Hillcrest Petroleum has signed a binding Joint Venture (JV) Agreement with Canadian oil and gas company Juniorco to acquire up to 75% working interest in two petroleum assets located in Western Canada.
The JV agreement is in line with the letter agreement initially signed by the parties and was announced on 21 February this year.
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Under the agreement, Hillcrest Petroleum will offer technical and operational expertise and capital funding to restore production from the fields.
Restoration of the production from the fields will be taken up in the second quarter of this year, with an aim to increase the total capacity to 400 barrels of oil per day (bopd).
The company plans to further enhance production from the fields through additional development activities later this year.
Hillcrest Petroleum CEO Don Currie said: “The project will provide cash flow and has the ability to grow through further development in and around the fields.
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By GlobalData“The assets had been producing in excess of 400bopd prior to being shut-in due to cyclically low product prices, and only modest investment is required to re-activate the existing wells.
"The company will earn a majority working interest in the fields at a very favourable effective dollar per flowing barrel cost metrics, and expected gradual increases in commodity prices and reduced operating expenses will enhance the profitability of the fields.”
Once Hillcrest recovers all restoration costs from the production revenues, its working interest will revert back to 50%.
The company expects the total project funding to be $1.61m.
The production restoration project is to be carried out by way of equipment installation and upgrades, along with well work-over, and is subject to regulatory approvals expected by Hillcrest within the next 30 days.
