CALGARY, Oct. 10, 2017 /CNW/ - Montana Exploration Corp.
("Montana Exploration" or the "Company") (TSXV: MTZ)
today announced execution of an amended farm-in agreement (the
"Farm-in Agreement") with a major regional Utility to extend the
time for performance of the 10 well Initial Drilling Program for
approximately nine months to July 1,
2018 (the "Extension Date"). The Farm-in Agreement pertains
to approximately 315,000 acres in Blaine and Hill Counties in the State of Montana much of which is "held by
production" by shallow zones, where deeper targets have been
significantly under-exploited. The Utility is a large
producer and purchaser of natural gas for its power and
distribution businesses. MTZ is required to drill a minimum
of nine new wells on the farm-in acreage by the Extension Date of
which at least six must be gas wells.
MTZ has interpreted a 315 square mile 3D data set to define
numerous prospects for both oil and natural gas. Under the
Farm-in Agreement, MTZ pays 100% of the cost of drilling to earn a
100% working interest in each well subject to a 6.25% royalty which
converts to a 25% working interest following payout.
Low natural gas prices for the past year have created an
opportunity for the Utility to purchase third party gas while the
return on natural gas drilling activity by MTZ has been
impaired. In consideration for the extension, MTZ will reduce
its earning for each non-unitized well drilled by approximately
half to a 75% working interest in between four and eight sections
to encourage additional drilling activity by MTZ.
Recent activity by MTZ has focussed primarily on the
identification of Shaunavon oil
prospects refining the Company's interpretation of 315 square miles
of 3D seismic in conjunction with historical and current drilling
results, geological and production information. MTZ has
mapped more that 60 million barrels of recoverable reserves on a
non-risked basis. The Company could ultimately drill more
than 300 wells to develop this resource. Current netbacks are
approximately $26 based upon a
$50 WTI price. Funding under a
previously announced joint venture agreement with a financial party
has been delayed while investors have been focussed on defined
development opportunities in a challenged market environment.
Discussions are none-the-less far advanced with several investors
under the $20 million transaction
terms that were previously announced.
ABOUT MONTANA EXPLORATION CORP.
Montana Exploration Corp. is an oil and gas exploration and
production company focusing on the Shaunavon oil and Eagle gas opportunities
underlying its extensive land holdings and drilling rights in the
State of Montana. In the United States, the company operates
through its wholly-owned subsidiary, Montana Land & Exploration, Inc. The
Company's common shares are listed on the TSX Venture Exchange
under the trading symbol "MTZ". Additional information regarding
the company is available at www.SEDAR.com or at
www.MontanaExplorationCorp.com.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
SOURCE Montana Exploration Corp.