Business
Vulcan Minerals Inc. Acquires Alberta Gas Project
Vulcan Minerals Inc. Acquires Alberta Gas Project.
About this update from Vulcan Minerals Inc.
[{"type":"text","content":"\n\n\n\n\nStock Symbol: TSX: VUL\nShares issued: 35,278,384\n\nST. JOHN'S, NL, June 22 /CNW/ - Vulcan Minerals Inc. (\"the Company\"\nTSX-V: VUL), the Company is pleased to announce that it has entered into an\narms length farmout agreement with a private Alberta corporation (Enerhance\nResources Inc.) to acquire a working interest in seven sections of land (4,480\nacres) near Medicine Hat, Alberta. The Company may earn an 85% working\ninterest before payout and a 75% working interest after payout by paying\n$400,000 cash and 100% of the drilling, completing and equipping costs of 16\nwells. A further 10 wells on the lands would be at 75% cost to Vulcan.\nUnderlying encumbrances in the lands amount to 10% overriding royalties. The\n$400,000 cash portion of the transaction includes the purchase and\nre-completion of two shut-in existing wells, both believed to be capable of\ncommercial production of gas with proper stimulation. Five new wells are to be\ndrilled prior to August 8, 2006 as per Phase I of the project at an estimated\ncost of $1,500,000.\nThe lands cover a portion of the prolific Medicine Hat gas field and\nspecifically include the rights to the Medicine Hat sands in an area of\nbypassed pay. A preliminary Resource Potential Assessment has been prepared by\nChapman Engineering Ltd. of Calgary, Alberta pursuant to National Instrument\n51-101 and concludes that the total project has a Best Estimate of Potential\nRecoverable Gas in Place of 20.9 BCF, a Low Estimate of 6.9 BCF and a High\nEstimate of 49.5 BCF based on historic data from offsetting production.\nVulcan's share would be 85% before payout and 75% after payout as described\nabove. Total costs to Vulcan for a complete 26 well package is estimated at\n$7,000,000. Vulcan's participation in the complete package of wells is\ncontingent on results. The risks to recovering commercial gas from the lands\nrelate to reservoir quality and the efficiency of hydraulic fracture\nstimulation of the reservoir as described in the Chapman report. A copy of\nthis report is being finalized and will be filed with Sedar and available on\nthe Company's website when finalized. A finder's fee in the amount of a 1%\ngross overriding royalty before payout and a 2% gross overriding royalty after\npayout is payable to an arms-length party on the Company's working interest\nshare.\nThe Co...