Ryland announced that its wholly owned subsidiary Pebble Petroleum has entered into a new farm-out agreement with Crescent Point Energy.
Under the agreement, Crescent Point has agreed to spud a test well by June 30, 2010, subject to rig availability, surface access and regulatory approval, at a location of its choice on a three-section lease in the Flat Lake area of southeast Saskatchewan acquired by Pebble in November of 2009. The test well, which has been licensed, will be a horizontal well which will test the Bakken formation. Crescent Point must pay 100% of the costs to drill, complete and equip or abandon the test well to earn a 50% working interest in the three sections comprising the lease as well an additional 11 net sections of Ryland leasehold acreage. If any wells are subsequently drilled on acreage in which Crescent Point has earned its 50% working interest, each of Pebble and Crescent Point will be responsible for payment of 50% of the costs of such wells and hold a 50% working interest, subject to the provisions of the operating agreement between the parties. Crescent Point will be the operator of the test well and the initial operator of all post-earning wells.
This is the fourth farm-out agreement between the Company and Crescent Point, the first three having been entered by Pebble with TriAxon Resources prior to TriAxon's acquisition by Crescent Point. Under the other agreements, Crescent Point has the right to earn a 50% working interest in and to a total of approximately 81 sections of Pebble acreage in the Flat Lake area by drilling a total of 8 wells. The earn-in under those agreements is limited to the Bakken formation only. Drilling is ongoing.
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