Aroway Energy Inc. (
TSX: V.ARW,
Stock Forum) said that it has entered into a farm-out agreement dated August 30, 2013 with a private oil and gas company (Privco), pursuant to which Privco has agreed to farm-out a 100% interest in nine sections (5,760 acres) in the Kerrobert area of Central Saskatchewan.
The farm-in lands are close to key infrastructure including a high grade road, power, gas, a nearby oil terminal and rail. In addition, the property qualifies for the Saskatchewan governments attractive crown royalty incentives of 2.5% on horizontal wells.
According to the
Aroway Energy press release, pursuant to the farm-out agreement Aroway will fund 100% of the costs to shoot, process and interpret a 3D seismic program and drill a vertical test well.
Upon favorable results of the vertical test well, Aroway has agreed to drill, case and complete two horizontal wells. Aroway Energy will earn a 100% working interest in the farm-out lands subject to a 12% gross overriding royalty payable to the Privco.
Aroway is a western Canadian junior oil production and exploration company participating in oil development and exploration prospects in Alberta and Saskatchewan.
On Tuesday morning, Aroway was trading at $0.305 a share. The company had a market cap of $18.8 million, based on $61.8 million shares outstanding.