Petro Grande owns over 16,500 leased acres in the Permian basin in Val Verde and Crockett counties in West Texas with 3D seismic and over 150 targets selected for drilling. There are over 60 producing natural gas Strawn wells adjacent to this acreage.
Petro Grande estimates that there is approximately 500 BCF of natural gas in its acreage position. The three main natural gas formations are Canyon Sands (approximately 6300′ in depth), Strawn formation (approximately 12,000′ in depth), and the Ellenburger (approximately 14,000′ in depth).
Petro Grande has designated over 75 locations on lands located on the Soto Lease (Canyon Wells). Blugrass would purchase seventy five percent (75%) of Petro Grande working interest in two such locations designated by Petro Grande and the 40 acre tracts associated with each location.
Blugrass would assume, bear and pay all the costs and expenses with the drilling and the completion of location wells. The company, after drilling at least one well on each initial location, will have the option to purchase two additional locations.
Blugrass has also entered into a LOI with Petro Grande to purchase 25% of its working interest in one Strawn and one Ellenburger well location designated by Petro Grande and (subject to the provisions of the applicable leases) the 160 acre (for the strawn) and 640 acre (for the Ellenburger) tracts associated with each such location.
Blugrass will assume, bear and pay for 33% of the costs and expenses associated with the drilling and completion of the Strawn location and the Ellenburger location wells.
Blugrass and Petro Grande are scheduled to start the drilling program in early March 2010. Blugrass said that it is ready to proceed with this project with an initial investment of $4.5m as soon as the first financing is closed.
