MEL newsCALGARY, ALBERTA--(Marketwire - Jan. 22, 2012) - Midway Energy Ltd. ("Midway" or the "Company") (TSX:MEL) is pleased to announce a strategic joint venture and partial sale arrangement at Swan Hills focused on its Beaverhill Lake light oil play.
Swan Hills Beaverhill Lake Light Oil Joint Venture and Partial Sale
Midway has entered into a joint venture and sale agreement ("the Agreement") involving its Beaverhill Lake mineral rights at Swan Hills with a senior conventional oil and gas producer.
Under the terms of the Agreement, Midway will dispose of a 50% working interest in its 23,000 net acres of land and its associated wells and production in the Swan Hills area in return for twenty million dollars ($20,000,000) in cash and a carried interest in the drilling of the first three (3) wells on the lands. In addition, Midway's joint venture partner will participate for a 50% working interest on a well that Midway is currently drilling. Based on Midway's historical drilling and completion costs in this area, Midway values the total contribution by the senior producer at thirty-six million dollars ($36,000,000). The Agreement is effective December 1, 2011 and is expected to close on February 1, 2012 and is subject to normal closing conditions and adjustments.
This joint venture represents a significant step forward in the development of Midway's Beaverhill Lake light oil resource play with a joint venture partner that has significant exposure in the area. Midway believes that the capital required to drill and complete these wells at a 50% working interest is more suitable to its size and risk profile, and looks forward to the additional technical skills that its new joint venture partner brings to its asset base in Swan Hills. Midway's remaining working interest position will provide meaningful exposure to this exciting light oil resource while allowing Midway to focus the majority of its capital and efforts on the continued development of its successful Cardium oil resource play in Garrington and future development areas in 2012.
Garrington
Midway was involved in a small oil spill relating to one of its Garrington drilling locations on January 13, 2012. Midway's staff and consultants provided a timely and efficient response to the containment and cleanup of the spill. Within 48 hours of the occurrence the majority of the cleanup efforts were completed. The total costs of the cleanup to date have been approximately $60,000, and we are currently working with the various stakeholders including the ERCB and Alberta Environment to ensure there are no lasting consequences of the spill. We have also altered our completions' program to ensure that this type of accident will not happen in future operations. More detailed information is available on Midway's website at www.midwayenergy.com.