Ryland Announces Farm-Out Agreements With TriAxon Resources Ltd. to
Test Bakken Formation
VANCOUVER, BRITISH COLUMBIA--(Marketwire - October 03, 2008) - Ryland
Oil Corporation (TSX VENTURE: RYD) is pleased to announce that,
through its wholly owned subsidiary Pebble Petroleum Inc., it has
entered into two farm-out agreements with Calgary-based TriAxon
Resources Ltd. ("TriAxon") respecting a total of 28 sections of
Ryland's acreage adjacent to the Flat Lake Bakken oil field in
southeast Saskatchewan. Under one agreement, TriAxon is required to
spud a test well by December 31, 2008, subject to rig availability,
at a location of its choice on 11 sections of Ryland acreage
comprising the farm-out lands. Triaxon may elect to drill either a
vertical stratigraphic well or a horizontal well to test the Bakken
formation. Ryland has the option to participate in the test well as
to 20% of the costs, in which event it will retain a 60% working
interest in the well with TriAxon earning a 40% working interest in
the well. If Ryland elects not to participate, TriAxon must pay 100%
of the costs to drill, complete and equip to earn a 50% working
interest in the well. In the event a vertical test well is drilled,
TriAxon's earning will be limited to 5 of the 11 section farm-out
lands and it will have a continuous right to drill, under the same
terms described above, and earn the balance of the farm-out lands. In
the event the farm-out test well is a horizontal well, Triaxon will
earn as described above in all 11 sections comprising the farm-out
lands. In any event, TriAxon's working interest will be restricted to
petroleum substances within the Bakken Formation, with Ryland
retaining a 100% gross and net working interest in all other zones.
After drilling the initial test well Triaxon also has the option to
drill an additional well on a location of its choice to earn in
another 11 section farm-out block. The percentage working interest
and the number of sections it can earn on the option lands will be
subject to the same terms as described above.
Ryland's second farm-out agreement with TriAxon requires TriAxon to
spud a test well by December 31, 2008, subject to rig availability,
on 6 sections comprising the farmout lands. As with the other
agreement, Triaxon may elect drill either a vertical stratigraphic
well or a horizontal well to test the Bakken formation. TriAxon must
pay 100% of the costs to drill, complete and equip the well in order
to earn a 70% working interest, with Ryland retaining the other 30%.
If TriAxon drills a vertical test well, it will earn a 70% working
interest in 4 of the 6 sections with the option to drill an
additional well to the remaining unearned sections. If TriAxon drills
a horizontal Bakken test well, it will earn a 70% working interest in
all 6 sections comprising the farm-out lands. In either event,
TriAxon's working interest will be restricted to petroleum substances
within the Bakken Formation, with Ryland retaining a 100% gross and
net working interest in all other zones.
Said Ryland Chairman Dick Findley, "We are very pleased to have
TriAxon as a partner. With approximately 572 sections of land to
explore and develop, it makes good business sense for Ryland to look
for strategic partners to assist in accelerating our exploration and
development program. By farming out to TriAxon we are gaining access
to additional rigs and drilling expertise while better leveraging our
capital. TriAxon is an established and successful operator in the
Bakken Formation in southeast Saskatchewan, and they concentrate
exclusively on developing low permeability reservoirs with
horizontal, multi-stage fracture stimulated wells. Their expertise in
the application of this technology in the Bakken will be very helpful
in the continued exploitation of our extensive holdings."
RYLAND OIL CORPORATION
Gerald J. Shields, President
Issued and Outstanding: 161,929,906
The TSX Venture Exchange has not reviewed and does not accept any
responsibility for the adequacy or accuracy of this news release, and
no regulatory authority has approved or disapproved the information
contained herein.
Contacts:
Ryland Oil Corporation
Mr. Jim Welykochy
Vice-President Corporate Finance
(403) 861-1242
Website: www.rylandoil.com