Winslow Signs Major Shallow Gas Farmin Agreement
Winslow has entered into a large-scale farmout agreement with a major oil and gas company covering 44 contiguous sections of land to explore for and develop widespread, multi-zone, shallow gas in west-central Saskatchewan. The properties are located near Leader, Saskatchewan in an area of active shallow gas drilling activity eight kilometers west of the prolific Abbey/Shackleton Milk River gas pools and sixteen kilometers north of the giant Hatton Milk River gas pool.
Winslow has agreed to drill twelve wells to test the Milk River formation prior to June 9, 2005 to earn a 100% interest in eighteen sections and a 75% interest in six additional sections of land. After completion of the first drilling phase, the Company then has the option to drill an additional twelve wells to earn the balance of the farmin lands at up to 100% interest on nine sections and 75% interest on eleven additional sections, as well as earn twelve existing shut-in Milk River gas wells on the properties. The 100% and 75% working interest lands will be subject to a five percent (5%) and a ten percent (10%) non-convertible overriding royalty to the farmor, respectively. The Company also plans to negotiate similar farmin terms on the remaining interests within the 75% interest group of lands to ideally bring Winslow's total interests up to 100% in all forty-four sections upon completion of the second drilling phase. Winslow will have also earned a 50% interest in all deeper P&NG rights.
The drilling program is strategically located to hold any expiring lands and to adequately evaluate the Milk River potential of these lands. If results upon completion of the first drilling phase look promising, the Company will continue into the second drilling phase during the third quarter. Encouraging results upon completion of the second drilling phase would initiate an extensive development plan over the earned acreage position requiring the drilling of 50 or more additional wells in 2006 and building the necessary gas production infrastructure. A pipeline is favorably situated across the southern end of the acreage block and would provide a starting point for future expansion.
Winslow is excited to participate in what is a widely growing gas
resource development play in Saskatchewan. This large land base will provide a
solid platform of future growth for the company and fulfill our growth
objectives to focus on building a base of production through long reserve
life, low risk drilling opportunities which includes unconventional gas plays
such as coalbed methane and shallow multi-zone gas reservoirs.