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US: Mayan Energy announces Oklahoma farmout
17 Jul 2017
AIM-listed Mayan Energy has announced that, further to its RNS of 26 June 2017, relating to the restructuring of Oklahoma leases, it has now entered into a US$2 million farm out of a 50% working interest in company's currently 100% owned and operated Zink Ranch and Mathis leases in Osage County, Oklahoma.
- Farm-Out agreement entered into with Longview Oil & Gas;
- Mayan will receive consideration of:
- US$ 50,000.00 in cash; and
- a 50% carried interest (worth approximately US$ 2,000,000) to effect the following:
- one new drill well on each of the Zink Ranch and Mathis leases; and
- five workover's of wells at the Zink Ranch lease;
- The Mathis new well will be a 3500' vertical drill to target the Mississippian formation with an estimated cost of US$ 1,300,000. As previously reported the Mathis leases have two seismically identified drilling locations at shallow depth (less than 3500') in the Mississippian formation. Mayan believes that owing to reduced costs in the oil services industry, as well as stable oil and natural gas prices, that a vertical well to target the Mississippian reserves is attractive at current prices.
- The Zink Ranch new well will be an 1800-2000' drill, to target and fracture multiple Pennsylvanian sands with an estimated cost of US$ 350,000.
- The five Zink Ranch workovers are intended to generate production by fracturing existing tight formations within existing wells to unlock their potential, with an estimated total cost of US$ 300,000;
- Mayan has agreed that an affiliate of the farm-in partner will act as Operator in respect of the farm-in work with the obligations of such set out in a to be executed Joint Operating Agreement;
- Detailed timings of the proposed investments are presently being negotiated with Mayan's new partner, but the indicative work plan suggests that the program will start within 90 days. Mayan will update the market once the program is finalised
Eddie Gonzalez, CEO, commented:
'This is an excellent transaction that unlocks value latent within Mayan's portfolio. We have been able to do this as a result of a number of factors, including the resolution of the regulatory and legal challenges that were facing the oil and gas operators in Osage County, Oklahoma that have now largely been resolved; our restructuring of our Oklahoma operations and now, finding an investor who was attracted by the prospects offered by our Oklahoma assets.
The transaction creates several potential sources of near to medium term upside for production, revenues and our share price. And we now look forward to reporting to shareholders in due course on the development of the program as it rolls out. Indeed, if as we hope, this program works out, our intention will be to accelerate the development of our Oklahoma assets; as we believe that they have the potential to underpin the turnaround of Mayan and will prove to be the foundation for the plans and deals we are already working on.'
Source: Mayan Energy