Eagle Resources, Freedom Energy have entered into North Dakota drilling JV


Cranberry Township, Penn. – Eagle Resources Corporation has entered into a joint venture agreement with Freedom Energy Resources LLC to explore and develop conventional oil drilling prospects in the Lodgepole Reef Formation in North Dakota, offsetting existing Lodgepole fields. The joint venture partnership, Eagle Drilling Venture 2018, will initially participate in the drilling of two wells in the Lodgepole Reef Formation.

“Freedom Energy has identified several seismically defined locations in the Lodgepole Reef Formation that carry a high projected rate of success, based upon technical analysis and seismic modeling,” said H. James Adams, CEO of Eagle Resources, “and we are pleased to be able to participate in this drilling venture with Freedom Energy.”

To maximize its drilling prospect efforts, Freedom Energy conducted advanced 3-D seismic analysis and modeling to understand the required seismic attributes of successful producing wells in the surrounding Lodgepole fields. The analysis defined several unique attributes common to successful wells in the producing area. Predictive modeling analysis of 42 wells within the company's 3D seismic coverage in the Lodgepole yielded a 95% success rate in predicting well outcomes. The JV will be drilling two wells where the primary objective is oil and in areas which all required seismic attributes are present to achieve success.

Intangible Drilling Costs Tax Deduction

Limited Partners investment in the Eagle Drilling Venture 2018 program will be eligible for a 100% tax deduction through the Intangible Drilling Costs (IDC) tax incentive. Intangible drilling costs are defined as costs related to drilling and necessary for the preparation of wells for production but have no salvageable value. These include costs for wages, fuel, supplies, repairs, survey work, and ground clearing.

Under current tax code, projects investing in IDC are 100% tax deductible for federal income tax purposes. To maximize the tax incentives for the investor, Eagle Resources will functionally allocate all intangible drilling costs, which account for 80% of the cost of the wells to be drilled to the investors.

Drilling Operations

Drilling operations for the two wells will commence no later than the end of the first-quarter 2019 to qualify for 2018 tax deductions relative to IDC’s. Freedom Energy will serve as the operator of the wells, and implements best industry practices which include, but not limited to, drilling, environmental and safety. The company is focused on developing drill-ready lower-risk higher-return opportunities and has acquired approximately 2,000 acres through leasing and strategic acquisition. This seismically defined acreage allows for the development of multiple Lodgepole drilling opportunities.

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