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Shoal Point Energy research and analysis

Contributed by eResearch

By Bob Weir

Shoal Point Energy Ltd. and NWest Energy Corp. have entered into an agreement whereby Shoal Point will acquire a 100% working interest in all rights in the EL 1079R licence (about 500,000 acres) in the immediate offshore area of western Newfoundland.

EL 1079R is contiguous with EL 1120 (100%-owned by Shoal Point) and EL 1070 (Shoal Point has the right to earn an 80% working interest). The agreement will allow Shoal Point to increase its gross acreage position in the “Green Point Shale” play from 217,000 acres to about 720,000.

The term of the EL 1097R licence comprises two periods, and extends to January 15, 2015. One exploration well must be spudded on EL 1097R by that date.

The EL 1079R licence is a recent consolidation of four pre-existing exploration licences, by the Canada- Newfoundland and Labrador Offshore Petroleum Board (CNLOPB), in order to facilitate exploration of the Green Point Shale in the western Newfoundland offshore area. The licence covers the extent of the Green Point Shale in the northern half of the western Newfoundland offshore area.

Payment in Three Stages

Under the agreement, payment is scheduled as follows: Annual refundable drilling deposits of $1,000,000 (to the regulatory body). An initial 2,000,000 shares and 2,000,000 warrants to acquire the 100% working interest. An additional payment of 4,000,000 shares and 4,000,000 warrants at the time of spudding a well on the property, and the granting of a 2% gross overriding royalty, of which 0.75% can be repurchased by Shoal Energy.

Update on 3K-39 Well

Shoal Point and DLMC (the operator of the Company’s 3K-39 well on the EL 1070 property) have received approval from the CNLOPB to continue cased-hole operations at the 3K-39 location. This stage of operation is expected to take 7-10 days, preparing the cased borehole for sidetracking (3K-39z) and deepening of the well.  Shoal Point and DLMC are finalizing all approvals for the deepening and testing of 3K-39, and expect to receive these approvals.

Closing of Financing

The Company recently announced the closing of a private placement financing for aggregate gross proceeds of $2,304,580. The financing comprised 8,185,750 units, at $0.16 per unit, and 5,526,999 flow-through units at $0.18 per unit.

THE COMPANY

Shoal Point Energy Ltd. is a petroleum exploration and development company, pursuing oil and gas exploration opportunities in Atlantic Canada.

In an area of western Newfoundland that has been the target of extensive exploration in the past, Shoal Point is currently focused on: (i) undertaking prospective exploration drilling, and (ii) confirming the presence of material quantities of in-place oil and gas contained within a shale formation. Shoal Point views this prospect as being analogous to other shale oil areas in North America, where the application of horizontal drilling and fracking has resulted in the production of significant quantities of oil and gas.

eResearch Analysts:
Eugene Bukoveczky, MBA., CFA.
Bob Weir, B.Sc., B. Comm, CFA