Pennant announced that the farmin well Drumlin Pearl 7-9-30-16W4 has been drilled, completed and production tested. Information on drilling and testing was held "tight hole" or confidential to date, due to forthcoming Alberta Crown land sales which included open land parcels (posted) of interest offsetting the Pearl well. The Company can reveal that the well was successful in producing hydrocarbons during the flow test of a completed target formation. Further information regarding well operations will be provided, as the operator makes the information public.
The terms of the Farmin Agreement called for the Company to pay 75% of the costs to drill and complete the Test well and if required, 50% of equipping and tie-in costs. By satisfying the terms of the Agreement, the Company has earned a reversionary working interest of 50% BPO (before pay out) reverting to 25% APO (after pay out) of a drilling and completion capital cost multiple, subject to Crown royalties in the Drumlin Pearl 7-9 well. Pennant does not revert to 25% APO until a total of 300% of costs is returned to Pennant. In addition, the Company earned an undivided 25% working interest in all PNG rights to the base of the deepest formation evaluated on the Farmout Lands, which covered 1 section with the option to participate as to a 50% Working Interest in future land acquisitions, exploration and development within an area of mutual interest (AMI) for a period of 1 year from the effective date of the Agreement.
The Pearl well will qualify for the Alberta New Well Incentive Program, which provides for a maximum 5% Crown royalty rate during the first year of production. In addition, upon application the Company will qualify for the $200-per-meter-drilled, Crown royalty drilling credit.
Thomas Yingling, President of Pennant Energy states, "I am pleased to announce success at the first well drilled on our Pearl project. The Company is currently evaluating the next drill location. I am very proud of Pennants management team, as this is the fifth successful well that the Pennant team has drilled in a row. Once this well is tied in and producing it will add significantly to our daily production. This increase in production, combined with the fact that we still only have 23,432,000 shares outstanding and no debt, should have a dramatic impact to the Company. In addition to evaluating off set drill locations with our existing projects we are also evaluating additional new projects."
Most Popular Articles
From the Career Center
Jobs that may interest you