Petrolympic announced that Canbriam Energy, has successfully completed the initial exploration program relating to the Farmout and Joint Operating Agreement that was entered into among Petrolympic, Ressources & Energie Squatex and Canbriam in November 2008, and subsequently amended in June 2009, and confirmed the selection of the first 8,000 hectare block in which it has earned a 60% interest.
On March 30, 2010, Canbriam finalized their selection of two St. Lawrence Lowlands exploration permits, 2006PG864 and 2006PG866, as forming part the farmout lands under the Agreement. On April 7, 2010, Canbriam selected its 60% earned interest in a contiguous 8,000 hectare block located within permits 2006PG864 and 2006PG866. This first block includes the Farnham No.1 well site spudded in July 2009 and drilled to a total vertical depth of 2,507 metres through the Utica Formation. The Partners' interests over the 8,000 hectare block are now as follows: Canbriam 60%, Squatex 28% and Petrolympic 12%.
Pursuant to the Agreement, Canbriam maintains the option to earn a 60% interest in up to 24,000 additional hectares within the Farmout Lands by drilling up to six additional vertical/horizontal wells, and by making cash payments of up to $13.5 million ($9.45 million to Squatex and $4.05 million to Petrolympic) prior to November 30, 2011. Canbriam is responsible for all drilling, completion or abandonment costs incurred with respect to the wells described above.
Canbriam has fulfilled its obligations under the Agreement that it was required to meet to date, including the exercise of the first option by accelerating a payment of $3.5 million ($2.45 million to Squatex and $1.05 million to Petrolympic) prior to November 30, 2009 (see News Release dated June 15, 2009). Canbriam has to drill and case or abandon two vertical wells down to the Utica Formation and/or 30 meters into the top of the Trenton Formation before December 31, 2010 to be entitled to a 60% interest over the next 8,000 hectare block.
Mendel Ekstein, the President and CEO of Petrolympic, commented, "We are pleased with Canbriam's progress on and commitment to the Farmout Lands and we look forward to their continued developments and contribution as a significant participant to the advancement of the Utica and Lorraine Shale Plays in Quebec. Canbriam has been a significant participant in the Southern portion of the Utica Fairway, successfully drilling wells both with Petrolympic/Squatex and Gastem. With the continued fulfillment of Canbriam's obligations under the Farmout Agreement, we will retain significant exposure to the developed permits, while retaining substantial exploration opportunities in the Utica Fairway. Petrolympic and Squatex are currently developing new exploration work programs on the non-optioned permits and will be seeking out additional farmout arrangements on the jointly held properties."
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