Operational Updates | Deals - Joint Ventures | Key Wells

Stratex Joins Itasca for Buda Lime JV; Whiting Well Update

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   |    Monday,June 29,2015

Stratex Oil & Gas Holdings, Inc. has reported this update on its current operations.

Zavala County, Texas

On March 13, 2015, the Company entered into a Joint Development Agreement (JDA) with Itasca Energy LLC (IT) to drill up to 6 wells in the Buda Limestone formation on a 19,791 acre leasehold in Zavala County, Texas. The Company owns a 94.85% BWI in the leasehold. Under the JDA, IT has the potential to earn a 77.50% BWI in each of the 6 wells that is timely completed at IT's sole cost and expense, with the Company retaining a 21.34% BWI. The Company has separately retained its full 94.85% BWI in two previously drilled wells that have not yet been completed, as described below. If IE timely completes and pays 100.00% of all costs through the tanks for all six wells in accordance with the JDA, IT will also earn a 77.50 % BWI in the surrounding 10,314 gross acres, reduced to a 50.00% BWI in the remaining 9,333 gross acres of the Lease, with the Company's retained BWI in the remaining acreage increased to a 44.85% BWI.

The first well to be drilled under the JDA, known as the Matthews #2502 Well, was spudded on March 16, 2015, and reached total depth, including an approximately 5,200 foot horizontal in the Buda Limestone, on April 8, 2015. IT is currently conducting operations to establish production and install surface production equipment. If IT successfully establishes production of hydrocarbons in commercial quantities from this initial well and pays 100.00% of all costs of drilling and completion through the tanks, it will earn the right to drill the second well, which must be spudded, if at all, within 120 days after the initial well reached total depth on April 8, 2015. IT must meet these same requirements to earn the right to commence each subsequent well, each of which must be spudded within 120 days after the immediately prior well reaches total depth. If any of the five subsequent wells is not spudded within the required time period as described in the JDA, IT will only earn its interest in any prior well(s) that have been timely completed in accordance with the requirements of the JDA for establishing commercial production and payment of all costs through the tanks.

On March 31, 2015, the Company entered into a Commercial Term Sheet with Eureka Petroleum Corp. to sell to Eureka an undivided 50% of the Company's retained BWI under the JDA with IT discussed above, increasing to an undivided 75% of the Company's retained BWI in the two Excluded Wells. The agreed purchase price is $3,300,000, together with a carry of the Company's share of all costs for completion of the two Excluded Wells. Eureka has paid a $500,000 non-refundable deposit to the Company, together with $25,000 of costs for the initial re-entry and preliminary testing of the Excluded Wells.

An additional non-refundable deposit of $600,000 is scheduled to be paid prior to June 30, 2015, with the remaining $2,200,000 of the purchase price scheduled to be paid in July, 2015. Completion operations are scheduled to commence in July, 2015, on the first of the two Excluded Wells, known as the BPH Matthews #1H Well, which was previously drilled to the Pearsall formation. Completion operations on the second of the two Excluded Wells, known as the Matthew #2501, which was previously drilled to the San Miguel formation, are scheduled to commence later this summer.

Sanpete County, Utah

On August 6, 2014, work began on a well in Central Utah, known as the Moroni 11M-1107 Well, with Whiting Oil & Gas Corporation as the record Operator. The Company owns an undivided 3.00% beneficial working interest (BWI) in this well and in an adjacent 20,000 net acre lease block located in Sanpete County, Utah. On February 14, 2015, the well was placed into production.

The well has now been completed, surface production equipment is in place and flow back of the residual fracture treatment fluids is continuing, accompanied by varying amounts of oil and natural gas. Several more months may be required to flow back these remaining fluids before stabilized hydrocarbon production rates will be known.