UnionTown Energy Inc. is a company focused on the acquisition, exploration, development and production of oil and natural gas properties throughout North America. The company announced today that it completed the purchase of the Musselshell Property in Montana. This property is an approximate 7,000 acre central Montana site that straddles the Heath and Amsden shale formations.
Under the terms of the original acquisition agreement, UnionTown was to issue 10 million restricted common shares and 1 million preferred shares which held only voting rights. This agreement was amended on April 5th to replace the preferred shares option with a grant of a 5-year option to the seller. This option gave the seller the right to acquire an additional 10 million restricted common shares at $3.00 per share.
In return, UnionTown will receive 75 percent of revenues generated from the Musselshell Property, with the operator receiving a 20% carried working interest. This should work out well for UnionTown. The property is believed to have estimated potential oil reserves of 10.4 million barrels. This estimate was determined by an independent, third-party geologist.
UnionTown believes the western half of the property, which covers the Heath formation, has the potential to support 16 horizontal drill sites with 2,000 foot horizontal legs. Seismic data on the eastern half of the property, which covers the Amsden formation, also shows exploration potential. The company also reports that it will immediately have a workover crew begin operations to perforate the existing well to test for production.
For further information on UnionTown Energy, please visit its website at www.uniontownenergy.com