Mr. Irwin Olian reports
DESERT MOUNTAIN ENERGY CLOSES ACQUISITION OF KIGHT GILCREASE SAND UNIT OIL & GAS PROJECT IN OKLAHOMA
Desert Mountain Energy Corp. has closed its acquisition of the Kight Gilcrease sand unit oil and gas project in Seminole county, Oklahoma. Under the terms of the definitive purchase agreement dated Feb. 13, 2018, as amended on Nov. 5, 2018, between the company, Seminole Productions LLC, an Oklahoma private company, and Desert Energy Corp., the company's U.S. subsidiary, the company has acquired certain oil and gas interests comprising the Kight Gilcrease sand unit.
In consideration of the oil and gas interests acquired, the company is paying (i) cash consideration of $180,000 (U.S.) of which $90,000 (U.S.) is payable on closing and $90,000 (U.S.) is payable within one year thereafter, and (ii) 1.44 million units at a deemed price of 20 Canadian cents per unit, where each unit comprises one share of common stock of the company and one share purchase warrant. Each warrant permits the holder to purchase one share for a period of three years from the date of issuance at a price of 30 Canadian cents per share. This represents a deemed value for the units of $220,000 (U.S.) at applicable exchange rates.
By way of background, the KGSU was permitted and approved by OCC by order No. 375263 dated July 19, 1993, as an enhanced recovery project primarily utilizing waterflood secondary recovery operations, in an administrative proceeding which consolidated and unitized all working and royalty interests in the project. It was subsequently acquired by its present owner/operator Seminole in 2003. The KGSU has had historic production estimated at 1,690,240 barrels of oil by the OCC and presently has seven wells on site, one of which is operational. The oil produced is a light sweet crude that varies from 34 American Petroleum Institute to 43 API gravity.
The KGSU comprises an area of approximately 883.7 acres, which is substantially underlain by the Gilcrease sandstone common source of oil supply. The KGSU leases are located eight miles south of Wewoka directly astride State Highway 56, in a portion of the S/2 of Section 6, all of Section 7 and the NW/4 of Section 18, T6N R8E Seminole county, Oklahoma. It is not located within an environmentally sensitive area or on a known Native American reservation. The oil-bearing pay zone was estimated by the OCC to be from 10 feet to 40 ft in width and to occur at a subsurface depth of approximately 2,726 ft to 2,810 ft, as reflected in geophysical logs from the Adams No. 1 Maverick well drilled in the SW/4 SE/4 SW/4 of Section 7-6N-8E, Seminole county. Further information on the KGSU is contained in the company's press release dated Nov. 22, 2018.
According to Irwin Olian, chief executive officer of the company: "We are extremely pleased to have closed our acquisition of the Kight Gilcrease sand unit in Seminole county, Oklahoma. It represents a strong opportunity to develop significant cash flow for the company and at the same time it gives us a base of operations in Oklahoma. Oklahoma has been one of the leading producers of helium among states in the U.S. and this will provide us with access to potential helium opportunities in the region as an adjunct to our flagship Heliopolis helium project in Arizona.
"Immediate plans for the KGSU contemplate reworking of existing wells in the field."
About Desert Mountain Energy Corp.
The company is an exploratory resource company engaged in exploration and development of helium, oil and gas, and mineral properties in the southwestern United States. Until Sept. 5, 2018, the company also owned the Yellowjacket gold project in Atlin, B.C., which it had been developing. The company has its executive offices in Vancouver, Canada. The company was incorporated under the laws of the Province of British Columbia, on April 30, 2008, and was formerly named African Queen Mines Ltd. It initially received certain Southern African assets in a spinoff transaction related to the acquisition of Pan African Mining Corp. by Asia Thai Mining Co. Ltd.
We seek Safe Harbor.
© 2020 Canjex Publishing Ltd. All rights reserved.