BUSINESS OF THE ISSUER
On April 6, 2005, we entered into an agreement with JGR Petroleum, Inc. ("JGR") to purchase an interest in two producing wells located in Burleson County, Texas from JGR. We agree to issue 1,000,000 shares of restricted common stock of IAS to JGR as full consideration for the purchase of interests. The shares are to be issued quarterly on the basis of one share for every $0.10 revenue from the oil and gas wells.
On November 3, 2005, we entered into a letter of intent to purchase a 37.5% net revenue interest in a producing oil well in Overton and Clay County, Tennessee, in consideration for $400,000. We also entered into a letter of intent to drill two exploration wells in the Overton and Clay County, Tennessee. In January 2006, we decided not to proceed with this project.
In April 2006, we signed a term sheet with a private oil and gas company to drill initially 4 gas wells in Kentucky, with an option to drill an additional 20 wells over a 18 month period. The term sheet is for a 100% interest, subject to a 12 ½ % interest to the landowner and 27 ½ % interest to the operator. We will retain a 60% net revenue interest in the wells. The term sheet is subject to a definitive agreement to be signed and drilling of the first well.
On May 4, 2006, the Company entered into a joint venture drilling agreement with Energy Source Inc. (ESI) where the Company can earn a 60% interest in 4 gas wells in Kentucky and the option to acquire a 60% interest in an additional 20 wells over an 18 month period by paying $185,000 per well for the first 4 wells, and a price to be agreed upon for all additional wells. Payment for the first well is payable within twenty days of the agreement (paid subsequently) and payments for additional wells are due twenty days after written notice is provided by ESI. In addition the Company must pay a monthly maintenance fee of $300 per well and any additional maintenance expenses, a monthly dehydration fee and a $0.55 per MCF transportation fee at 60% of the head volume as well as any third party transportation and marketing fees incurred in delivering gas to the sales point.
In June 2006, the Ken Lee #1 well was successfully completed as a commercial gas well. The initial open flow tested 1.22 MCF of high BTU gas. The well was completed to a depth of 1410' in the Big Lime formation.
The successful drill results for the Ken Lee #1 gas well provides confirmation of a productive gas field in the Knox and Laurel counties, Kentucky.
In July 2006, we commenced the drilling of the Elvis Farris #2 well, located on the Farris Lease, in Laurel County, Kentucky. Testing of the first two wells has commenced.
Teryl Resources Inc. has an option to earn a 40% interest by paying 50% of the costs of each well that Teryl elects to participate in.
