Morumbi Oil & Gas Commences Trading as a Newly Public Co
Morumbi Oil & Gas is a newly traded public company with attractive near-term development and production assets. The Company commenced trading on the TSX Venture Exchange on December 22, 2009 after completing a reverse take over with Blackburn Ventures Corp. (see press release dated December 23, 2009). In conjunction with the transaction a non brokered private placement of $1,487,000 was completed at $0.30 per unit (comprised of one common share and one warrant exercisable into one common share at $0.40 per share for a period of one year) resulting in total shares outstanding of 12,458,330.
The immediate focus of the Company is the re-completion of the existing 12-33 horizontal well with a surface location at 4-33 in the SW quarter of the property. The re-completion will involve suspending the horizontal portion of the wellbore (which extends to 12-33) and perforating a 15 meter interval in the build section located at the top of the Cadotte reservoir. The objective of completing the well is to enable the Company to pursue the drilling of a new vertical well in the NW quarter of the property (12- 33 well). In addition, the well could be useful as a water disposal well if the decision is made by Morumbi to put in its own battery facility if the recompletion does not yield economic rates of production. At present the well is tied into nearby CNRL facilities where the emulsion is processed.
Morumbi anticipates drilling this new well (12-33) in the NW quarter in February 2010 once government approvals have been received. This well offsets a vertical well that produced just under 500,000 barrels of 37 degree API oil and had production rates of over 600 bopd. The original 12-33 horizontal well bore penetrated the target zone of the new proposed location at 12-33 and horizontal log data shows excellent porosity and hydrocarbons are present.
Morumbi also has applied to drill a second new well (7-33) in the SE quarter Section in LSD 7 which it plans to drill directionally from LSD 6. This will put all wells in close proximity to each other and make the production operations more efficient. This well is located up dip to the NE of the existing 4- 33 surface location of the original 12-33 well. Depending upon the results of the re-completion and the new 12-33 well, Morumbi will determine whether to proceed to drill the 7-33 well location.
All drilling operations are planned to be completed by March 31, 2010 in order to take advantage of the significant royalty incentives announced by the Alberta Government. These incentives will reduce royalties payable to the Alberta crown for 12 months from up to 50% of revenue to a maximum of 5.0%. Furthermore, the $200 per meter royalty credit program implemented by the Alberta Government for new wells ($300,000 for the 1,500 meter wells to be drilled at McKinley) can be used to further reduce Morumbi's royalties to a maximum of 50% of the royalties otherwise payable.
Morumbi also wishes to announce that pursuant to the terms and conditions of its Stock Option Plan, it has granted, in the aggregate, 1,150,333 incentive stock options (the "Options") to the officers, directors and consultants of the Company. The options will be exercisable for a ten year period at $0.35 per share and subject to approval by the TSX Venture.