Thayer Project, the Company has entered into a swap agreement for 60 MMCFG per month with a $5.107 swap price at the Southern Star index beginning June 2009 thru December 2010. The Company also sold calls on 60 MMCFG per month at $8.00 NYMEX from January 2011 thru April 2012. These new hedges combined with the Company's existing costless collar for 60 MMCFG per month with a $5.50 floor and $9.00 ceiling at the Southern Star index that run thru March 2010 cover over 80% of the Company's gross sales proforma for the Thayer Project acquisition and provide a stabilizing effect to the Company's near-term cash flow at prices well in excess of the current spot prices in its market area.
In addition, the company has reduced salaries for all field staff and middle management by 10% and senior management by 20% until the market fundamentals improve.
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