Aspen Group & Westchester Sign Multi-Well Drilling Deal
Aspen Group Resources
|Friday, November 19, 2004
Aspen Group Resources and Westchester Resources announced that, through their joint venture arrangement, the companies have entered into a multi-well farm-in agreement with Oil for America, Inc. in North Dakota. The initial agreement is for a four well package with Aspen acting as operator. The Joint Venture has the right to choose drilling locations and has the right to terminate the farm-in after two wells have been drilled and tested. If the drilling is successful and the wells are developed for production, OFA will receive a 25 percent carried interest on the first four wells, on a well-by-well basis, after the Joint Venture has recovered all its exploration and development costs. For any additional wells drilled and brought into production by the Joint Venture, the carried interest to OFA is reduced to 20 percent.
OFA, in association with the Joint Venture have leased lands for several locations in North Dakota. The target in North Dakota is the Lodgepole Formation in Stark County. The average Lodgepole completion has an estimated ultimate recovery (EUR) of approximately 1,000,000 barrels and 500MMcf. The larger wells have EURs of 4,000,000 barrels and 1BCF. The target depth is 9,600' and estimated costs to casing point are $900,000. Completions are estimated at an additional $300,000. Initiation of the drilling program is subject to rig availability.
Aspen also announced that the Joint Venture has completed two test wells on its Southern Saskatchewan property. The wells were drilled on the eastern and western edge of the 52,533-acre property to test the potential gas zones in the Colorado Group formation. Both wells encountered gas shows in two zones. The lower zone in the eastern well was fracture stimulated and tested and is being shut-in to determine whether there is sufficient pressure to economically produce gas from the zone. The well is scheduled for completion and testing in an upper zone within the next two weeks. Completion of the western well is delayed until all tests have been run on the core samples and the log analysis is completed. Additional drilling locations will depend upon the results of the work in progress.
Exclusive of the Joint Venture, Aspen has completed two oil wells in Butte, Saskatchewan where Aspen holds a 35 percent working interest. The wells in aggregate produce approximately 50 boepd and increase Aspen's production to 350 boepd.