Mountainview Energy Ltd. is pleased to announce that its board of directors has approved a three-well summer drilling program which will result in increased capital expenditures in the aggregate amount of $14 million. The three-well program will be comprised of three additional Three Forks wells in the Company’s 12 Gage Project located in Divide County, North Dakota. Mountainview has contracted with Nabors Rig 272 for the three-well summer drilling program and projects well costs, including drilling, completion and tie-in to be approximately $7-7.5 million (gross) per well.
The Company plans to move in the drilling rig to the Heckman location within the next week. Upon completion of the summer drilling program, the Company will have held approximately 35% of its acreage in its 12 Gage Project.
To fund this increased capital program, Mountainview’s wholly-owned subsidiary Mountain Divide, LLC (“Mountain Divide”), which holds Mountainview’s interest in the 12 Gage project, will draw an additional $14 million on its $75 million dollar senior secured credit facility (the “Facility”). Including this draw, the total amount drawn under this facility to date will be $33 million. Pursuant to the Facility, the lender has been assigned a 39% after pay-out net profits interest (the “NPI”) in all of Borrower’s oil and gas properties within Divide County, Montana. The NPI is defined as all revenues received by Borrower, less all operating costs, production taxes, and capital costs incurred by the Borrower. Payments on the NPI shall commence upon repayment in full of the outstanding Facility but will automatically reduce to 20% once the Lender achieves a 1.65 x return on investment as stated in the definitive agreements underlying the Facility.