X-Change subsidiary, Cutbank Operating, has executed a letter of intent (LOI) with a private oil and gas fund to secure funding for its drilling operations in Daniels County, Montana, US.
The company will receive $65m in initial funding for an eight well drilling programme in the 5,000 acre region.
Once the company receives positive results from the drilling programme, the fund will provide an additional $175 million working interest (WI).
The WI will allow the company to capitalise on the remaining leasehold positions in Daniels County and Roosevelt County.
The LOI will close in 30 days and the company intends to start its drilling operations in November 2012.
X-Change said the Bakken Shale in the north-east Montana area is from the Devonian Mississippian age.
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By GlobalDataThe Upper Devonian-Lower Mississippian Bakken formation consists of dolomitic sand, which comes when an upper and a lower shale member is mixed with a siliciclastic carbonate middle member.
Both the upper and lower shales are both the petroleum source rocks (organic rich) and seal for the reservoir.
The company said that Bakken has reserve estimates up to between 6 billion and 24 billion barrels of recoverable oil.
About 6,000 wells are active in the Bakken shale while other wells are being drilled in North Dakota and NE Montana.
