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MEDIA RELEASE 30th January 2008
MOLOPO UNDERTAKES MAJOR EXPANSION IN NORTH AMERICA
• Acquisition of 1.85 million acres for US3.2 million (Net Revenue Interest 80%)
• Shale gas and conventional gas opportunity
• Large multiple Trillion cubic feet potential
• Minimal initial work commitments
• Access to US East Coast gas prices (approximately US$8 per Mscf)
Molopo wishes to announce the signing of a Purchase and Sale Agreement involving the acquisition by Molopo of a substantial acreage position in the emerging Eastern Canada shale gas play.
Under the transaction, Molopo will acquire approximately 1.85 million acres in Quebec province, Canada, for a consideration of US$3.2 million. The acquisition price represents an average cost of US$1.72 per acre. The transaction will provide Molopo with an 80% net revenue interest (“NRI”) for the acreage.
The shale gas acreage is at an early stage of exploration, however conventional oil and gas exploration in the area extends back to the late 19th century. While a high level of technical risk exists, the project has substantial upside. It represents a very large acreage position within the Utica and Lorraine shales in Eastern Canada, which have a proven hydrocarbon generating potential, and it is located in one of the highest priced international gas markets.
Acquisition of the shale play is consistent with Molopo’s strategy of assessing and developing non-conventional gas projects where evidence of in-situ gas from previous work is apparent and where there is existing infrastructure, with proximity to high-priced gas markets.
16 wells have flowed gas to surface from the Loraine/Utica shale in neighbouring acreage. These wells were not stimulated and ranged from rates that were too small to measure up to 2.9 million cubic feet per day. These wells were mostly drilled by Shell and Soquip (a former Quebec Government entity) in the 1970’s and were targeting deeper and more conventional reservoirs