Vital Energy Inc. ("Vital") (TSX VENTURE:VUX) announces that it has entered into an agreement with a Third Party whereby the Third Party has committed to spend up to ten million, five hundred thousand dollars ($10,500,000.00) to, among other things, drill, frac, test, complete and equip up to seven (7) one mile horizontal test wells on one of Vital's project areas. This will be "Phase 1" on a project that has identified an additional 27 drilling locations on the project lands. The primary target is medium gravity (21 degree) oil. Vital will be the Operator of the Phase 1 drilling program. Drilling is expected to commence immediately after spring break up 2017.
Under the terms of the agreement, the Third Party will pay up to $10,500,000.00 for commitments that include paying 100% of the costs incurred to drill, frac, test, complete and equip up to seven (7) wells on the project lands. The Third Party will be entitled to receive 80% of the net profits generated by the sale of petroleum substances from the Phase 1 wells and their drilling spacing units. Once the Third Party has recovered 180% of its investment back from the 80% net profits interests, the Third Party will convert from its net profits interest to a non-convertible 5% gross overriding royalty in the Phase 1 wells and their respective drilling spacing units.
Under the terms of the agreement, the Third Party will have the right of first refusal to fund additional Phases of development drilling on the project lands, on the same terms and conditions as for the Phase 1 drilling program.
Vital Energy Inc. is a publicly traded junior oil and gas company (TSX VENTURE:VUX) whose primary focus is developing light and medium crude oil production in Western Canada.
SOURCE: Vital Energy Inc.
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