Magnum Announces Amendment to Viking Oil Joint Venture Agreement
October 31 2011 - 8:30AM
Marketwired
Magnum Energy Inc. (The "Company" or "Magnum") (TSX VENTURE:MEN) is
pleased to announce that it has amended its joint venture agreement
("JV Agreement") with Nextraction Energy Inc. (Nextraction).
Under the terms of the original JV Agreement, Nextraction was
required to drill, complete, equip and tie-in two horizontal wells,
at its sole expense, to earn a 50% working interest in each well
and in certain lands in the Provost area Viking Oil Property.
Under the terms of the amendment, Magnum has released
Nextraction from its obligation to drill a second horizontal well
in exchange for approximately $1.2 million, which proceeds were
used to fully repay the loan to Nextraction.
Effective October 1, 2011, Magnum will act as the operator of
all drilling, re-completions and production of the Provost area
properties. As it has now retired the debt to Nextraction, it is
entitled to immediately retain the cash flows generated from its
working interest in the Provost wells. Magnum is now also in a
position to determine which projects will provide the best
opportunities for future development of this Viking oil
prospect.
Magnum has recently received approval of a Holding Application
which allows for the drilling of up to four wells, whether vertical
or horizontal, per quarter section on the 3.25 sections of land
originally acquired in Provost.
Magnum's technical team is reviewing optimization programs to
increase production levels from the first horizontal well. The
completion of the gas pipeline for the well will be fully funded by
Nextraction and is expected to occur no later than December 31,
2011. Concurrently, Magnum will acquire a new surface lease and
drilling permit for drilling the second horizontal well. Both
companies have agreed that a new location identified for the second
horizontal well optimizes the full potential of the zone and can be
drilled at lower costs using monobore technology.
About Magnum Energy Inc.
Magnum Energy is a junior oil and gas producer with operations
located in the Western Canadian Sedimentary Basin in Alberta. The
Company's has two producing core areas - the Viking oil operations
in Provost and a natural gas producing property in the Sedalia
area, where it maintains a 100% ownership of the Sedalia gas
facility.
Forward-looking Statements
This news release contains certain forward-looking information
and statements that are based on the Corporation's current
expectations, estimates, projections and assumptions in light of
its experience and its perception of historical trends. In this
news release, such forward-looking information and statements can
be identified by terminology such as "will", "to be", "expected",
"anticipated" and similar expressions.
In particular, this news release contains forward-looking
statements and information relating to the planned use of proceeds
and timing for the Offering. These forward-looking statements and
information are being made by the Corporation based on certain
assumptions that the Corporation has made in respect thereof as at
the date of this document. These forward-looking statements are not
guarantees of future performance and are subject to a number of
known and unknown risks and uncertainties, including, but not
limited to: non-performance of agreements in accordance with their
terms; the impact of competition; commodity prices; regulatory
environment and inability to obtain required regulatory approvals;
fluctuations in operating results; the ability of the Corporation
to raise sufficient capital to complete future projects and satisfy
future commitments; labour and material shortages; and certain
other risks detailed from time to time in the Corporation's public
disclosure documents.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Contacts: Magnum Energy Inc. Richard Nemeth President and CEO
604 669 3155rnemeth@magnumenergyinc.comwww.magnumenergyinc.com
Boardmarker Group Dean Stuart 403 517 2270dean@boardmarker.net
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