Blugrass shall pay to Petro Grande the sum of $48,000 as the total location fee for two Canyon Sands Locations and $750,000 per location for drilling and completion.
Upon payment, Petro Grande shall assign to Blugrass an undivided 75% of its rights, titles and interests in and to the subject lease insofar as the same covers the two Canyon Sands Locations designated by Petro Grande, one on Block CS-S-A and one on Block CS-S-B.
Petro Grande has designated over 75 locations on lands located on the Soto Lease (Canyon Wells) that it believes will be economic to drill. Drilling will be contracted by PG operating and the project manager will be Total Energy Services.
Blugrass shall have the option to participate in any subsequent initial well proposed by or on behalf of Petro Grande to be drilled on the remaining Canyon Sands Locations in the same Block as such Initial Well and to be assigned its undivided 75% of Petro Grande’s interest.
Petro Grande owns over 16,500 leased acres in the Permian basin in Val Verde and Crockett counties in West Texas with the latest 3D seismic and over 150 targets selected for drilling. There are over 100 producing natural gas Canyon wells and 60 producing natural gas Strawn wells adjacent to this acreage.
Petro Grande estimates that there is approximately 500BCF of natural gas in its acreage position. The three main natural gas formations are Canyon Sands, approximately 6,300′ in depth; Strawn formation, approximately 12,000′ in depth; and the Ellenburger is approximately 14,000′ in depth.
Berscht, president of Blugrass Energy, said: “Petro Grande is in the right geographic location and we are excited at the opportunity we have with Petro Grande and look forward to a long and rewarding relationship with their extensively experienced team of experts. We believe this project offers Blugrass a great opportunity to build significant shareholder value.”
