The LOI is subject to the execution of definitive farmout and purchase and sale agreements incorporating the terms of the LOI and other industry standard conditions.
Farmout of Point
The LOI contemplates that Point Loma will initially assign 20% of the Corporation's interests in three areas of mutual interest ('AMI') lands to the Farmee in exchange for a commitment to drill a horizontal well on one of the three AMI lands to earn additional interests in the drilled AMI lands. Once the first horizontal well is drilled there is the opportunity for the Farmee to elect to drill and earn similar interests in the second and third AMI areas on a rolling option basis.
The first horizontal well is committed to be drilled prior to
The drilling of an earning well will result in either a 15% GORR payable to Point Loma convertible at payout to 50% of the Corporation's pre-drill working interest or, at the election of the Farmee, the Farmee will earn 70% of the Corporation's pre-drill working interest in the block of AMI lands on which the drilling occurred.
AMI Areas
The AMI lands contain three of Point Loma's high-graded exploration opportunities at Leaman, Wildwood and
Leaman AMI -
Point Loma has internally identified and captured an Upper Mannville pool target which is analogous to the Corporation's Rex discovery at
Wildwood AMI -
Point Loma has internally identified and captured multiple Mannville pool targets which appear analogous to the Corporation's operated Paddle River Lower Mannville producing oil and gas pool. The target zones are thicker and appear to have similar reservoir characteristics to the existing
Paddle River AMI - Banff Oil
Based on proprietary 3D seismic shot by the Corporation, Point Loma has internally identified two high impact
Increases in Natural Gas Production Weighting and Indications of Strengthening Prices
The Corporation's natural gas production was bolstered in late 2019 by the transfer of approximately 240 boepd (net) of natural gas weighed production from its partner
The onset of Covid-19 has had a negative impact on world oil demand and prices and has resulted in a substantial reduction in drilling activity and production shut-ins in
About Point Loma
Point Loma is a public oil and gas exploration and development company focused on conventional and unconventional oil and gas reservoirs in west central
Contact:
Tel: (403) 705-5051
A Note Regarding Forward-Looking Information
This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws, including without limitation, statements pertaining to the anticipated execution of a binding definitive farmout and purchase and sale agreements and the terms contained therein; the terms of the proposed farm-out of the Corporation's lands; reservoir characteristics of the Corporation's properties and drilling opportunities; expectations regarding relating to natural gas prices; ; the focus of Point Loma's management team and go-forward strategy and statements. Statements relating to 'reserves' are also deemed to forward-looking statements, as they involve the implied assessment based on certain estimates and assumptions, that the reserves can be profitably produced in the future.
The use of any of the words 'will', 'could', 'would', 'expects', 'believe', 'plans', 'potential' and similar expressions are intended to identify forward-looking statements or information. These statements should not be read as guarantees of future performance or results. Although Point Loma believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward-looking statements and information because Point Loma cannot give assurance that they will prove to be correct.
Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited, delays or changes associated with the terms of the farmout arrangements as may be reflected in definitive farmout and purchase and sale agreements and whether such agreements are executed at all ; the inability to obtain the necessary regulatory approvals; the risks associated with the oil and gas industry in general such as operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve and resource estimates; the inability of Point Loma to bring additional production on stream or in the anticipated quantities disclosed herein; the uncertainty of estimates and projections relating to reserves, resources, production, costs and expenses; health, safety and environmental risks; commodity price and exchange rate fluctuations; marketing and transportation; loss of markets; environmental risks; competition; incorrect assessment of the value of acquisitions; failure to realize the anticipated benefits of acquisitions; ability to access sufficient capital from internal and external sources; changes in legislation, including but not limited to tax laws, royalties and environmental regulations, actual production from the acquired assets may be greater or less than estimates. Management has included the above summary of assumptions and risks related to forward-looking information provided in this press release in order to provide security holders with a more complete perspective on Point Loma's future operations and such information may not be appropriate for other purposes.
The forward-looking statements and information contained in this press release are made as of the date hereof and Point Loma does not undertake any obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
Oil and Gas Information
'BOEs' may be misleading, particularly if used in isolation. A BOE conversion ratio of six thousand cubic feet of natural gas to one barrel of oil equivalent (6 Mcf: 1 bbl) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. As the value ratio between natural gas and crude oil based on the current prices of natural gas and crude oil is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.
Well test results should be considered as preliminary. There is no representation by the Corporation that the disclosed well results included in this news release are necessarily indicative of long term performance or recovery. As a result, readers are cautioned not to place reliance on such rates in calculating the aggregate production for the Corporation or that such rates are indicative of future performance of the well.
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