On October 24, 2007 the Company completed the acquisition of a 40 percent working interest in two prospects in Montana totaling 34,000 acres in Choteau County, Montana. MegaWest will earn an addition 20 percent working interest in each prospect by carrying its working interest partner through the first US$2.5 million of work. In addition, MegaWest and its working interest partner have established a regional Area of Mutual Interest (“AMI”) covering approximately 1,000,000 acres that shall remain active for the next two years. The interest in the AMI shall be divided 65 percent to MegaWest and 35 percent to its partner. MegaWest shall pay for the lease acquisition, initial geological and geophysical activity, drilling and completing of all wells, if any, comprising an agreed upon initial work program for each new prospect within the AMI and shall receive 100 percent payout of all such costs and expenses incurred for each such prospect prior to its partner receiving its respective share. To date, the Company has acquired an additional 2,000 acres in the project.
The Company is in the process of formulating an exploration plan that will include some seismic data acquisition to identify future drilling locations.
Historic mapping and volumetric calculations indicate about 250 million barrels of speculative oil resource on the Teton River Prospect, and about 160 million barrels of speculative oil resource plus about 7.5 BCF of speculative gas resource on the Loma Prospect. MegaWest will work diligently to confirm these estimates through seismic acquisition, delineation drilling and the preparation of a third-party study to establish 51-101 compliant estimates.
Historic Information:
The Big Sky Project in Montana, USA was acquired by MegaWest Energy on October 24, 2007.
The Big Sky Project includes a 40% working interest in the Teton River prospect in Choteau County, Montana, which comprises over 27,000 acres. MegaWest will earn an additional 20% working interest by carrying the Vendor through the first US$2.0 million of work (additional leasing, seismic, test wells, geologic studies, pilot project development and implementation) after which the Vendor will be responsible for its 40% working interest share of all cost, risk, expense and benefit related to the Prospect.
The Big Sky Project also includes a 40% working interest in the Loma Prospect in Choteau County, Montana, which comprises over 6,000 acres. MegaWest will earn an additional 20% working interest by carrying the Vendor through the first US$0.5 million of work (additional leasing, seismic, geologic studies, and test wells) after which the Vendor will be responsible for its 40% working interest share of all cost, risk, expense and benefit related to the Prospect.
MegaWest Energy paid a purchase price of $300,000 USD and issued from treasury a total of 500,000 common shares and 250,000 warrants, whereby each warrant provides the holder the right to purchase one common share at a price of US$2.50 for a period of 18 months commencing from October 24, 2007.
MegaWest and selling parties have also established a regional Area of Mutual Interest covering approximately 1,000,000 acres that shall remain active for the next two years. The interest in the AMI shall be divided 65% to MegaWest and 35% to Vendor. MegaWest shall pay for 100% of the lease acquisition, initial geological and geophysical activity, drilling and completing of all wells, if any, comprising an agreed upon initial work program for each new prospect within the AMI and shall receive 100% payout of all such costs and expenses incurred for each such prospect prior to Vendor receiving its respective share.