The farmin was formalised through Carpenter Pacific’s wholly-owned subsidiary, Marion Energy Inc.
The Clear Creek Natural Gas Unit comprises roughly 17,800 acres located about 12 miles west of the Drunkards Wash field in the Uinta Basin, central Utah. The field was drilled in the 1950’s and mostly produced through the early 1970’s on 640 acres spacing. It has produced 130 billion cubic feet of natural gas from conventional reservoirs.
“In the company’s opinion, the spacing was not sufficiently tight to drain all the gas in place,” Carpenter Pacific said.
“Each individual well probably only drained 40 to 80 acres, leaving a significant amount of gas in the reservoirs. Independent engineers have estimated significant potential reserves in the Ferron sands in addition to the Ferron, Blackhawk and Emory coals. Unrisked potential reserves in the area could be in excess of 500 Bcf.”
The terms of the farm-in call for Carpenter to carry Mid-Power’s capital expenditures up to US$5 million over four years, after which the working interests in the project will be Carpenter 75%, Mid-Power 25%.
Carpenter Pacific will grant Mid-Power options to purchase 2.5 million shares with an exercise price of 40 cents per share if and when Marion has carried Mid-Power for US$2.5 million of capital expenditures. Options to purchase an additional 2.5 million shares at the same exercise price will be granted to Mid-Power in the event the carried capital expenditures reach an aggregate of US$4 million.
