MGM Energy Corp. announces withdrawal of applications for horizontal well
Thursday, Nov 08, 2012MGM Energy Corp. (TSX:MGX) ("MGM Energy" or the "Company") announced today that on October 4, 2012 its applications to the Sahtu Land and Water Board (the "Board") for a water license and land use permit required to allow it to drill a horizontal well on its Exploration License 466 in the Central Mackenzie Valley were referred to an environmental assessment. Shell Canada Energy has exercised its option under the Farmout Agreement with MGM Energy (the Farmout Agreement was announced in a press release dated June 28, 2012) to not fund the environmental assessment process and, pursuant to the Farmout Agreement, it no longer has the option to drill a second well.
MGM Energy also announced that it will not be proceeding on its own with the environmental assessment process requested by the Board in respect of the second, horizontal well. MGM Energy has advised the appropriate regulatory agencies in the Northwest Territories that its applications have been withdrawn. This action has no impact on MGM Energy's permits already issued in respect of a vertical well to be drilled this upcoming winter on the same lands.
"MGM Energy simply cannot justify the allocation of resources to pursuing a regulatory process that is uncertain both in terms of requirements and time lines, and thus cost" said Henry Sykes, President of MGM Energy. "We believe it is premature to invest substantial and indeterminate time, money and resources in this regulatory process at the exploratory phase of the Canol shale oil play. As the play advances, the time for such a process may come, but that time is not now."
MGM Energy continues its preparations to drill a vertical well on EL 466, expected to spud in late January or early February, 2013. All equipment required to be staged has been put in place for the vertical well on EL 466, and preliminary construction activities are expected to commence shortly.
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