Company: CRCE
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001096906-25-001324
Chunk: 16

Company: Circle Energy, Inc./NV
Filing Date: 2025-08-14
Form: 10-Q
Item: Part I, Item 2
Chunk 16
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  Under the lease agreement, we are required to drill at least two wells, one on each 40-acre farmout tract, within three years or the rights under the lease to any undrilled tract or tracts will automatically revert to Boa Vista.  

There are currently two plugged but no producing wells on the lease.  These two wells were drilled on 40-acre spacing, produced from the Clear Fork and were economical.  There are additional wells on surrounding acreage that have produced marketable quantities of oil and gas.

The initial intent is to drill two new Clear Fork wells based on 20-acre spacing.  Management believes there is potential for further downspacing to 10-acre spacing, depending on oil and gas prices, development cost and completion results of the 20-acre development.  Management also believes there is potential for San Andres development with possible 10-acre spacing, again depending on oil and gas prices, development costs and completion results.

We have also entered into a joint venture agreement with Boa Vista to mutually develop an area of mutual interest near the current lease. This area of mutual interest consists of approximately 880 acres including and adjoining the acquired acreage.  If we are successful in acquiring additional acreage, we would jointly own mineral rights in the same percentage of ownership with Boa Vista as the current lease (75% Circle, 25% Boa Vista).  The parties intend that the joint venture would use AAPL 610-19819 or AAPL 610-2015 or similar operating agreement to structure the joint venture.  The liabilities of the parties would be severed and not joint, and each party would be responsible only for its share of the costs and liabilities incurred under the operating agreement.  Boa Vista, LLC is an oil and gas exploration company with operations in Texas and New Mexico. Boa Vista partners with such companies as Exxon, Diamondback and other large E&P companies.

Management intends to lease additional acreage within the area of mutual interest.  Towards this end, we have engaged a petroleum engineer to prioritize the acreage for leasing and have engaged a landman to execute our leasing efforts.  Once we have identified and acquired the specific acreage for development and evaluated our best options to develop it, we will be able to determine whether to utilize vertical or horizontal drilling.  This will be determined based on the amount and configuration of any additional acquired acreage.  

If we are unsuccessful in adding additional acreage,