TORONTO, ONTARIO (May 11, 2011) – Petrolympic USA Inc., a wholly-owned subsidiary of Petrolympic Ltd. TSX.V: PCQ (“Petrolympic” or the “Company”) is pleased to announce that it has acquired a new property in the Maverick Basin (“the Property”), Texas, as the Company shifts its near-term operational focus from gas to liquids. The 8,000 + acre block in which the Company has acquired an interest is uniquely positioned within the preferred oil window of the prolific Eagleford Shale resource play and located among currently producing fields. The acreage also hosts other highly productive formations such as the Buda, Georgetown, Edwards and McKnight.
The acreage is defined by 3D seismic and extensive offsetting well control. Several majors and large independent producers are currently active in this area. A large independent is sharing the lease line with the proposed acquisition and is currently developing the Georgetown.
“Petrolympic plans to advance this project as quickly as possible with the goal of becoming an oil producer in the near term,” said CEO Mendel Ekstein. “With today’s favourable oil prices this project is well situated in a producing area that is known for low cost production due to near surface oil and existing infrastructure. Drilling on our project is expected to start this month to evaluate the resource potential.”
Petrolympic has entered in to an Exploration Agreement with Texas HBP LLC (“HBP”) to acquire a portion of its interest in the Property. HBP has an exploration agreement with the original lease owner of the Property, Blue Star Oil & Gas (“Blue Star”) which was subsequently acquired by Shell Western E&P (“Shell”). Under the terms of the agreement between HBP and Shell, HBP is required to pay 100% of the costs incurred in the drilling and completion of earning wells. Once each well has been drilled to its objective depth, completed and tested, HBP will own an 87.5% working interest in the property, with Shell retaining the remaining 12.5% interest. Thereafter, each party will be responsible for its proportionate share of operating costs.
Key terms of the Exploration Agreement are summarized as follows:
1) $250,000 will be paid to HBP upon signing of the Exploration Agreement, refundable if drilling does not commence on or before May 14, 2011;
2) Petrolympic will be responsible for 100% of all actual costs of drilling and completing the first well;
3) Big Shell Oil & Gas, an affiliate of HBP, will remain as Operator of the property;
4) In the event that the first well is completed as a producing well with a minimum average of 50 barrels of oil production per day for the first 60 days , Petrolympic will have the obligation to tender to HBP an additional $3,000,000 (“the Payment”) within 20 days of Petrolympic’s receipt of confirmation of production volume;
5) Upon fulfillment of its drilling and payment obligations, Petrolympic will earn an undivided 50% working interest, yielding a 37.5% net revenue interest, in the acreage and depth to the first well. Additionally, Petrolympic will receive the farm-in right to an undivided 50% working interest in the remainder of the subject property, provided that Petrolympic assumed its proportionate shared cost of the carried interest;
6) In the event that the first well does not produce up to the average of at least 50 barrels of oil per day, Petrolympic will retain the option to make the Payment and thereby acquire a 50% working interest and a 37.5% net revenue interest in the subject property. In the event that Petrolympic elects not to make the Payment under this scenario, it will receive a 50% working interest, yielding a 37.5% net revenue interest, on the first well and the 320 acres surrounding it but will have no further rights under the Exploration Agreement.
Further technical information concerning the Property will be provided as it becomes available.
Update on Quebec Properties
Petrolympic remains confident that shale oil & gas will be developed safely in Quebec. The company is currently evaluating and exploring their property in the Lower St. Lawrence/Gaspe Region of Quebec together with Energie Squatex Inc. ("Squatex") to target hydrothermal dolomite hosted conventional and unconventional light oil where oil showings have been previously observed in geological outcrop sampling and coring programs. Petrolympic is one of the largest land holders in the Utica Fairway and is the only acreage holder that still has large contiguous blocks of land available for farm-out.
About Petrolympic Ltd.
Petrolympic is a junior oil and gas company that is actively exploring for premium light crude oil and natural gas in North America. The Company combines significant land positions, promising geology, systematic exploration, accessible infrastructure, and experienced management.
Petrolympic holds an interest in a total 754,216 hectares (1,863,668 acres) of oil and gas exploration permits in the Appalachian Basin of Quebec that include holdings in the St. Lawrence Lowlands and Gaspe Peninsula. The Company's holdings in the St. Lawrence Lowlands are a 30% interest in 217,370 hectares (536,941 acres) through a joint venture with Ressources & Energie Squatex Inc.; a 12% interest in 8,000 hectares (19,768 acres) through a Farmout Agreement with Canbriam Energy Inc., as well as a 100% interest in 56,622 hectares (139,913 acres) located over the Lowlands shallow carbonates platform on the south shore of the St. Lawrence River, less than 30 kilometers southwest of Montreal. These properties represent a major position in the Utica-Lorraine and Trenton-Black River Plays. Petrolympic also maintains holdings in the Gaspé and Bas-St. Lawrence regions, including a 30% interest in 431,339 hectares (1,065,839 acres) through a joint venture with Squatex and a 100% interest in a block of exploration permits totalling 40,885 hectares (101,029 acres) located between Rimouski and Matane prospective for hydrothermal dolomite hosted light oil.
This press release includes certain "forward-looking information" within the meaning of the Securities Act (Ontario), including, but not limited to, statements as to timing and extent of exploration programs and the availability of exploration results. As such, forward-looking information addresses future events and conditions and so involves inherent risks and uncertainties, as disclosed under the heading "Risk Factors" and elsewhere in Petrolympic documents filed from time to time with the Ontario Securities Commission and other regulatory authorities. Actual results could differ significantly from those currently projected as a result of, among those factors, adverse weather, regulatory changes, delays in receiving permits, accidents and delays in completing exploration activities not all of which are in the control of Petrolympic. The forward-looking information contained herein is Petrolympic's reasonable estimate today of future events and conditions, but no assurance can be given that such events or conditions will occur. The reader is cautioned not to rely on these forward-looking statements. Petrolympic disclaims any obligation to update these forward-looking statements.
The TSX Venture Exchange has not reviewed and does not accept responsibility of the adequacy or accuracy of this news release.
For further information please contact:
President and CEO
Or visit www.petrolympic.com.