West Hawk signs drilling and development agreementadmin
Thursday, August 10th 2006
West Hawk Development Corporation, through its wholly owned subsidiary, West Hawk Energy (USA) LLC, has formally entered into a Drilling and Development Agreement for a 5120 acre property located in the center of the Piceance Basin, Colorado. Under the Drilling and Development Agreement, the Company has committed at a minimum to drill 4 wells in year 1, 8 wells in year 2, and 12 wells in year 3. The Resource Evaluation Report, in compliance with the Canadian securities commissions’ National Instrument 51-101 criteria for oil and gas properties, has been completed by Gustavson Associates, Independent Qualified Reserve Evaluators, and is being filed with the TSX Venture Exchange and is viewable on SEDAR and the Company website.
A Resource calculation from the report, prepared by a Registered Petroleum Engineer with the State of Colorado, is as follows: The basin-centered gas accumulation in the Piceance basin is expected to form a continuous pool with varying degrees of technically and economically recoverable gas. This play is best thought of in terms of resources and economically recoverable reserves on a per well basis. Based on all available data, Gustavson Associates has assigned the probabilistic estimation of technically recoverable resources from the property, measured in billion cubic feet (BCF), as follows: P90% estimate of 383 BCF, P50% estimate of 529 BCF, and P10% estimate of 700 BCF.
Under the terms of the agreement, West Hawk is responsible for 100% of drilling and completion costs of the first 32 wells (160-acre spacing). In accordance with the aforementioned NI51-101 report, the cost of each of those wells is estimated at $1,600,000 per well with roughly 50% attributable to drilling and the balance to completion costs. In return, the company will earn a working interest in the property (ranging from 50% to 75%) with a 75% net revenue interest (NRI) proportionally reduced to the working interest earned.
”The Piceance Basin, with an estimated 300 trillion cubic feet (TCF), is considered one of the largest gas plays in North America. Signing this agreement follows our focus to build West Hawk Development into a significant energy producer” says Dr. William Mark Hart, President, West Hawk Development Corp.