Hi Hummer,, I'll give you my opinion on the announcement...

Hi Hummer,,

I'll give you my opinion on the announcement mate,,,, for what it's worth..!

The up-coming drilling of the " Yellow Rose well " is in the Yellow Rose tennament lease of 8,200 acres,,,none of which has been sold..!!

AZZ owned an additional lease of 5,102 acres, which is adjacent and immediately to the north of the Yellow Rose lease.
It's the lease over the 5,102 acres that they have sold, but with conditions of sale attached.!

It's mildly confusing because AZZ make reference to gross and nett acres..!
The gross is 5102,,,,and the nett is 4,840 acres.

The difference between the two figures is 262 acres.
262 divided by the gross acre figures of 5102, is 5% of the overall tennament.!

Effectively this means that AZZ had a joint venture partner in that tennament who owned 5%,,, and AZZ owned 95%.

AZZ can only sell their 95% share,,so 95% of the overall 5102 acres,, equates to a theoretical nett of 4,840 acres..!

There is a condition in the sale agreement, for AZZ to retain the right to buy back into the action , on a well by well basis, further down the time track.

Most buy back agreements are on an equal share basis,,costs to well working interest.,ie. [ put up 50% of the drilling costs, and receive 50% of the production from that well ]

It's important to note that, under such an agreement, AZZ would receive a percentage of production revenue from that particular well only, and not the whole tennament..!

Cheers.!