Canadian Imperial Venture Corp., pursuant to an area of mutual interest agreement with Shoal Point Energy Limited (SPE), has exercised its right to earn a 32-per-cent working interest in the shallow rights of EL1120, which lies adjacent to EL1070 and is owned by Ptarmigan Energy Inc. (PEI). The company made the election to participate concurrent with the signing of a farm-in agreement between SPE and PEI on EL1120 in western Newfoundland.
Under the terms of the farm-in agreement, Shoal Point will have the right to earn into the shallow rights within a certain area of exploration licence No. 1120 (the farmout lands) by paying to PEI a total of $1.8-million, and by drilling a test well to assess the petroleum potential of the Green Point formation on or before Dec. 31, 2012. Once earning has occurred under the farmin agreement, the shallow rights working interest within the farmout lands of EL1120 will be SPE 48 per cent, CIVC 32 per cent and PEI 20 per cent.
"Shallow rights" for the purpose of the farm-in agreement, are defined as all strata lying stratigraphically and structurally above the Ordovician carbonate platform, and include the Green Point formation and other organic-rich rocks lying within the Cow Head Group, and equivalents, within the Humber Arm allochthon.
Farmout lands encompasses an area of approximately 67,285 acres (27,230 hectares) which forms a seven-kilometre-wide band along the coastline defining the eastern border of exploration licence No. 1120.
The area of mutual interest agreement between CIVC and SPE covers approximately 1.2 million acres in western Newfoundland and both EL1070 and EL1120 are contained within that area. The agreement has a three-year term and the respective participation rights under the agreement are 40 per cent CIVC and 60 per cent SPE.
The total area of Green Point shale rights held by the SPE/CIVC partnership is now approximately 217,285 acres, including about 60 km of continuous strike length along the coast between the south shore of Port au Port Bay and the Bay of Islands. Initial operations on EL1120 will benefit from access to the coast via the community of Littleport, where it is anticipated the test well will be located.
"The Ptarmigan deal allows CIVC to achieve its goal to significantly expand its interest in the Green Point oil-in-shale play in western Newfoundland and we look forward to working with our partners with a view to establishing commercial production in the area," said Gerard Edwards, president and chief executive officer of Canadian Imperial Venture.
