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EMERALD RESOURCES NL — Capital/Financing Update 2008
Aug 12, 2008
64849_rns_2008-08-12_2ab44b67-2f92-4a5b-8d98-6602b0056d2a.pdf
Capital/Financing Update
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Level 2, 16 Altona Street West Perth WA 6005 Ph: +618 9482 0500 Fx: +618 9482 0505 Email: [email protected] www.emeraldoilandgas.com
13 August 2008
Centralised Company Announcements Platform Australian Stock Exchange 10[th] floor, 20 Bond Street Sydney NSW 2000
MOU TO ACQUIRE INTEREST IN 50 WELLS
Emerald Oil & Gas NL (“Emerald”) is pleased to announce that it has signed an MOU with P&J Resources Inc (P&J), the operator of its Appalachian Gas Development project to acquire a 25% interest in 50 gas wells located in Magoffin County, Kentucky USA.
Highlights
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50 wells to be hooked up to new pipeline facilities
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Acquisition cost well below current drilling costs
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Frac program to enhance production
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Includes associated gathering lines and infrastructure
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Accelerates development and production profile
APPALACHIAN BASIN GAS DEVELOPMENT PROJECT
(Emerald 80% Working interest, Operator: P&J Resources Inc.)
Emerald has entered into a Memorandum of Understanding with P&J to acquire a 25% interest in 50 wells drilled in Magoffin County Kentucky from 2004 to 2006. These wells have all produced gas however capacity constraints and lack of infrastructure have curtailed production, with the wells shut in since 2006. P&J is close to completion of a 35 mile 8 inch pipeline that connects to the El Paso trunkline which has excess capacity which will enable hookup to production.
The 50 wells are all vertical Big Six completions, drilled to less than 3,000 feet. Production rates have been between 40 and 80 Mcf per day. It is planned to put the wells on to production then proceed with fracture stimulation to enhance production flow rates. It is envisaged that fracture stimulation will substantially enhance production.
Under the MOU Emerald will also acquire a 25% interest in the 35 mile pipeline and a 50% interest in the Amine plant that have both been recently constructed and are nearing commissioning.
In Wayne County West Virginia, Emerald has entered into an MOU to acquire a 25% interest in the pipeline “tap” and associated equipment connected to the El Paso line. This is a strategic move to ensure that Emerald will always retain access to El Paso’s line. Emerald will be entitled to receive a transmission fee for all gas passing through the “tap”. In addition Emerald will acquire a 25%
interest in P&J’s 10 mile 10 inch gathering line in Wayne County West Virginia. This line provides the only access to El Paso’s trunkline for the immediate area, so third party producers will have use of the line for a fee.
Agreement
The total consideration for the acquisitions will be:
US$950,000 in cash and 4.5 million Emerald shares. The MOU allows for a due diligence period ending August 30, 2008.
This acquisition will significantly expand Emerald’s production and development activities in the Appalachian Basin and will further entrench Emerald’s relationship with P&J.
P&J retains a 25% interest in the wells with an unrelated third party retaining the remaining 50%.
The acquisition will fast track Emerald’s development program in the Appalachian Gas Development project.
For more information please contact:
Emerald Oil & Gas NL Tel: +618 9482 0510
JOHN HANNAFORD BOB BERVEN Executive Director – Finance Executive Director – Technical [email protected] [email protected]
About the Appalachian Gas Development Project
Emerald announced on April 30, 2008 that it had entered into a Drilling and Operating Agreement to develop two 45,000 acre lease areas in eastern Kentucky and western West Virginia. Under the agreement Emerald will earn an 80% working interest in a 4000 foot radius spacing unit for each well drilled for 100% of the drilling costs of each well. Both acreage areas have significant potential for infill drilling on 40 acre spacing, as well as several productive horizons.
The Appalachian Valley is USA’s oldest oil and gas producing area. Recent discoveries in the Marcellus Shale have now focused renewed exploration activity on the region. Combined with high gas prices, extensive infrastructure, enhanced drilling and completion techniques the area now offers extensive upside potential and compelling economics.
About Emerald Oil & Gas NL
Emerald Oil & Gas NL (ASX: EMR), listed on the ASX in June 2006, is an oil and gas exploration and production company with project interests in Kentucky, West Virginia, North Dakota and Texas in the USA and in the Canning Basin of Western Australia. Emerald’s focus is on both conventional and non-conventional reservoir targets for oil and gas prospects. Its primary objective is to achieve near term production and cashflow to build shareholder value and provide funds to fuel further growth. Emerald’s strategy is to take modest but meaningful positions in low risk exploration projects that can be swiftly brought into production.
Information in this announcement pertaining to exploration potential was compiled by Robert Berven, Emerald Oil & Gas NL’s Technical Director who is a Member of the Australasian Institute of Mining and Metallurgy and the American Association of Petroleum Geologists CPG # 2498.
Statements regarding Emerald’s plans with respect to its petroleum properties are forwardlooking statements. There can be no assurance that Emerald’s plans for development of its petroleum properties will proceed as currently expected. There can be no assurance that Emerald will be able to confirm the presence of additional petroleum deposits, that any discovery will prove to be economic or that an oil or gas field will successfully be developed on any of Emerald’s petroleum properties.