On Friday, UnionTown Energy Inc. announced that they entered into agreements to earn into the 11,000 acre Teton River Prospect located in Montana. All closing documents have been signed; the necessary disclosures are being filed with the United States of America Securities and Exchange Commission (SEC).
UnionTown Energy Inc. had previously announced (April 13, 2011) that they had entered into a Letter of Intent (LOI) to acquire 11,000 acres in the Teton River prospect area of Montana. A $100,000 deposit was advanced on signing of the LOI; a further $175,000 was advanced and announced on May 17, 2011 applied as expense reimbursement concerning the acquisition and maintenance of the leases.
Under the terms of the agreement entered into on May 30, 2011, UnionTown Energy Inc. also agreed to fund for well exploration, completion and reservoir engineering – $200,000 on or before May 31, 2011 and $150,000 on or before June 15, 2011. The $200,000 was advanced and announced by the Company on May 31, 2011. This funding will be applied to drilling the first Teton well, now scheduled for the second week of June. This is dependant upon weather conditions currently being experienced in Montana.
In addition, the agreement calls for approximately an additional $1,000,000. This is to be advanced on or before August 15, 2011. This is to provide for the additional drilling of four production wells and one water source well. The additional drilling is scheduled to start soon after August 15, 2011.
The expectation is that a steam operation plant will be developed as part of the production requirement for these wells. The operator has agreed to provide UnionTown Energy Inc. with a budget for this phase, expected not to exceed $1,500,000. The Company shall have up to eight months starting the date of receipt of the budget proceeds to provide for this production facilities budget.
Payment of the initial cash payment of $275,000 plus the well exploration, completion and reservoir engineering funding of approximately $1,350,000 earns UnionTown a 25 percent interest in the property. Upon funding of the steam operation budget, UnionTown shall earn a 100 percent interest in the Leases. This shall entitle the Company to 85 percent working interest before the Payout and a 70 percent working interest after the Payout subject to 75 percent net revenue interest. The Company will also provide any cost overruns for drilling, completions and the steam operation plant.
UnionTown Energy Inc. expects (after drilling of the first well) to have a geological reserve report prepared by a reservoir engineer to estimate the recoverable reserve and to design the future development of the project.
Headquartered in Billings, Montana, UnionTown Energy Inc. is an exploration-stage company building towards becoming an oil and gas producer. The Company engages in the acquisition and exploration of oil and natural gas properties located within America’s borders. They have recently completed acquisitions of the Musselshell, New Miami and Teton properties. In addition, they are undertaking the acquisition of the Darby Block, with the property currently under contract. They recently began a drill program at New Miami as well. They are moving rapidly on all company properties to bring wells to production.
For more information visit: www.UnionTownEnergy.com