Well Oil & Gas, Inc., through its wholly owned
subsidiaries, Northern Alberta Oil Ltd. and Deep
Well Oil & Gas (Alberta) Ltd. has a 90% working
interest in 51 sections on six oil sands leases and
an 80% working interest in 5 sections on one oil
sands lease in the Peace River oil sands area of
Alberta, where we are operator. In addition, the
Company has a 25% working interest in another 12
sections on two oil sands leases in the Peace River
oil sands area of Alberta, Canada. Together these
nine oil sands leases, which are contiguous, cover
43,015 gross acres (17,408 gross hectares) of land.
July 30, 2013, we entered into a farmout agreement (the “Farmout
Agreement”) with a new joint venture partner (the “Farmee”)
to fund our share of the recently Alberta Energy Regulator
(“AER”) approved Steam Assisted Gravity Drainage
Demonstration Project (the “SAGD Project”).
The SAGD Project is located on our joint Sawn Lake properties
in the Peace River oil sands region of Alberta. In accordance
with the Farmout Agreement, the Farmee has agreed to
provide up to $40,000,000 in funding for our portion
of the costs for the SAGD Project, in return for a net
25% working interest in 12 sections where we have a working
interest of 50% (before the Farmout Agreement). As required
by the Farmout Agreement, the Farmee has paid Cdn $11,014,946
to the operator of the SAGD Project for the Farmee’s
share and our share of the initial costs of the SAGD
Project. Also, the Farmee is required to provide funding
to cover our monthly operating expenses not to exceed
$30,000 per month. In addition, the Farmee has the option
to elect to obtain a working interest ranging from 40%
to 45% in the remaining 56 sections of land where we
have working interests ranging from 80% to 90%, by committing
$110,000,000 of financing for the development of our
Sawn Lake oil sands project.
connection with the the SAGD Project agreement dated
July 30, 2013, we entered into a Water Rights Conveyance
Agreement whereby we acquired a 25% working interest
in one water source well and one water disposal well
for a cost of Cdn $425,000, which in turn was reimbursed
to us by the Farmee. As required by the Farmout Agreement,
the Farmee has also paid Cdn$1,058,568 to the operator
of the SAGD Project for the Farmee's share and our
share of the expenditures relating to the water source
well, water disposal well and pipelines to connect
them to the SAGD project surface facility.
first SAGD well pair has been drilled and completed.
See SAGD Project for further updates.
Sawn Lake Area Project