Oct 11 - Border Petroleum Provides Update on Red Earth Joint Venture

Source Press Release
Company Border Petroleum Limited 
Tags Deals, Upstream Activities
Date October 25, 2011

Border Petroleum Corp. is very pleased to announce that, further to the previously announced joint venture between Border and the Loon River Cree Nation (the "Nation"), after extensive consultation between Border, the Nation and Indian Oil and Gas Canada ("IOGC") (collectively, the "Parties"), the Nation has now authorized IOGC, pursuant to a fully executed band council resolution, to issue Border an IOGC permit covering an expanded 27 sections (6,912 hectares) of Slave Point rights in the Red Earth area of northern Alberta (the "Permit"). The Permit is subject to formal documentation prepared by IOGC to provide the following:

  • the permit will have a 5-year term during which Border has the right to earn the entire 27 section block by drilling 6 horizontal test wells into the Slave Point formation (the "Test Wells") on a rolling option basis, with a minimum of two Test Wells in the first year and one Test Well in each year thereafter, and payment of a Permit bonus of approximately $3.9 million;
  • for each Test Well drilled, Border earns the right to a 4.5 section (1,152 hectare) lease (the "Lease") for a term of 5 years to the base of the deepest formation penetrated and a royalty rate equivalent to Alberta crown incorporating the Horizontal Oil New Well Royalty Rate with a 10% minimum and no gross overriding royalty payable; and
  • Border will pay 100% of all costs related to each Test Well and Lease for a 100% before and 100% after payout working interest in both the Test Well and the lands under the 4.5 section Lease with no carried working interest provision.

Kelly Kimbley, Border's President and Chief Executive Officer, stated "I would like to extend my thanks to Border's shareholders for their patience, and to the Nation and IOGC for their hard work which involved tremendous time and effort finalizing this arrangement. The enhanced Permit terms outlined above will mutually benefit Nation members and Border shareholders by allowing for the development of the Nation's resources on a basis that is competitive with industry development in the Red Earth area. With the terms of the Permit finalized by the Parties, Border will carry on with the planning and logistics work necessary to commence its Slave Point horizontal drilling program at Red Earth during the upcoming winter drilling season."

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