Cerus Energy Corp. (“Cerus”) announces that further to previously released News Release dated March 31, 2017 it has entered into an agreement with Vital Energy Inc. (“Vital”).
Cerus has agreed and committed to fund Vital for up to ten million five hundred thousand dollars ($10,500,000.00) to acquire land and drill, frac, test, complete and equip up to seven (7) one mile horizontal test wells on Vital’s 100% owned Pennant Area Project Lands located in S.W. Saskatchewan.
Phase 1 Drilling Program
The seven (7) well drilling program will be “Phase 1” on a project that has identified an additional 27 drilling locations on the current Pennant Area Project Lands (3,360 acres). The primary target is medium gravity (21 degree) oil from the Upper Shaunovan formation. Vital will be the Operator of the Phase 1 drilling program. Drilling is expected to commence immediately after spring break up 2017.
Under the terms of the agreement, Cerus will pay up to $10,500,000.00 for 100% of the costs incurred by Vital to acquire lands posted for sale by Vital at the April 11, 2017, Saskatchewan public crown land sale and to drill, hydraulic fracture ("frac"), test, complete and equip up to seven (7) wells on Vital’s current Pennant Area project lands as a condition of earning.
Cerus will be entitled to receive 80% of the Net Profits generated by the sale of Petroleum Substances from the Phase 1 wells and their respective drilling spacing units. Once Cerus has recovered 180% of its investment back from the 80% net profits interests, Cerus will convert its net profits interest to a non-convertible 5% gross overriding royalty in the Phase 1 wells and their respective drilling spacing units.
Under the terms of the agreement Cerus will have the first right of refusal to fund additional Phases of development drilling on all of Vital’s Pennant Area project lands, on the same terms and conditions as for the Phase 1 wells.
Completion of Initial Commitment
Vital announces that Cerus has made the first cash advance in the amount of $360,000.00 CAD to Vital under the terms of the agreement. Vital was successful in acquiring 4 leases at the April 11, 2017, Saskatchewan crown land sale. The lease acquisitions totaled 5,220 acres more than doubling Vital’s current Pennant Area project lands and bringing the total 100% owned Pennant Area project lands to approximately 8,580 contiguous acres.
For further information regarding Camarico, see the Company's profile on SEDAR at www.sedar.com.
Anthony Chan, CEO & CFO
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Exchange) accepts responsibility for the adequacy or accuracy of this release.
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