Pursuant to the agreement, Blacksteel will earn a 22.22% working interest after payout, subject to a gross override, in a quarter section of land in the Devon area of Alberta for consideration of 33.33% of all costs associated with drilling, completing, tying-in and bringing the well into production.
The target horizon of the opportunity is the Leduc oil formation. The company’s participation in the farmout is estimated at $500,000.
Subsequent to entering the farmout and to reduce its financial commitment to the farmout, Blacksteel entered into a sub-participation agreement with a private company (third party). The third party will earn 30% of Blacksteel’s interest (6.67% of the farmout) for consideration of $150,000 (10% of the estimated costs of the farmout).
As a result, Blacksteel will earn a 15.55% working interest for consideration of 23.33% of the associated costs of the farmout, resulting in a total estimated cost to Blacksteel of $350,000.
