CALGARY, Dec. 1, 2015 /CNW/ - Montana Exploration
Corp. ("MTZ" or the "Company") (TSXV: MTZ) announced
that it has signed an agreement (the "Agreement") with a
major regional Utility, to farm-in on approximately 315,000 acres
in Blaine and Hill Counties in the State of Montana. Much of this acreage
is "held by production" by shallow gas zones, where deeper targets
have been significantly under-exploited. Pursuant to the
Agreement, the Company will drill Eagle gas wells to produce gas
that will be sold to the Utility, and the Company will also explore
and develop other oil and gas zones, including conventional
Shaunavon oil.
"This farm-in agreement greatly expands our development
inventory of conventional oil and natural gas targets that are
economic at current oil and gas prices," said Charles V. Selby, Chairman and Chief Executive
Officer. "Montana Exploration also now has a strong strategic
joint venture partner, with which it has a greatly-expanded land
base for conventional oil and gas development and exploration."
Under the terms of the Agreement, the MTZ effectively becomes
the drilling partner of the Utility, and is required to drill a
minimum of ten wells throughout the farm out acreage within 24
months (the "Initial Drilling Program"), of which at least
six must be shallow Eagle gas wells. Following the Initial Drilling
Program, the Company can continue to drill throughout the farmout
acreage as long as each new well is spudded within 90 days of
completion of the prior well.
The Company will pay 100% of all initial drilling and completion
costs in exchange for a 100% working interest subject to a 6.25%
overriding royalty in the spacing unit of the well before payout of
the well and a 75% working interest after pay out. For each
non-unitized well drilled, the Company will earn a 75% working
interest in between 8 and 15 additional contiguous sections,
depending on the depth drilled, Eagle wells are drilled to
approximately 1,200 feet and Shaunavon wells are drilled to 4,200 feet.
MTZ will retain operatorship of any oil wells. For gas
wells, the Company's partner will pay the tie-in costs, assume
operatorship of the wells, and provide a long-term market for all
gas produced. The Utility will not pay any of the initial
drilling and completion costs, and the Company's focus will be on
identifying and developing incremental gas reserves to meet the
Utility's long-term system requirements (along with its
Shaunavon oil program) rather than
further development of existing gas production.
Access to 3D seismic is important in this region for
identification of both Eagle gas and Shaunavon oil prospects. MTZ's partner
has access to approximately 230 square miles of 3D data and MTZ
owns and has access to an additional 85 square miles of 3D
data. MTZ can resolve Upper Shaunavon oil targets on 3D
seismic.
Within the option area, several of the shallow gas producing
areas are complexly faulted. One of the targets will be
undrained fault blocks, resolvable on 3D seismic. Over 800
Bcf has been produced to date from the region and MTZ has
significant knowledge, experience and understanding of the
tectonics of the Bearspaw Uplift to identify incremental gas
reserves and production for its joint venture partner.
In conjunction with MTZ's existing land holdings of 132,000 net
acres, the Company now has development and exploration rights to
approximately 447,000 acres in the State
of Montana, on both the Shaunavon oil and Eagle gas trends. The
reserves and production potential throughout this acreage presents
substantial upside to the Company's shareholders.
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.