Junex (JNX-V) has arranged a $14-million joint venture at its 70-per-cent-owned Galt project on the Gaspe Peninsula with provincial government affiliate Ressources Quebec. Galt is Junex's main oil project and is also the most advanced oil project in Quebec (although that is hardly a high bar to clear). Ressources Quebec already had exposure to Galt through its shareholdings in Junex. Initially Ressources Quebec held just a few hundred thousand shares, but in mid-2012, it splurged and bought 7.14 million at 70 cents. (The proceeds were in fact used to drill an exploration well at Galt.) In mid-2015 (with Galt again in focus), Ressources Quebec picked up another 5.55 million shares of Junex at 90 cents. That gave it 13.12 million of Junex's 79 million shares. Those investments are still underwater even after today's jump in the stock to 48 cents, but Junex has nonetheless kept busy, striving to become the province's very first oil producer. It reached an important milestone in 2014 when it drilled the first horizontal exploration well in the province, Galt No. 4. This well later tested at 161 to 316 barrels of oil a day. The next well, Galt No. 5, was drilled in 2015, but is currently under observation. Junex has said that Galt No. 6 could be drilled this summer. It has been spending much of the year so far trying to get a production lease for Galt. The province has never before granted an oil production lease, so the process is taking longer than Junex would like. It originally wanted to start production last year.
Junex is doubtless hoping that with today's announcement of a joint venture with Ressources Quebec, activity at Galt can proceed more quickly. Ressources Quebec has agreed to commit $8.4-million to a planned $14-million exploration program that will include the spudding of the Galt No. 6 well in the coming weeks. In exchange, Ressources Quebec will receive a 17.13-per-cent interest in Galt (reducing Junex's interest to 52.87 per cent) and will also receive warrants entitling it to acquire 9.5 million shares of Junex at 53 cents.
Jean-Yves Lavoie, co-founder, president and CEO of Junex, cheered the joint venture as a "crucial step towards developing an initial oil and natural gas deposit in Quebec." Interestingly enough, the news comes exactly one week after a different government-linked joint venture, which had also wanted to develop oil and gas deposits in Quebec, finally fizzled out. That would be the proposed multimillion-dollar exploration effort on Anticosti Island. The operator of that effort was Petrolia Inc. (PEA-V), which announced to much fanfare in early 2014 that Ressources Quebec had agreed to spend millions helping the company explore the island for oil. Later in 2014, however, Quebec got a new government, one that did not seem to feel the need to honour its predecessor's contract. Petrolia strove long and valiantly to make the government honour its commitments, but to no avail. The government officially banned the exploration and exploitation of Anticosti's oil last week. In Petrolia's opinion, the ban does not put an end to the contractual agreements from 2014, so the company is continuing to negotiate with the government. Other companies with assets on the island have simply accepted compensation, with one of them being the above-mentioned Junex. It took $5.53-million from the government in exchange for the transfer of its Anticosti permits and will happily use the money for Galt instead.
Freebie from Stockwatch |
