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Shell joins MGM in NWT shale oil play Calgary junior’s stock rises after farming out to major

By Dan Healing, Calgary Herald June 28, 2012

CALGARY — Shares in Calgary junior MGM Energy Corp. leaped by as much as 45 per cent on Thursday morning after it announced it had signed Shell Canada to help explore an oil play in the Northwest Territories.

The company’s stock rose seven cents to 22.5 cents in early trading in Toronto but closed the day at 20 cents, up 29 per cent from Wednesday’s close.

In a news release, MGM said the Canadian division of Royal Dutch Shell has agreed to fund the drilling and completion of up to two wells in the Central Mackenzie Valley Canol shale oil play to earn a 75 per cent interest in its exploration licence, 466B.

The first well, a vertical, is to be drilled either this winter or next and will give Shell a 37.5 per cent share in the licence. Shell will than have the option to pay for a second horizontal multi-stage hydraulic fractured well and earn another 37.5 per cent, becoming the operator of the play.

“Shell has extensive experience with shale plays throughout North America and is one of the pre-eminent developers of shale plays in the world. We look forward to working with them in the Central Mackenzie Valley play,” said Henry Sykes, president of MGM Energy, in the release.

The play is located 1,500 kilometres north of Calgary and overlies the Enbridge Norman Wells oil pipeline.

MGM was spun out by Calgary-based Paramount Resources hold its northern assets.

Paramount is still its largest shareholder with about 14 per cent of the stock and the companies share some senior executives.

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