BSE will drill one well on each of EL’s 1070, 1120, and 1097R. • on EL 1070, the Shoal Point 3K39 well will by June 15, 2013 be re-entered and sidetracked from surface casing to drill, stimulate, complete and evaluate prospective oilbearing zones within the Green Point shale formation. Earning depth of the well will be 1800 metres below sea level;
• on EL 1120, a well will be drilled, stimulated, and completed to evaluate prospective oilbearing zones within the Green Point shale formation. Earning depth of the well will be 3000 metres below sea level;
• on EL 1097R, a well will be drilled, stimulated, and completed to evaluate prospective oil-bearing zones within the Green Point shale formation. Earning depth of the well will be 3000 metres below sea level;
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Having met the conditions of the above program, BSE will earn a 40% interest in SPE’s working interest rights, that is, 40% of “shallow rights” in EL 1070, where SPE currently holds a 100% working interest, 40% of all rights in EL 1097R, where SPE currently holds a 100% working interest, and 32% of “shallow rights” in EL 1120, where SPE currently holds the right to earn an 80% working interest from Ptarmigan Energy Inc. by drilling a well to test the Green Point shale. (n.b. The definition of “shallow rights” includes all Green Point rights on these properties).
Optional Phase 1 Earning Well: Upon rig release at the third earning well above, BSE will have the right to elect, within a period of 60 days, to drill, stimulate, complete and evaluate a fourth well at a location of its choice, on either of the three EL’s noted above, to earn an additional 10% of SPE’s working interest in all three properties. Having so elected, BSE will be required to spud this well by April 30, 2014.
If all the conditions of Phase 1 Earning are met, then BSE will hold a 50% working interest in SPE’s rights in west Newfoundland (50% of “shallow rights” in EL 1070; 50% of all rights in EL 1097R, and 40% of “shallow rights” in EL 1120) at the conclusion of Phase 1 Earning. Application for Significant Discovery Licenses: During Phase 1 earning, upon the successful testing and recovery of petroleum in an exploration well on a particular license, BSE and SPE (the “Parties”) will cooperate to apply to the Canada-Newfoundland Offshore Petroleum Board for a Significant Discovery License (“SDL”) for that property, which when awarded will allow the parties to hold, develop and produce from the lands
