Newstar Resources Inc -
T & H Resources signs Texas joint venture agreement with Newstar
Newstar Resources Inc
NER
Shares issued 35,419,867
1999-05-19 close $0.28
Thursday May 20 1999
See T & H Resources Ltd (THE) News Release
Mr. John Pollock reports
T & H Resources has signed a letter of understanding with Newstar Resources
through its subsidiaries, Newstar Energy USA Inc. and Newstar Energy of Texas
LLC, to develop Newstar's Madisonville, Tex., acreage. The formations targeted
will be the Glen Rose and Georgetown.
T & H will pay 100 per cent of the estimated $1.4-million (U.S.) cost to drill,
complete and equip a horizontal well to test the Glen Rose formation. T & H also
commits to pay 100 per cent of the cost to drill, complete and 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 financing the two operations, T & H will earn 50 per cent
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 per cent royalty interest and T & H 100 per cent of the working
interest in all oil and gas revenues. After T & H receives payout, proceeds shall be
50 per cent for the account of T & H and 50 per cent for the account of Newstar.
Newstar and T & H anticipate spudding the initial well on July 15, 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 U.S. Bankruptcy Court. T & H also
reports its participation in a deep Ellenburger formation project in Pecos County,
Tex., between the Gomez and Pucket gas fields each of which have produced
several trillion cubic feet of natural gas.
T & H has a 20 per cent 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 which the failed
drilling string was rented, and its insurance carrier.
Negotiations during February with Weatherford and its insurance carrier were
unsuccessful resulting in a lawsuit being filed against them in Pecos County, Tex.
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