In April 2011, Shoal Point Energy Ltd. announced completion of a farm-in agreement with Ptarmigan Energy Inc. (PEI) of St. John's, Nfld., and Labrador, with respect to exploration licence 1120, western Newfoundland, . Under the terms of the farm-in agreement, Shoal Point will have the right to earn into the shallow rights within a certain area of exploration licence 1120 (farm-out lands) by paying to PEI a total of $1.8-million, and by drilling a test well to assess the petroleum potential of the Green Point formation on or before Dec. 31, 2012. Once SPE has completed the earning requirements by making the aforementioned payments, and by drilling the test well, SPE will earn an 80-per-cent working interest in the shallow rights within the farm-out lands, with PEI retaining a 20-per-cent working interest therein.
Shallow rights, for the purpose of this agreement, are defined as all strata lying stratigraphically and structurally above the Ordovician carbonate platform, and include the Green Point formation and other organic-rich rocks lying within the Cow Head Group, and equivalents, within the Humber Arm Allochthon.
Farm-out lands encompass an area of approximately 67,285 acres (27,230
hectares) which forms a seven-kilometre-wide band along the coastline defining the eastern border of exploration licence 1120.
For more information on this farm-in agreement please refer to Shoal Point news release dated April 13, 2011.