Permex Petroleum has signed a farmout agreement with Blackspear Capital for the 680 acre Oxy Yates property that Permex owns in Eddy County, New Mexico.

The farm-in specifically relates to the Company’s leases located in Section 14, Township 20 South, Range 28 East. The target is the Yates formation of the upper Guadalupian series of the Permian system. The Yates formation is 50 – 60 feet thick and is located at an average depth of 1200 feet, as stated in the independent reserves report prepared by MKM Engineering, independent qualified reserves evaluator, effective as of September 30, 2017 (the “Reserves Report”).

Management believes that the excellent 10-acre well spacing provides the opportunity for and estimated 32 locations to be drilled and completed at a management estimated cost of US$50,000 – US$80,000 per well.

Management believes the Yates formation is an excellent shallow infill checkered drilling opportunity with potential waterflood secondary recovery also available on this property once primary recovery has been maximized and exhausted through drilling and development.

Pursuant to the Agreement, within 30 days of Blackspear’s shares being listed on the Canadian Stock Exchange, (the “Commencement Date”), Farmee will commence drilling of the initial well of a five (5) well program and Farmee shall retain the option to drill an additional Test Well every six months thereafter.

The entire cost (100%) associated with the drilling and completing the operations under the Agreement are borne solely by Blackspear. Upon the Farmee earning any income from the sale of any oil, natural gas, or other hydrocarbons, the Farmor shall retain a twenty-five percent (25%) working interest before payout in the assigned leases applicable to that particular well which has received revenues from oil, gas and other hydrocarbons until such time as the Farmee has recovered its costs (after payout) at which time the Farmor shall retain a fifty percent (50%) working interest in the well.

Mehran Ehsan, President and CEO of Permex Petroleum Corporation commented, “Permex Petroleum is excited to have executed the Farm-out Agreement thereby securing the relationship with Blackspear as a Venture Capital strategic partner. This partnership will enhance Permex’s ability to drill and develop its assets without accessing debt or further accessing equity markets, thereby reducing the debt and market dilution risk and strengthening the Company’s ability to perform its reserve development program in a timely fashion.”

Khaleel Meghji, President of Blackspear Capital Corp. commented, “We are delighted to have executed the Farm-out Agreement with Permex Petroleum. We believe the Oxy Yates property is a very promising oil and gas field and that Permex Petroleum’s portfolio of Texas and New Mexico acreage is among the most exciting farm-in opportunities we’ve evaluated in the region. We look forward to working closely with Permex to define and execute the drilling opportunities as quickly and economically as possible.”

Source: Company Press Release