Daytona Energy Corporation

Daytona Energy Corporation

June 26, 2008 19:02 ET

Daytona Energy Corporation: Participation Agreement-Sharon Prospect, Jasper County, Mississippi

CALGARY, ALBERTA--(Marketwire - June 26, 2008) - Daytona Energy Corporation (TSX VENTURE:DTE) announces that it has secured partners to participate in drilling of the Sharon Prospect and will retain a 25.875% non-operator interest.

The Company entered into a Participation Agreement (the "Agreement") with Crossover Resources II, LP ("Crossover"), Highstand E&P LLC ("Highstand") and Wolverine Energy LP ("Wolverine"), referred to singularly as "Party" and collectively as "Parties" regarding a geographical area within the Parties will acquire leases, drill, develop and operate for the production of oil and gas ("Area of Mutual Interest" or "AMI") known as the Sharon Prospect in Jasper County, Mississippi. The transaction is non arm's length, as Highstand is controlled by James R. Breimayer, the President of Daytona Energy Corporation and Highstand is acting as one of the three General Partners of Wolverine.

On December 7, 2004 Daytona entered into a Prospect Generating Agreement, which granted Daytona the right to the prospects generated by Highstand. Pursuant to the terms of that agreement, Daytona acquired the rights to the Sharon Prospect in 2005. Consideration was payment of a prospect fee of U.S. $35,000, agreement that if Daytona sold any working interest in the prospect area to a third party to share any cash consideration (25%) or carried interest (25%) and grant of a 1% or 1.5% overriding royalty in favor of Highstand, which varies depending upon the amount of lessor royalty. In addition, Highstand is obligated to participate in the Sharon Prospect for a minimum working interest equivalent to the amount of the prospect fee received.

Terms of the Agreement are as follows:

1. All interests leased within the AMI will be subject to a gross overriding royalty payable to Highstand of 1.5% on the leases within drilling units with weighted average net revenue interest greater than or equal to 80% and 1% on leases within drilling units with weighted average net revenue interest less than 80%.

2. To acquire a working interest in the Prospect area leases; on or before the effective date of the Agreement, Crossover is to reimburse Daytona 50% of 47.5% of costs previously incurred amounting to U.S. $45,837.50 and Wolverine is to reimburse Daytona 20% of the costs previously incurred amounting to U.S. $38,600. The remaining 50% of Crossover acquisition costs are to be credited against Daytona's share of future lease costs. All future costs incurred by any Party for leasing, surveying, title work, etc. will be shared by all Parties in proportion to their working interest. Crossover, at its sole discretion, has first priority right but not obligation to purchase the interest of any Party that fails to pay its share of Acquisition Costs or any other costs per the terms of the Agreement.

3. Ownership interests of the Parties in and to all the Prospect, Prospect Area Leases and any other rights and interests granted or provided herein as follows:

Parties Working Interest
All Other Operations
Crossover 47.5000%
Daytona 25.8750%
Highstand 6.6250%
Wolverine 20.0000%

Daytona and Highstand will be required to fund 9% and 1% respectively of drilling and completion, or plug and abandon costs on the Test Well and the cost of the pipeline including meter tap amounting to U.S. $150,000 (8/8th). All other costs will be shared proportional to the respective Party's working interest.

4. The Parties have agreed to participate in the drilling of an initial test well including single lateral well not to exceed 3,000' ("Test Well"), subject to the right of each party to make a separate election at casing point.

5. An Operating Agreement was simultaneously entered into upon signing the Agreement for a three year term and designates Crossover, as the operator.

The Agreement is conditional upon obtaining any applicable regulatory approvals, consents and orders including but not limited to the approval of the TSX Venture Exchange.

Daytona is an oil and gas exploration/development company, focused on gas exploration in Alberta, Canada and the Gulf Coast region of the United States.


Jim Breimayer, President & CEO

Except for historical information contained in this release, the matters discussed are forward looking statements that involve risks and uncertainties. When used in this release, words such as "anticipate", "believe", "estimate", "expect", "probable" and "intend" and similar expressions, as they relate to the Company or its management, identify forward looking statements. Such forward-looking statements are based on the beliefs of the Company's management, as well as assumptions made by and information currently available to the Company's management. Among the factors that could cause actual results to differ materially are the following: the effect of business and economic conditions; the impact of competitive products and pricing; capacity and supply constraints or difficulties; product development; commercialization or technological difficulties; the regulatory and trade environment. The Company undertakes no obligation to revise any forward-looking statements as a result of future events or developments.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release.

Contact Information

  • Daytona Energy Corporation
    Jacqueline M. Tucker
    Daytona Energy Corporation
    Jim Breimayer