Cavu, which will pay a 23% net royalty on production, will own 100% of the coal, coal bed methane, and oil and natural gas rights.
Cavu is also acquiring three years of land work, research and engineering.
The seller Nitro had engaged Ramsey Engineering, a petroleum engineering firm in Oklahoma City, to conduct an engineering survey on the proposed 10 well drilling program in the Powder River Basin of Montana.
The acquired study identified and utilized seismic surveys to target the optimal drilling locations.
Geological reports indicate that there are four shallow methane and gas pay zones in each well.
Once funded, the 10-well drilling program will target six production zones, with the wells drilled to depths from 4350ft to 7700ft.
The company said that the target is to drill at least 150ft into the Tensleep formation in each hole.
