Birch Lake Energy Inc. says that Bernum Petroleum Ltd. has filed a statement of claim against Birch Lake regarding the Company's Lochend Assets, being the non-operated working interest of 40% in certain petroleum and natural gas rights underlying 7,760 gross acres (2,718 net) in the Lochend-Bearspaw area of Alberta. As set out in the court documents, Bernum is claiming that Birch Lake is in default under the related joint operating agreement and is seeking a judgement in the amount of $1.532 million, plus interest in the amount of $11,365. Bernum is also seeking court approval for the sale of Birch Lake's working interest in the Lochend Assets.

The Company has taken immediate steps to vigorously defend this claim and preserve its rights in the joint venture assets including a detailed review of the completion operations on the initial well which led to the apparent collapse of the production casing string during the frac operation and the resulting loss of more than half the productive well bore. The Corporation is also conducting a detailed review of the drilling operations of the second well during which intermediate casing was not able to be successfully run to depth drilled, resulting in drilling difficulties during the horizontal section and the eventual loss of the horizontal section after nearly reaching total depth. Financial constraints prevented BLK from participating in a re-drill of the horizontal leg and forfeiture of the one-section lease.

Tags: Birch Lake Energy Inc.