Dyer Creek Prospect and South East Edison Project - Bakersfield, CA Area
In November 2007, The Company announced that it (in partnership with California Oil & Gas Corporation), acquired 100% working interests (50% respectively) in two blocks of land known as the Dyer Creek and South East Edison claims, each 320 acres (net 320 acres). In December 2007, Chevron U.S.A. Inc. (Chevron) earned a 50% working interest in the Dyer Creek Claims, as part of the Chevron 3-D Seismic Agreement, thereby reducing the working interests of the Company and California Oil & Gas Corporation to 25% respectively.
Effective February 26, 2010, the Company negotiated the transfer of its working interests in the Dyer Creek and South East Edison properties to Daybreak Oil & Gas, Inc (Daybreak). In exchange, the Company will receive a 5% overriding royalty interest on the working interest in each property held by the Company.
The 5% overriding royalty interest, based on the 50% working interest the Company held in the South East Edison property, equates to 2.50% of all revenue received from the property, being paid to the Company. The 5% overriding royalty interest, based on the 25% working interest the Company held in the Dyer Creek property, equates to 1.25% of all revenue received from the property, being paid to the Company. The overriding royalty interest payments are free of any operating or production cost, but net of any county or state production, severance or franchise taxes. As of the date the assignment, the only tax payable by the Company is the California Franchise Tax levied against revenue received by the Company.
Consolidated Oil and Gas Corp Agreement
On December 21, 2009, the Company entered into a letter agreement with Consolidated Oil and Gas Corp. ("COGC") of Barbourville, Kentucky to help find, evaluate and develop past producing oil and shale natural gas projects. COGC received an initial sum of US$5,000 and a 15% carried working interest in any properties which are found to be suitable for development and which are placed in operation.
On March 23, 2010, the Company negotiated an agreement to acquire leases ("Little Property") on approximately 100 acres of oil, gas and minerals rights located on the Alpine Topographic Quadrangle in Overton Country, Tennessee. On July 6, 2010, the Company completed the assessment work on a past producing oil well on these leases. The Company drilled to a final depth of 1,610 feet and although marginal amounts of crude oil were encountered, the existence of saltwater made completion of the well bore cost prohibitive. As a result of the presence of saltwater in this particular area, the second planned drilled site near this location was not commenced. The Company is currently considering possible locations for another drill site where the saltwater is less likely a factor.