Calgary-based TriAxon Resources has farmed into assets in southeastern Saskatchewan held by Pebble Petroleum Inc., a subsidiary of Ryland Oil Corp., Vancouver (CDNX: RYD).
The assets consist of additional 53.25 sections of Pebble’s acreage adjacent to the Flat Lake Bakken oil field. This is the third farm-out agreement between the Ryland and TriAxon.
TriAxon is required to spud two test wells, one by Aug. 1, at a location of its choice on Exploration License EL 812 and the second by Oct. 15, at a location of its choice on Exploration License EL 811. TriAxon may elect to drill either vertical stratigraphic test wells or horizontal wells to test the Bakken formation. TriAxon must pay 100% of the costs to drill, complete and equip or abandon the test wells to earn a 50% working interest in the Bakken formation underlying the test well section.
In the event a vertical stratigraphic test well is drilled, TriAxon will also earn a 50% working interest in the Bakken formation underlying an additional four contiguous sections. In the event a horizontal test well is drilled, TriAxon will earn a 50% working interest in the Bakken formation underlying an additional ten contiguous sections.
Pebble will retain 100% working interest in all other zones. After drilling the initial test wells, TriAxon has the continuing option to drill additional earning wells at locations of its choice on the remaining farm-out lands to earn on the same basis as the test wells. If any wells are subsequently drilled on acreage in which TriAxon has earned its 50% working interest, each of Pebble and TriAxon will be responsible for payment of 50% of the costs of such wells and hold a 50% working interest.