Archer has entered into two agreements with a privately funded oil & gas company based in Houston, Texas to explore two high-potential oil exploration projects in the Western Canadian Sedimentary Basin of Alberta.
Under terms of the agreements, Archer has paid an aggregate US$1,312,500, which includes prospect fees and reimbursement of 46.66667% of expenses incurred to evaluate and develop one of the drilling prospects. Archer will also be responsible for 46.66667% of the minimum costs of the initial well being drilled on one of the prospects, which share is estimated to be US$350,000. Archer's working interest is equal to 35% and covers approximately 13,400 acres of leasehold in two key project areas located in Alberta. Additionally, the Company has acquired an option on a third project area consisting of approximately 5,900 gross acres. The Company expects to participate in the drilling of several wells testing Devonian-aged reef complexes.
These acquisitions were acquired by Archer with the assistance of ABL Energy Partners LLC ("ABL"). Pursuant to the Company's Management Services Agreement with ABL (the "MSA"), certain remuneration will be payable by the Company to ABL in respect of these acquisitions, subject to the terms of the MSA.
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