Under the memorandum of intent, Cobra has paid Coastal $180,000 for the option to acquire a half-interest in more than 82,000 acres of Coastal’s Valley County leases. The agreement allows Coastal to pay its lease rentals that are due June 1, 2008, and brings in a new party to explore on the leases.
Cobra will have two years to exercise the option by spending $1 million on Coastal’s behalf, drilling wells on the leases under the agreement.
These leases include approximately 62,000 acres of leases that were formally under an agreement with F-Cross Resources that expired earlier in 2008, and more than 20,000 acres of other leases Coastal held in Valley County.
Meanwhile, Coastal and Western Standard Energy have planned to recommence operations to test the gas discovery well they drilled during the fall of 2007, which confirmed the 34,000-acre Starbuck East structure.
