As per the agreement, EFLO may spend up to $1.05m on the exploration and development of oil and/or gas production from the San Miguel formation on the lands covered by the lease.

The agreement provides for the acquisition of rights only insofar as that lease covers from the surface to the base of the San Miguel formation.

To earn its initial 21.25% working interest (net revenue interest 15.94%), the company is obligated to drill and complete a vertical test well to a target depth of 3,500ft (test well).

If the test well is prospective for production in commercial quantities, the company is required to equip the test well and place it on production in a timely manner.

If it is determined that the test well is not prospective for production in commercial quantities, the company will be responsible for its abandonment.