Vast Exploration Inc is pleased to provide the following update on the settlement of final payment terms with the Kurdistan Regional Government with regards to the acquisition of an additional 10% working interest announced in September 2009, and furthermore provide a progress update on Qara Dagh - 1 Exploration Well.
Capacity Building Payment “Profits Royalty”
As previously announced, in September 2009, Vast entered into an agreement to acquire an additional 10% net working interest in the Qara Dagh Production Sharing Contract, which would result in Vast holding an aggregate 37% net working interest. To satisfy the capacity payment obligations, Vast had agreed to issue 60,000,000 common shares of the Company to a social fund established by the Government. However, Vast is pleased to announce that it has been able to negotiate with the KRG to convert this share issuance into a 30% royalty to be paid by the Company on its profits from production attributed on its additional 10% working interest. Vast does not have to alter the terms of its original 27% net working interest, and all other material terms remain unchanged. As a result of this agreement, the Company does not have to issue any common shares to the Government.
Mr. Ahmed Said, President and CEO, stated, “We are very pleased to conclude our negotiations. This transaction is significantly less dilutive to shareholders in the short term, and is overall accretive for the Company. As a result, payment obligations for this acquisition are deferred until the production phase”.
The Qara Dagh Well was spudded on 12 May 2010 with a planned total depth of between 3,600 and 4,000 meters. Geologically, the well has penetrated an unexpected and anomalously thick Aalijii formation containing potential light oil reservoir in sandstone, which displayed fluorescence and cut fluorescence. A significant increase of gas readings with free light oil has been observed in the drilling mud. Further evaluation of this new, promising zone has been deferred in an effort to proceed with the drilling program into the primary targets, however, an assessment will likely be conducted after the well has reached total depth.
Following the setting of 20” surface casing at 686 meters, an 8 ½ inch pilot hole has been drilled to approximately 1,650 meters after successfully side-tracking the original hole where the Bottom Hole Assembly was lost at 1,335-1,687 meters.
Upon completion of the current logging operations, the well bore will be reamed to 17 1/2 inches and then the 13 3/8 inch intermediate casing will be set.
Following the setting of the intermediate casing string, the plan is to drill ahead and evaluate the prospectivity of the three primary targets in the Cretaceous zone, with the Shiranish formation being the uppermost perspective reservoir.
Mr. Ahmed Said, President and CEO, stated, “The presence of hydrocarbons in the Aalijii formation is a positive indication of potential prospectivity in the main targeted reservoirs in the Cretacous. We are encouraged with the oil shows and look forward to continuing the drilling program after the successful casing of the current section”.
Vast also announces that the Board of Directors has adopted a fixed stock option plan (the “Plan”) pursuant to which the Company is authorized to issue options to purchase an aggregate of 17,509,349 common shares (being 10% of the issued and outstanding shares of the Company as of the date of the Plan’s adoption) to officers, directors, employees and consultants. As of the date of adoption, the Company currently has 17,447,500 options outstanding. The Plan remains subject to TSX Venture Exchange Approval.