| Bittern Lake, Alberta
The Company has a joint venture agreement with Canadian Spirit Resources Inc. (“CSRI”) under which the Company and CSRI have agreed to acquire, explore and develop petroleum and natural gas rights in central Alberta.
In January, 2006 the Company earned a 50% participating interest in the joint venture lands by incurring expenditures of $2.5 million. CSRI is the project operator.
The joint venture is focused on, but not
limited to, coalbed methane (natural gas from coal or
“NGC”) targets. The joint venture lands are comprised of
three sections (1,920 hectares) of land in the form of
oil and gas leases in the Bittern Lake area of Alberta.
In late September and early October
2005, CSRI drilled and completed one Horseshoe Canyon
well. Based on the completion results of the first well,
CSRI drilled three additional wells on the same section.
After initial positive indications from the first
completed well, formation water increased and the well
was shut in. A second well was completed in February
2006 to further evaluate this play. Due to the inability
to acquire a sizable land base for development on
reasonable terms, the Company and CSRI will be
evaluating disposition or farmout opportunities of these
lands.
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