QUEBEC – The long-awaited details of a Quebec oil-exploration deal, kept quiet for five years, have been released to the public.
Petrolia has finally shed light on the agreement it signed in 2008 with Hydro-Quebec to explore for oil on Anticosti Island.
More details are available here (in French).
Although the provincial Liberal government wanted to reveal the details in 2011, Petrolia had refused, citing confidentiality clauses in the sale of permits.
The Parti Quebecois said after it won a minority government last year that it wanted to know the contents of the secret deal.
The PQ, meanwhile, has confirmed it will move ahead with exploratory drilling on the island – even if it doubts the dizzying estimates that Anticosti contains tens of billions of barrels of oil.
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The province has owned Anticosti Island since buying it from Consolidated Bathhurst in 1974 for about $25 million.
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A few hundred people live on the 8,000-square kilometre island, known for its forests and fauna.
The deal includes four components – the assignment of contracts and permits, royalties on production, a mortgage securing the payment of a fee and an agreement for the use of seismic data.
Under the accord, Hydro-Quebec sold half its interests for 29 exploration licences and 25 per cent interest in six other permits.
Petrolia (TSX:ECP) granted the Crown-owned utility an overriding royalty on interest of possible hydrocarbon production.
That will be one per cent for the first three million barrels of oil, two per cent on the portion between three million and 10 million barrels, and three per cent on everything above 10 million barrels produced.
The company will also provide Hydro-Quebec with a mortgage of up to $10 million as collateral for the payment of the overriding royalty.
Petrolia will also pay $460,000 to the utility to use its seismic data.
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