Western Standard Energy Corp. Enters Farmout Agreement For Oil & Gas Exploration In Montana
Western Standard Energy Corp., (the “Company”) (OTCBB:WSEG), an oil and gas exploration company, today announced that it has entered into a Farmout Agreement with Coastal Petroleum Company, for leases on approximately forty-two thousand (42,000) acres in Valley County Shallow Gas Assembly in the state of Montana.
Under the terms of the Farmout agreement, signed August 30, 2007, Western Standard is required to pay 100% of the cost of the test well and associated lease rentals, in return for 100% of the working interest before payout of the test well and 80% of the working interest of the test well after payout.
In addition, within 30 days after the test well is completed, the Company can elect to purchase a 50% interest in the leases owned by Coastal Petroleum in its Valley County Shallow Gas Assembly. If it so elects, at the time of full payment, Coastal Petroleum will assign the full 50% undivided working interest in the leases to the Company. From that point on Coastal Petroleum and the Company would each pay 50% of the cost of wells in which they both participate and each be entitled to 50% of the revenues of wells in which they both participate. If the Company has earned 50% undivided interest in the leases, either party may propose a well within the leases or additional acreage acquired within the area of mutual interest (which exists within four miles of the leases). The other party may opt-in or opt-out of the proposed well, on a well by well basis.
Following the completion of a successful test well, Western Standard can elect to: (1) drill four step out wells as soon as possible; (2) complete a reserve study; (3) obtain financing based upon the reserve study to complete the development of the field; and (4) install pipelines needed to carry the gas to transmission lines.
Coastal Petroleum will be designated as operator for all operations on the leases for the joint account of Coastal Petroleum and the Company except where Coastal Petroleum declines to participate in the drilling of a well or wells by the Company, in which case, the Company may elect to act as an operator and owner of such well or wells.
About The Starbuck Prospect
The Starbuck Prospect in Valley County Montana is a shallow multiple zone natural gas field on trend with approximately 34,000 feet of closure. The Starbuck prospect is comparable in size to the 1 TCF Tiger Ridge Field to the west in Hill County, and similar in characteristics to the Bowdoin Gas Field in Phillips and Valley County, but as yet has no proven reserves. The Bowdoin Filed is the second largest gas field in Montana with more than 1,200 wells and cumulative production to date exceeding 500 Bcf of natural gas.
Successful natural gas wells in these fields have similar characteristics in that they have encountered long production lives and prolific production rates with significant recoverable reserves. These areas are further defined by their shallow hydrocarbon depths that measure from 1,000 feet to 3,800 feet. Many wells in these developments will produce for 20 years or more, making them attractive long term investments. The Company hopes that the Starbucks Prospect will demonstrate similar characteristics.
Dan Bauer, CEO of Western Standard Energy, states: “We are excited to complete the Starbuck Prospect acquisition and look forward to developing current targets and future prospects in this resource rich region. We intend on drilling our first test well in the immediate future to begin the process of proving out the prospect.”
Shareholders are invited to contact corporate communications toll free at (888) 956-7843 for further information.
About Western Standard Energy Corp.
Western Standard Energy Corp. is a publicly traded independent oil and gas exploration company with headquarters in London, England. Western Standard aims to secure and develop a portfolio of oil and gas properties throughout the Central and Western United States of America. Western Standard Energy Corp. is a publicly traded company and trades on the NASD OTC BB under the ticker symbol: WSEG.
Western Standard Energy Corp.
Dan Bauer, President
Statements in this news release that are not historical facts are forward-looking statements that are subject to risks and uncertainties. Forward-looking statements in this news release include that we hope that the Starbucks Prospect will demonstrate similar characteristics to successful wells in the region, the Company’s belief that we can participate in the exploration of those properties; the future development potential of our license in the Valley County Montana Project, that we hope to secure and develop a portfolio of oil and gas properties throughout the Central and Western United States of America; and that we intend on drilling our first test well in the immediate future to begin the process of proving out the prospect. It is important to note that actual outcomes and the Company’s actual results could differ materially from those in such forward-looking statements. Factors that could cause actual results to differ materially include the uncertainty of the requirements demanded by environmental agencies, the Company’s ability to raise financing for operations, breach by parties with whom we have contracted, inability to maintain qualified employees or consultants, competition for equipment, inability to obtain drilling permits, potential delays or obstacles in drilling operations and interpreting data, and the likelihood that no commercial quantities of gas are found or recoverable. Additional information on risks for the Company can be found in filings on Edgar of other junior oil and gas exploration companies with the US Securities and Exchange Commission.