Storm Cat Acquires Large Gas Play in Eastern Saskatchewan
Storm Cat Energy has entered into a Farm-In Agreement with Golden Eagle Energy on a large exploration permit in eastern Saskatchewan called Moose Mountain. Golden Eagle is a private oil & gas exploration and production company based in Calgary, Alberta, Canada. The Moose Mountain play is classified as a large unconventional shallow gas play of which Storm Cat's management has considerable experience in developing. Storm Cat will draw upon its strong drilling and completions experience and will operate the program. Golden Eagle will implement the geological and geophysical aspects of this new exploration opportunity.
This Saskatchewan Petroleum and Natural Gas Special Exploration Permit comprises 235,830 acres or 368 contiguous sections of land. Storm Cat has farmed into Golden Eagle's 50% working interest, which provides Storm Cat with a 45% working interest before payout and 30% working interest after payout.
Storm Cat will pay Golden Eagle, the 'Farmor', $750,000 CDN and agrees to pay 95% of the first two years work commitment of $500,000 CDN. Furthermore, Storm Cat has agreed to pay 95% of the approximate $100,000 of technical and geological expenses incurred as programs are completed.
Payout provisions provide for Storm Cat, the 'Farmee', to recover 2.5 bcfe attributed to its 45% working interest share of petroleum substances produced from the Exploration Permit. Restated, Storm Cat will receive 45% of the first 5.5 bcfe of production from the exploration permit area. At Payout, Storm Cat will convert to a 30% working interest in these lands.
Company President, Scott Zimmerman said: "This transaction is consistent with our focused business plan of applying our technical expertise in the development of unconventional natural gas resources. Our partnership with Golden Eagle provides a combination of their geological expertise in this play type and area, along with Storm Cat's drilling and completion expertise to develop the potential resource. As a result of the Moose Mountain acquisition and continued negotiations for additional Western Canadian properties, Storm Cat is expanding into larger offices in Calgary, Alberta. The company has recently signed a five year lease on approximately 5,400 square feet located at 209 - 8th Avenue SW, Calgary, Alberta. The new offices are expected to be fully operational by March 31, 2005."
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