Additionally, once the Vencedor payable has been paid, the remaining four wells will be drilled and put into production per a response from the CEO on the company website:
"Question #2: Also, the payment to Vencedor per the settlement is for five wells drilled and operating in Pennsylvania (2,3,4,,14 and the existing well 15). Will they now continue operations to place the other four wells?
Response #2: At the time Vencedor Energy Partners (VEP) assigned its receivable to Equity Capital, on August 5, 2013, the Company was obligated to pay $835,000 to VEP of an 8 well drilling program on the Rice Lease costing $1,336,000. They permitted 5 locations and per the Participation and Operating Agreement - Rice Lease (POA), the Company has to prepay VEP prior to them doing any work on the leases per the POA. The pricing, an average of $167,000 per well, is on the basis of doing 4 to 6 wells at one time to take advantage of economies of scale. VEP invoiced the Company on December 18, 2012 and the Company was obligated to pay this lump sum on receipt of the invoice per the POA. Based on immediate payment, all 5 wells would have been completed on or before March 31, 2013. The financing the Company was working on with a funder did not materialize and as a result VEP could not start the drilling as scheduled in the POA. VEP started work on the Rice Lease in March at their own cost and carried the costs until the Company began making advances on the account from funds received through CPN's.
Upon receipt of the funds by VEP from Equity Capital, VEP is obligated to complete its obligations to the Company. VEP cannot return any unused portion of the cash or invest in the Company or any of its affiliates. VEP invoiced for $835,000 for services to be rendered on a prepaid basis and it is expected that VEP will complete its obligation of drilling and completing oil wells equal to or greater than $835,000 for the Company, whether on the Rice lease or any other oil and gas lease the Company approves. In simple terms the $835,000 rolls forward until it is expended."
AI
