At year end December 31, 2007, Keystone Royalty
Corp. owned interests in over 207,000 gross acres of fee mineral
title in the Province of Saskatchewan, with additional minor
property interests in Alberta, Manitoba and Ontario.
Keystone’s producing acres increased by
16.9% during 2007, from 12,561 gross acres (4,591 net) in 2006
to 14,692 gross acres (5,419 net) in 2007. Keystone currently
holds 33,375 gross (14,733 net acres) of fee title lands in
the area currently recognized as the Bakken core area. Approximately,
86% of those lands have been leased to industry, but less than
10% have been drilled. In point of fact, 2007 marked the first
fiscal period in which Bakken drilling on our lands resulted
in any incremental bonus consideration and royalty income. Of
the 28 producing wells drilled on Keystone’s lands in
2007, 9 wells were drilled into the Bakken zone. Of those only
one well was producing in the first half of the year, with 4
of the 9 wells coming on production either late in December
2007, or subsequent to year-end. High levels of activity at
the end of 2007 have continued into 2008. As of the date of
this letter, Keystone is aware of 41 wells planned to be drilled
on our lands in 2008. Twenty-nine of those wells are licenced
to the Bakken, reflecting the extent to which the bulk of exploration
capital is being directed towards the Bakken play and away from
conventional SE Saskatchewan targets in the Mississippian.
Interest in the Bakken play has resulted in massive
increases in Crown landsale revenues for the Province of Saskatchewan,
and to a lesser extent for freehold title owners such as Keystone.
In May 2008, Keystone signed a number of leases on Bakken acreage,
generating in excess of $3.7 Million in bonus revenue in that
month alone.
As a result of robust leasing and drilling
activity, we anticipate that 2008 will again be a record year
for our Company.
Land Position
Keystone currently holds 207,754 gross acres and
70,080 net acres of fee mineral title. Given that the true value
of the Keystone land inventory is only fully realized once the
lands are developed, we continue to focus on and execute development
opportunities.
Keystone’s Royalty and Title Acquisitions
Keystone Royalty Corp. has become one of the most active fee
mineral and royalty purchasers in Saskatchewan.
Keystone has the expertise to quickly evaluate,
and the financial strength to execute, on both large and small
acquisitions of producing and non-producing mineral properties.
