SOURCE: JayHawk Energy, Inc.

April 28, 2014 14:40 ET

Jayhawk Energy and Vast Petroleum Announce Farmout Agreement in Southeast Kansas

COEUR D'ALENE, ID--(Marketwired - Apr 28, 2014) - Jayhawk Energy, Inc. (OTCQB: JYHW) ("Jayhawk", the "Company") is pleased to announce that it entered into a Farmout Agreement with Vast Petroleum, Corporation ("Vast" or "Vast Petroleum") covering Jayhawk's natural gas pipeline and adjacent natural gas wells in Crawford and Bourbon County, Kansas.

Jayhawk Energy CEO Kelly Stopher said, "We have been working diligently to attract a strong technical partner who understands the potential upside contained within the Jayhawk asset base. The successful closing of this Farm-out Agreement provides the Company with the local presence necessary to operate the field efficiently and effectively. Vast provides the boots on the ground personnel needed to optimize the Company's gas production levels. With natural gas prices strengthening, the Farmout Agreement with Vast will allow Jayhawk to resume ongoing production from 32 wells along its 17 mile pipeline for the first time in 24 months. Vast will also evaluate additional potential sites in acreage within reasonable proximity to the entire length of the pipeline. As well, we are also looking forward to their evaluation of potential oil production in the region and a long-term relationship with Vast Petroleum."

"Vast Petroleum sees excellent potential in the Cherokee Basin and we are pleased to enter into a strategic relationship with Jayhawk Energy in Southeast Kansas. We believe that with this large acreage footprint, we can relatively quickly leverage the existing infrastructure to monetize the potentially substantial natural gas reserves in the region together," said Scott Mahoney, CEO of Vast Petroleum, Corporation.

Details of the Agreement

Under the terms of the Agreement, Vast shall reinstate production of natural gas, from one or more of the leases, within one year after the execution of the Agreement. Once actual production of natural gas is reinstated from one or more leases, Vast shall have earned 50% interest in the Farmout Area, subject to certain terms and conditions as set forth in the Agreement. Vast also agrees to evaluate, prospect and study the leases to determine whether oil exists in commercially viable quantities and, if so, to drill test wells upon the leases until the sooner of (1) the completion of twenty (20) test wells or (2) Vast discovers that it would be imprudent to drill any additional wells upon the leases. 

Under the terms of the Agreement, Vast shall be assigned all operational rights with respect to the leases and shall operate the leases pursuant to the terms of the Joint Operating Agreement (Vast shall incur all costs associated with the performance of the development requirements as set forth in the Agreement). Once development requirements have been performed by Vast, all parties to the Agreement will be responsible for their respective share of all development and operating expenses. All revenue attributable to the working interest in the leases generated from the sale of oil or gas produced from the leases shall be distributed as forth in the Agreement.

About Jayhawk Energy, Inc.

JayHawk Energy, Inc. is a managed risk, oil and gas exploration/exploitation, development and production company with activities focused on projects in the Cherokee Basin, Kansas and the Williston Basin, North Dakota. For more information please visit www.jayhawkenergy.com.

Forward-looking Statements:

This press release contains forward-looking statements concerning future events and the Company's growth and business strategy. Words such as "expects," "will," "intends," "plans," "believes," "anticipates," "hopes," "estimates," and variations on such words and similar expressions are intended to identify forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Forward looking statements in this press release include statements about our drilling development program. These statements involve known and unknown risks and are based upon a number of assumptions and estimates that are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of the Company. Actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, the timing and results of our 2013 drilling and development plan. Additional factors include increased expenses or unanticipated difficulties in drilling wells, actual production being less than our development tests, changes in the Company's business; competitive factors in the market(s) in which the Company operates; risks associated with oil and gas operations in the United States; and other factors listed from time to time in the Company's filings with the Securities and Exchange Commission including the Company's Annual Report on Form 10-K for the year ended September 30, 2013. The Company expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based.

Cautionary Note to U.S. Investors -- The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this press release, such as "probable," "possible," "recoverable" or "potential" reserves among others, that the SEC's guidelines strictly prohibit us from including in filings with the SEC. Investors are urged to consider closely the disclosure in our filings with the SEC.

Contact Information