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Victory Energy Corporation (OTCBB: VYEY) today announced it has entered into a letter of intent dated February 13, 2007.
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Mr. Jon Fullenkamp, President and Chief Executive Officer of Victory Energy Corporation, the ("Company"), announced today that the company has entered into a Letter of Intent with Coastal Petroleum Company to conduct a drilling program on Coastal's Valley County, Montana leases.
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The Letter of Intent sets out the substantive terms of a Formal Agreement ("Agreement") that Coastal and Victory will complete and execute within sixty days. Under the Agreement, Victory will be required to drill a minimum of three wells on the Coastal Prospects and to make payments totaling $1,225,000 over the next fourteen months to Coastal in return for a 50% interest in Coastal's existing leases. Coastal's President Phillip Ware said: "We are excited about the formation of the team of Coastal and Victory Energy Corporation to develop the existing potential of our enormous Valley County leases. Victory brings a great deal to the play and we are looking forward to working together."
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Victory will commence drilling the first well to test one of Coastal's Lodgepole Reef prospects within three months of the execution of the Agreement. A second well will be started within four and half months to test a 34,000-acre shallow gas prospect on the leases. The third well under the Agreement will be drilled to test another of Coastal's Lodgepole Reef prospects and will begin within eight months of the Agreement. Victory will earn a 50% working interest in the spacing unit covered by each well while Coastal will retain the other 50% of the working interest. Victory will also earn an undivided 1/6th working interest in all of Coastal's Valley County Leases after each well is drilled.
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After the three wells are drilled, Coastal and Victory will each have a 50% working interest in all of the Valley County, Montana leases. The parties have also agreed to work together to explore an Area of Mutual Interest within twenty miles of the Leases, encompassing approximately 1,000,000 acres.
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Victory Energy President Mr. Jon Fullenkamp states, "This Letter of Intent represents a stage of progress for the company's growth plan to acquire and develop prospects with significant upside while minimizing downside potential. Coastal provides the associations and partners to the company enabling significant growth and shareholder value in the near future."
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