Forent reached a significant milestone in 2012 with the drilling of two exploration wells for Gays River reefs on the Alton Block. Forent Alton #1 and Forent South Branch #1 were both drilled through the zones of interest to basement. These wells provided confirmation regarding the presence of hydrocarbons in the system and reef development at depth. They also reduced the Company's three year $6.3 million exploration agreement commitment to $1.8 million, as at March 31, 2013. Under the current terms of the Alton Block exploration agreement, the balance of the work commitment is required to be spent by April 8, 2014.
Forent is actively looking for a joint venture partner to assist with capital expenditures and share risk and upside potential on the Alton Block. In addition to 8 geophysical anomalies targeting Gays River reef locations, Forent sees large potential for gas reserves in the Horton shale on the northern portion of the Alton bock. Data obtained from operators offsets Forent acreage; indicate significant shale gas potential on these lands. During 2013, Forent will continue geological evaluation of the Horton Shale potential while seeking a joint venture partner to evaluate both Gays River reef and Horton Shale potential.
During the second quarter of 2012, at Montgomery, Forent entered into a joint venture partnership with BlackShale Resources Inc. ("BlackShale"), a wholly owned subsidiary of Houston based Kerogen Energy Holdings LLC. BlackShale is a private company specializing in identifying and exploiting unconventional oil and gas opportunities in Canada. After an extensive assessment of the regional light oil resource opportunities in Western Canada, BlackShale identified Forent's Montgomery lands for one of its initial projects and committed to drill up to two exploration wells on a pay 100% of cost to earn 70% working interest basis. BlackShale will earn a 70% interest on 4 sections of land per well drilled.
In December of 2012 the first earning well, BlackShale Montgomery 01-16-012-29W4/00, was drilled and cased to the base of the Mannville formation at 3,227 meters. Although the well is still being evaluated, indications to date are that it will achieve its intended objectives. Extensive core was cut and a full suite of conventional and specialized petrophysical logs were run over the entire well bore in order to analyze both the unconventional and conventional hydrocarbon potential. During the first quarter of 2013, the Second White Specs formation was perforated and stimulated in order to obtain rock mechanical properties, pressure and flow data. Subsequent to the stimulation, the well was flowed for a partial clean up, shut-in for an extended reservoir pressure build up and remains in this state today. Tight reservoirs typically require extended shut-in periods to fully build up to initial reservoir conditions in order to adequately analyze the data and calculate the stimulated permeability. Additional evaluations of the well, core and log data will occur over the next several months.
On February 1, 2013, the Company closed the sale of all of its interests in the Mervin, Saskatchewan property for proceeds of $5.5 million, resulting in a gain of $2.9 million over the carrying amount of the assets and liabilities related to the property, net of deferred taxes. The disposition of this property allowed Forent to realize a value comparable to the fair market value of the asset prior to the impairment and in excess of the independently assigned proved plus probable value as of December 31, 2011.
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