Edge has signed a significant farm-in agreement with a major E&P Company in its core Edmonton Sands geographical area. The deal consists of a 4 well drilling commitment followed by an additional 23 optional wells, which would result in a total of 27 sections that would augment the Company's existing 19 sections.
After several months of negotiations, the Company is positioned to potentially increase its current Edmonton Sands land-base by 142% with highly-prospective lands that are largely contiguous and immediately adjacent to the Company's existing properties. The contiguous nature of the package will allow the Company to control its own production, reduce its operating costs and make efficient use of capital by constructing its own pipeline and compression facilities in the area.
Brad Nichol, the Company's President & CEO, commented, "This deal is another positive step towards achieving our vision of being Canada's premier Edmonton Sands specialist. Our reputation as Edmonton Sands experts has opened the door to this large opportunity with one of Canada's largest E&P companies, and we look forward to continuing along this path well into the future. We will continue to focus on the high capital efficiencies and near-perfect success rates awarded by the Edmonton Sands, while many of our industry peers pursue highly-competitive play-types."
The Company must elect its 4 commitment wells by April 30, 2010 and is required to complete the drilling of these 4 wells by September 30, 2010 to earn those 4 respective sections of land. The Company then has the option until March 31, 2011 to drill up to 23 additional wells on the remaining 23 sections. By drilling 1 well per section, the Company will earn 100% the farmer's interest in each respective section, subject to a single-digit gross overriding royalty.
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