Deep Well Oil & Gas, Inc., through its wholly owned subsidiaries, Northern Alberta Oil Ltd. and Deep Well Oil & Gas (Alberta) Ltd. has a 90% working interest in 51 sections on six oil sands leases and an 100% working interest in 5 sections on one oil sands lease in the Peace River oil sands area of Alberta, where we are operator. In addition, the Company has a 25% working interest in another 12 sections on two oil sands leases in the Peace River oil sands area of Alberta, Canada. Together these nine oil sands leases, which are contiguous, cover 43,015 gross acres (17,408 gross hectares) of land.
On July 30, 2013, we entered into a farmout agreement (the “Farmout Agreement”) with a new joint venture partner (the “Farmee”) to fund our share of the recently Alberta Energy Regulator (“AER”) approved Steam Assisted Gravity Drainage Demonstration Project (the “SAGD Project”). The SAGD Project is located on our joint Sawn Lake properties in the Peace River oil sands region of Alberta. In accordance with the Farmout Agreement, the Farmee has agreed to provide up to $40,000,000 in funding for our portion of the costs for the SAGD Project, in return for a net 25% working interest in 12 sections where we have a working interest of 50% (before the Farmout Agreement). Also, the Farmee is required to provide funding to cover our monthly operating expenses not to exceed $30,000 per month.
The first SAGD well pair was drilled, completed and started production on September 16, 2014. For further information see SAGD Project.