The amending letter agreement initially acknowledges that DLMC had assigned its rights and obligations under the original farm-out agreement to Fire Horse.
It further acknowledges that Shoal Point’s interest in EL 1070 is to be set at 51.5% after the completion of the next well (3K-39) which is to be spudded prior to the end of the year.
Originally Shoal Point’s interest was to be reduced from 61.5% to 30.75%.
Under the terms of the amended agreement, Shoal Point’s interest will be reduced by only 10% to 51.5%.
In consideration for retaining this increased interest in EL 1070, Shoal Point has agreed to pay 41.5% of the drilling costs of the well (estimated to be $1,867,500 or 41.5% of $4.5m), to make the refundable abandonment deposit (estimated not to exceed $1m) and to pay 50% of the costs of filing reports and making the application for an Significant Discovery License (SDL) on EL 1070.
