Jim Letourneau's Blog

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Markets Matter

My blogging is the first thing to go when I get busy with consulting work. However I thought I’d pass this Wavefront press release along. In a scenario being played out 100’s of times a week, a company releases positive news and the share price goes down. Such is the nature of bull market corrections. They go deeper and last longer than most of us expect. I see it as an opportunity but I’m already a shareholder and consultant to the company.

Wavefront to earn 50% interest in Greentree well

Wavefront Energy and Environmental Services Inc. has entered into a royalty interest agreement with Greentree Gas & Oil Ltd. for a producing horizontal gas well in South Walsingham township, Norfolk county, Ontario.

The horizontal gas well, known as GGOL No. 32, was the subject of a coil tubing acid stimulation performed with Schlumberger using Wavefront's proprietary stimulation technique. Under the terms of the agreement Wavefront, in return for providing its patented fluid flow technology on a one-time basis and incurring 50 per cent of all capital costs directly associated to the stimulation of GGOL No. 32, will earn a net overriding royalty interest in the production of petroleum substances of 50 per cent before payout, and 30 per cent after payout.

Wavefront would also like to provide an update on the development of the first phase of the Rodney South project with Greentree that commenced in mid-September. Under the development plan, Greentree expects to drill eight injection and two horizontal production wells by late November, 2006, which will be added to the current eight vertical and one horizontal producer wells. Over this time frame the production and injection lines, battery site and injection facilities will also be completed. To date, Greentree has completed the second injection well and has moved on to the third injection location.

Under the terms of the Rodney South agreement with Greentree reported in Stockwatch Feb. 2, 2006, Wavefront is providing up to $2.25-million in capital expenditures related to initial field development. In consideration of Wavefront's capital investment it shall earn a 70-per-cent net overriding royalty interest in the production of all new and current wells in Rodney South until payout of Wavefront's initial $2.25-million capital investment. Subsequent to payout, cash flow from operations will be allotted 50 per cent to each of Wavefront and Greentree.

In connection with letter of intent to acquire a 100-per-cent undivided interest in Top Gun Sand Pumps and Rentals, an arm's length privately held Saskatchewan company, reported in Stockwatch June 6, 2006, the parties agreed to extend the deadline to close the transaction to Dec. 15, 2006. The extension will among other things, permit the company to complete its due diligence process and enter into a definitive purchase agreement.

In addition, to streamline the corporate structure and reporting of the company, Wavefront and Pe-Tech Inc., a wholly owned subsidiary of Wavefront, recently completed an amalgamation. The bylaws, articles, share capital and name of the amalgamated company will remain that of Wavefront.