Teton Energy Corporation and the other working interest owners at the Goliath Prospect (American Oil & Gas, Inc. (50%), Sundance Energy Australia Limited (5%) and privately held Evertson Energy Partners LLC (20%) have signed a participation agreement with Red Technology Alliance LLC (“RTA”), which gives RTA the option to fund 100% of the drilling, completion and equipping of up to four horizontal Bakken wells at Goliath. Teton owns a 25% working interest in the approximate 80,000 gross acre position.
RTA has committed to commence drilling the first Bakken well under this agreement within 90 days of spudding the Viall #1-30 well that will target the Red River formation (discussed further below). Upon completion of the first Bakken well, RTA will own a 50% working interest in the well and the expected 1,280 acre spacing unit. Within 90 days of the completion of the first Bakken well, RTA has the option to commence a second Bakken well. Upon completion of the second well, RTA will own a 50% working interest in this well and spacing unit and will earn a 40% working interest in approximately 30,000 net undeveloped acres. Within 90 days of completion of the second well, RTA may elect to drill a third Bakken well in which it will own a 50% working interest (and in the spacing unit) and will earn a 40% working interest in an additional approximate 15,000 net undeveloped acres. Again, within 90 days of completion of the third well, RTA may elect to drill a fourth Bakken well in which it will own a 50% working interest (and in the spacing unit) and will earn a 40% working interest in the remaining approximate 15,000 net undeveloped acres. RTA will earn its proportionate rights to all formations in the Goliath project area with the exception of formations below the Three Forks Formation (which includes the Red River Formation) in a 40 square mile area surrounding the recently completed 10.5 square mile 3D seismic program that covers acreage on trend to Teton’s successful Solberg 32-2 well.
Should RTA elect to drill all four wells, the current working interest owners would retain a collective 60% working interest (Teton would own a 15% working interest) in the Goliath project. Halliburton Energy Services Inc. will serve as project manager in the drilling and completion of the initial four wells.
Teton (which currently has an approximate 17% working interest) and other working interest owners (which do not include RTA) plan to drill the 14,400 feet deep Viall #1-30 well (formerly called the Machette 1-30 well) that will target the Stonewall, Red River and Winnipeg formations on a prospect identified by the 3D seismic program at Goliath. Subject to rig availability, the well is planned to commence before year end 2008.
Karl Arleth, Teton’s President and CEO, commented, “We are very pleased to have RTA join us in the next phase of developing the Bakken potential within our Goliath acreage position. Recent advancements in drilling and completion techniques, that have resulted in successful Bakken wells by other operators west of the Nesson Anticline, will be incorporated into our upcoming program. While these four wells will target completion in the Bakken formation, the Goliath drilling program will be designed to provide important reservoir and geological data from other prospective formations in the project area including the Three Forks/Sanish, Madison, Nisku, Duperow, Interlake, Stonewall, Red River and Winnipeg.”
Arleth concluded, “With our agreement with RTA to begin drilling of the next phase of our Goliath Bakken program, we have positioned Teton to move forward in one of the most exciting oil and gas plays in the country.”
Teton Energy Corporation is an independent oil and gas exploration and production company focused on the acquisition, exploration and development of North American properties. The Company’s current operations are concentrated in the prolific Rocky Mountain and Mid-continent regions of the U.S. Teton has leasehold interests in the Central Kansas Uplift, the Piceance Basin in western Colorado, the Big Horn Basin in Wyoming, the Williston Basin in North Dakota and the eastern Denver-Julesburg Basin in Colorado, Kansas and Nebraska. Teton is headquartered in Denver, Colorado and trades on the NASDAQ under the symbol TEC. For more information about Teton, please visit the Company’s website at http://www.teton-energy.com.