Forest Gate Energy has entered into an exclusive option agreement with a private Denver, Colorado-based oil company to acquire a 50% interest in oil licenses in the state of Utah, consisting of approximately 135,505 gross acres and 37,264 net acres for an amount of US $1,200,000. Forest Gate's exclusive option expires on March 31, 2010.
This land package covers a vast area with significant exploration potential, including at least 8 drilling prospective areas for oil and gas. The prospectivity has been determined on the basis of nearby producing field analogs, adjacent well discoveries and shows, 2D and 3D seismic data of good quality, surface geological mapping and the integration of the complete database into a geological framework.
This option acreage contains shallow reservoirs, which are thick, good porosity sandstones of the Cretaceous and Jurassic age, which occur in a variety of trapping scenarios in a depth range of 3,000 to 4,000 feet. They occur as lenses draping over structural anticlines, as eolian (sand dunes) and as wedges tapering up against faults or salt walls. Multiple targets can be intersected with a single well location. The identified prospects offer low-risk and low-cost opportunities for the discovery of large reserves of oil.
There are also several deeper potential plays at depths of 5,000 to 16,000 feet. These include a Granite Wash play (eroded granite, which has been redeposited as a sedimentary unit), several carbonates (reef, shelf, limestone), algal mounds, and an over-pressured fractured shale. These are older formations, including Mississippian, and all have productive analogs. These concepts represent somewhat higher risk than the shallower tier but offer the potential of large reserves, particularly gas.
Completion of this transaction would bring Forest Gate's total land holding in the area to 256,505 gross acres and 69,419 net acres.
"Recent drilling activity by Delta Oil & Gas and Golden State Resources underlines the emerging potential in the area", said Don Vandergrift, Forest Gate's President and Chief Operating Officer. "A large acreage spread, coupled with available technical data and identification of play concepts with drilling prospects, provides Forest Gate a unique opportunity in this relatively under-explored area of the U.S."
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