Richards Expands Horseshoe Canyon Land Position in Alberta
Richards Oil & Gas Limited has significantly increased its Horseshoe Canyon Coalbed Methane ("CBM") land holdings at Thorsby Alberta through a combination of a Crown land acquisition and the execution today of a farmin agreement with a large integrated oil & gas company.
At the November 14, 2007 Alberta Crown land sale, the Company acquired 100% interest in two sections adjacent to the Company's original lands.
On January 22, 2008 the Company executed a farmin agreement representing a five well drilling commitment to earn a 100% working interest on five sections that are adjacent with the Company's current landholdings. Under the terms of the agreement, the Company has the option to earn up to nine additional surrounding sections with the drilling of additional wells.
If the Company elects to drill all of the earning and option wells under the farmin agreement its interests in the Thorsby property will increase from nine gross (four net) sections to 23 gross (18 net) contiguous sections. Full development of this land position would provide the Company 92 future drilling locations at an average working interest of 79%.
The Company's technical management has identified the Thorsby area as being prospective for natural gas production from the Horseshoe Canyon coals and conventional natural gas production from the Edmonton and Belly River sand channels. The Company currently has one Horseshoe Canyon CBM well producing (gross) at 100 mcf per day in the area and in December 2007 drilled and completed four additional wells. Flow test and tie-in activity for these additional wells is currently underway. The coal seams in this area are relatively consistent based on existing well control which increases the probability of success of future wells. The Edmonton and Belly River sands represent additional economic upside to the Company from the Thorsby area.
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