Under the terms of the LOI, Blast has an option to participate in the Guijarral Hills project on a promoted basis of one-third for a quarter, or 66.66% of the costs to drill and complete the initial planned well.
After competition of the initial well, Blast will earn a 50% working interest, with net revenue interest of 38%, in the entire project’s acreage position and will contribute on an equal heads up basis (50% of all costs) on any additional wells that may be drilled in the project.
The estimated gross cost to drill the initial planned well to its approximate total depth of 10,500ft is approximately $2.3m, and Blast will pay approximately $1.54m of this cost.
If the well is successful, Blast will then expect to pay its 66.66% promoted share toward the additional costs needed to complete the well and bring it onto production.
After the initial planned well is drilled, whether successful or not, Blast will participate in future drilling activities within the project at a 50% working interest.
