Proceeds from the agreement will fund a two-year development program at Thunderbird’s Gordon Creek property in Utah, US which will include drilling 50 new wells and re-working five existing wells by 2012.
Under the agreement, Sandstorm will have the right to acquire 35% interest of all natural gas produced from the Gordon Creek property.
Thunderbird will receive a payment of $15m in 2011 and a further $10m in 2012.
The agreement also provides Thunderbird with a two-year right to buy back 50% of the future production for a purchase price of $16.25m.
Closing of the transaction is subject to regulatory approvals, the company said.
