Sun River Energy Inc. (OTCBB: SNRV) has signed a non-binding Letter of Intent to enter into a joint venture with Dallas based Strata Resources Inc. The Letter of Intent between the parties anticipates the recompletion of one existing wellbore and the drilling of five (5) new wells, all of which will primarily target oil.
For the first time, Sun River will drill on its massive Colfax County, New Mexico property. Specifically, Sun River will receive a 25% carried working interest in 3 wells drilled to test the oil bearing formations above 5,000' in Colfax County, New Mexico. It is anticipated that prior to spud of the first well, approximately 10 miles of new 3-D seismic will be shot and processed.
In Texas, Sun River is to receive a cash payment and 50% carried working interest in the recompletion of an existing well bore and in two (2) new wells drilled to the Pettet formation in Panola County, Texas.
Both drilling projects in each state will be covered by an area of mutual interest between the parties that allows for significant future development.
Donal R. Schmidt, Jr., the Company's CEO and President, said, "The carried working interest Sun River negotiated gives us the chance to participate in the development of these properties at no cost to the Company. Strata will bear all costs associated with drilling, completing and bringing these wells to production. Additionally, Strata is required to shoot 10 miles of 3-D seismic in New Mexico to supplement the 2-D seismic shot in the 1960's which we reprocessed last year.
"This venture allows us to execute on our previously stated plan to rapidly move to oil. Drilling and completion efforts are expected to begin within 45 days in Panola County and within 120 days in Colfax County. Revenues from these activities are expected within the Company's second quarter. Both drilling projects are subject to additional due diligence which is ongoing by both parties and is expected to be concluded quickly.
"I think these two projects and the steps management has recently taken to reduce overhead by 25% will result in the Company becoming cash-flow positive by the third quarter."
Chuck Miller, Strata Resources, said, "Strata Resources is pleased to have the opportunity to participate in these two exciting and impactful projects. We are moving forward expeditiously to the due diligence process."
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