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Gold/Mining/Energy : Stanford Oil & Gas (SOG was STB)
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To: Saverio who wrote (86)5/7/1998 3:50:00 PM
From: johnlag  Read Replies (2) of 196
 
I think there may be some confusion about the 'big play' not working out. By choosing to not participate in the completion phase, the company still holds the interest in the well. But is subject to a 500% penalty of the total completion costs.

What this means is: If Benz (the operator) incurs $1 million dollars in costs during the completion stage, they will get the first $5 million in payout from the proceeds and then Stanford will participate in its 20%. Stanford still holds the interest in the field, as well.

The total AFE on this well was for US$3.7 million. In order to move ahead, Stanford would have had to write a CDN$800,000 check. This completion is pretty risky, and is using the latest in fracturing technology. Better for the company for Benz to spend and prove the theory and we can participate later if things work out well.
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