Unitech Enters $800,000 Agreement to Generate Hydrocarbon Study
Unitech Energy Resources Inc. has entered into a Geological Consultancy Agreement with a private oil and gas company pursuant to which Unitech agreed to generate a regional bypassed hydrocarbon study in consideration for the sum of $795,000.
Unitech used its proprietary image analysis and pattern recognition system, called Leadscan, to generate the geological study on approximately 9,000 wells within Townships 1 and 8, Ranges 1 to 11, W2M and targeted the Bakken, Frobisher and Midale formations. The consideration payable to Unitech under the Geological Consultancy Agreement was satisfied by a cash payment of $95,000 and the granting by PrivateCo to Unitech of a gross overriding royalty ("GORR") and a working interest participation option ("WIPO") on approximately 6,000 acres of land in the Area.
The terms of the WIPO as set out in the Farmout and Participation Agreement entered into with PrivateCo are such that Unitech can earn 9% of PrivateCo's working interest on any wells drilled on lands in the Area currently held by PrivateCo by electing to pay 15% of PrivateCo's share of the costs to drill any such wells. Unitech also entered into an Overriding Royalty Agreement with PrivateCo which provides for the payment to Unitech of a 3% GORR on PrivateCo's share of new production on the royalty lands in the Area.
There is no current production subject to the GORR or the WIPO and Unitech will not be able to value the GORR and/or WIPO until such time as production is achieved. The term of the GORR and the WIPO expire on December 31, 2009, with Unitech retaining all interests earned under the Farmout and Participation Agreement.