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Strawn Oil Project

Mosman owns 50% of the Strawn Oil Project located in Texas.

The Project is operated as a joint venture with Mosman’s Strategic Alliance Partner Blackstone Oil & Gas, Inc. (“Blackstone”). Mosman acts as operator on the Project.

Details of the Strawn Oil Project

The Project is located in Young and Archer Counties, Texas, approximately 200 km west of Dallas. The Project consists of 27 existing well, many of which were not in production at the time of acquisition. The Project is some 1,300 acres spread over 7 established leases which are documented in accordance with local requirements. The leases do not currently have a resource identified though production on the leases by the vendor has been occurring since 2003.

Mosman is currently conducting maintenance and workovers with the objective of increasing the rate of oil production.

Project Life and Abandonment Liabilities

The leases are "held by production". Typically, these projects continue as long as revenue exceeds operating cost, which is mainly a function of oil price. Based on current production, Mosman anticipates the field will produce for the foreseeable future.
The established regulatory system in Texas requires that 10% of inactive wells need to be restored to production, or abandoned. Mosman intends to meet this obligation by restoring wells to production. The hypothetical total (for both joint venturers) cost of an immediate full abandonment of the Asset is estimate to be USD$364,000 but as noted above Mosman does not expect this to be applicable to the field in the foreseeable future.
The regulator currently holds a bond for USD$50,000 on behalf of  Mosman Operating LLC.

Royalties and Taxes

Royalties vary for each lease and average 20%, which is in the normal range for leases in the area.
A state severance tax of 4.6% applies to the market value of oil produced in Texas. In addition, any profits resulting from oil production will be subject to US income tax.