(TSXV Symbol: EXX)
MONTREAL, March 31 /CNW Telbec/ - On June 9, 2005, the Company announced
an agreement with Chamberlain Exploration Development and Research
Stratigraphic Corporation ("Cedar Strat") under which the Company initially
acquired a 100% working interest in oil and gas leases covering approximately
33,000 net mineral acres in the Nevada Oil and Gas Fairway. Under the
agreement, Cedar Strat was obligated to continue assembling acreage within two
areas of interest, with the goal of assembling an additional 120,000 net
mineral acres for the Company's benefit.
Under the terms of the original agreement, the Company has to date paid
US$2,800,000 for acreage assembled by Cedar Strat under the agreement, and is
obligated to make a final payment of US$800,000 by November 30, 2006. The
Company also agreed to drill four wells on the project: the first by May 31,
2007, the second by May 31, 2008, the third by May 31, 2009 and the fourth by
May 31, 2011. The agreement provided further that the Company was obligated to
make default payments to Cedar Strat for failure to drill the commitment
wells, in the sum of US$500,000 for failure to drill the first well,
US$300,000 for the second well, US$100,000 for the third well and US$150,000
for the fourth well. The agreement also provided that the Company would
relinquish and return to Cedar Strat all of its interests in sub-areas where
it failed to drill commitment wells within the required time.
The Company and Cedar Strat have now entered into an amendment agreement
dated March 30, 2006, (the "Amendment Agreement") amending certain of the
terms of the original agreement. Under the Amendment Agreement, the date for
commencing each of the four commitment wells has been extended by 18 months.
Also, no default payments are payable by the Company, and no interests are
relinquished to Cedar Strat, in the event that commitment wells are not
drilled. The Amendment Agreement also provides for the Company and Cedar Strat
to collectively employ their best efforts to sell to a third party any
interests upon which the Company elects not to drill any commitment well, with
the proceeds being distributed first to the Company as to 75% of its costs
incurred with respect to the interests sold, and 50/50 thereafter.
As consideration for the amendment, the Company has agreed to pay the
final US$800,000 payment under the original agreement by March 31, 2006, and
lend Cedar Strat the sum of US$200,000 under a promissory note due November
30, 2006, bearing simple interest at the U.S. commercial prime rate.
"The amendment allows Exxel additional time to acquire and evaluate
further geological and geophysical data required to prioritize the drill
targets on our leases in the Great Basin of eastern Nevada", stated John R.
Hislop, President and Chief Executive Officer. "We're very excited about the
oil and gas potential of the under explored region and testing the new
exploration models advanced by Cedar Strat and Dr. Chamberlain".
The Company also is also pleased to provide an update on its Piceance
Basin Project. Further to Exxel's news releases dated February 7, 2006 the
first well drilled by the Exxel/Dolphin joint venture, Biscuit Ranch 10-31d,
has reached total depth of 9,250 feet, open hole logs were run, and production
casing set. Well completion activities will commence in due course.
The TSX Venture Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of this release.
