Signature, EnerJex to Form Drilling JV in Kansas
Signature Exploration and Production Corporation has entered into a letter of intent with EnerJex Resources to form a joint venture partnership in a lease located in Franklin County, Kansas.
The Lease lies on 214-acres and currently has 24 producing oil wells, two (2) water injection wells and two (2) temporarily abandoned, previously producing wells. According to an independent engineering assay report issued in 2008, cumulative production on the property was 64,499 barrels of oil, and estimated total probable reserves were 91,845 barrels of oil.
Under the terms of the letter of intent, Signature would purchase an un-divided 90% working interest in the Lease's assets for $1.5 million. As Signature's joint venture partner, EnerJex would manage the purchase of the Lease and development and operations thereof for a one-time management fee. EnerJex would retain the remaining 10% working interest. Once Signature has received $3 million, through the sale of oil at the property, EnerJex would receive an additional 15% working interest, resulting in an after-adjustment ownership of 75% Signature/25% EnerJex. The transaction is expected to close on or before May 15, 2010, subject to the completion of the agreements, due diligence and financing.
"The Lease is a major turning point for the Company and our shareholders. Upon the close of the transaction, Signature is poised to begin generating revenues from a number of the site's oil producing wells. In addition, we may have room for immediate expansion, including bringing the two shut-in wells online," said Steven Weldon, Chairman and CEO of Signature Exploration and Production Corp. "The Lease is a major step forward in diversifying our asset base and creating the potential for strong operating cash flows in 2010."
C. Stephen Cochennet, CEO of EnerJex Resources, Inc., stated, "In response to economic conditions and capital market constraints, we have recently begun to explore and evaluate various strategic industry alliances that can continue to exploit our properties. Signature Exploration is an ideal partner to help us further develop our current leases as we continue to grow production and reserves in the mid-continent region of the United States."