The survey of the pipeline right of way and engineering design has been completed and all necessary ERCB approvals for construction secured. The company will own a 50% working interest in the gas gathering pipeline.
The gross lease production from the Drumlin Pearl well, based on production test data, is estimated to initially be as high as 1 million cubic feet of gas per day (mmcf/day) or in terms of barrels of oil equivalent, 167boe/day (82boe/day net to company interest).
Contingent upon the performance of the Drumlin Pearl well, development drilling of the offset acreage may commence in early fall 2010.
The terms of the farmin agreement called for the company to pay 75% of the costs to drill and complete the test well and 50% of equipping and tie-in costs.
By satisfying the terms of the agreement, the company has earned a reversionary working interest of 50% BPO reverting to an APO interest of 25% after recovery of a capital cost multiple equal to 300% of a drilling and completion costs.
