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Shoats Creek Update
Northcote has noted the announcement by Red Rock Resources today that it has entered into an option agreement with Shoats Creek Development, Inc., Northcote’s partner at the Shoats Creek Field, Louisiana, to farm-in to certain planned development wells.
Subject to the exercise of the option RRR, alongside Northcote, will participate with a 20% working interest and 14.4% net revenue interest in the drilling of two offset wells on the field targeting the Frio sands: the Lutcher Moore #21 and Lutcher Moore #22.
Drilling is planned for late 2015 and early 2016.
Pursuant to the terms agreed between RRR and SCDI, SCDI was to receive 3.75% working interest and 2.7% net revenue interest after payout of RRR’s investment. As consideration for Northcote’s assistance in arranging the farm-in, SCDI has agreed to assign Northcote 50.0% of the back-in after payout interest it is to receive per the terms of the transaction. Accordingly, based on the terms agreed between Northcote and SCDI, Northcote will receive an assignment of 1.875% working interest and 1.35% net revenue interest at such time.
Other than the addition of a share of the BIAPO, the transaction does not impact Northcote’s interest in Shoats Creek which remains as follows:
Frio formation – 70% working interest
Lutcher Moore #20 Well – 93% working interest
Cockfield formation- 70% working interest
Wilcox formation- 50% working interest
Northcote is also pleased to announce that it has received permission from the Louisiana Department of Natural Resources to commence oil sales from the Lutcher Moore #20 well at Shoats Creek Field and with this permit in hand the Company has now commenced making sales.
Northcote Managing Director Randall J. Connally said, “We are pleased to have permission to sell oil from the LM#20 and also to have Red Rock Resources as a partner in the development of the next several Frio wells at the Shoats Creek Field. The high impact low cost potential of the Frio formation at Shoats Creek was clearly demonstrated by the expectation – beating 340 boepd (gross) test results reported for our recently drilled and 93% working interest Lutcher Moore #20 well. Having a solid partner led by a capable management team will facilitate continuation of the development programme at Shoats Creek to the mutual benefit of our shareholders.”
