T&H Signs Letter of Agreement to Madisonville, Texas Project with Newstar Resources Inc.
Listed: TSE
Symbol: THE
Shares Issued: 35,169,245
TORONTO, May 20 /CNW/ - T & H Resources Ltd. (''T&H'') is pleased to
announce that it has signed a letter of understanding with Newstar Resources
Inc. (NER-TSE) through its subsidiaries, Newstar Energy USA, Inc. and Newstar
Energy of Texas, LLC (''Newstar'') to develop Newstar's Madisonville, Texas
acreage. The Formations targeted will be the Glen Rose and Georgetown.
Pursuant to the terms of a letter of agreement, T&H will pay 100% of the
estimated US$1.4 million cost to drill, complete and equip a horizontal well
to test the Glen Rose formation. T&H also commits to pay 100% of the cost to
drill, complete & equip a horizontal well to the Georgetown Formation. The
Georgetown operation could encompass drilling a horizontal well from a new
vertical well bore or by using the vertical section of the Glen Rose well
bore. By funding the two operations, T&H will earn 50% of Newstar's interest
in Madisonville in all formations.
Prior to T&H recouping its costs, Newstar will receive a sliding scale
royalty to a maximum 15% royalty interest and T&H 100% of the working interest
in all oil and gas revenues. After T&H receives payout, proceeds shall be 50%
for the account of T&H and 50% for the account of Newstar.
Newstar and T&H anticipate spudding the initial well on or about the 15th
of July 1999.
The agreement is subject to regulatory approvals and necessary financing.
T&H understands that Newstar is in Chapter 11 and the terms of the
agreement may be subject to court appproval of the US Bankruptcy Court.
T&H also reports its participation in a deep Ellenburger Formation
project in Pecos County, Texas located between the Gomez and Pucket gas fields
each of which have produced several trillion cubic feet of natural gas.
T&H has a 20% working interest in the initial well drilled on the
prospect, the Winfield Ranch well. The well was drilled to 25,740 feet and
encountered 1,100 feet gross feet of fractured Ellenburger dolomite reservoir.
Production casing was run, however when attempting to clean out the casing
prior to completing the pay zone a rental drilling string failed.
Attempts at fishing out the drill string were unsuccessful. Consequently
the well has been suspended pending a satisfactory resolution of the problem
with Weatherford International,Inc., from whom the failed drilling string was
rented, and their insurance carrier.
Negotiations during February with Weatherford and their insurance carrier
were unsuccessful resulting in a law suit being filed against them in Pecos
County, Texas.
''John A. Pollock''
President
-30- |
