Incorporated in December 2007, Xun Energy Inc. is a development stage company that lists on the OTC Bulletin Board. In February 2011, the Company’s management identified several business opportunities in the state of Kentucky. On February 7, 2011, the Company established two wholly owned subsidiaries in the State of Kentucky, Xun Oil of Kentucky, Inc. and Nux Holdings of Kentucky, Inc.
Nux Holdings of Kentucky, Inc. entered into several different leasehold assignments with Sequachee Oil and Gas LLC (Sequachee) on February 28, 2011. These leasehold assignments provide in part for the assignment of Sequachee’s leasehold rights in three leases.
Through the leasehold assignments, Xun Energy Inc. owns a 100 percent working interest and 75 percent of the net revenue interest in three separate leases. The leasehold interests are located in Lincoln, Jackson and Clay County, Kentucky. Sequachee retains an override royalty equal to 12.5 percent and each of the landowners will receive a royalty of 12.5 percent of the value of all oil produced and removed (if any) under the lease.
The Tillet lease is approximately 105 acres. It is located in Lincoln County, Kentucky. The lease has five shut in oil wells that have undergone drilling to a depth of 350 to 385 feet. The wells are drilled to the Coniferous producing formation.
The Neeley lease is approximately 239 acres. It is located in Jackson County, Kentucky. The lease has one oil well that is currently on pump, but not pumping to generate revenue. The well is drilled to the Coniferous producing formation.
The Gross lease is approximately 30 acres. It is located in Clay County, Kentucky. The lease has one gas well that is not connected to a gas pipeline system. The well produced oil from the Stones River formation at a depth of 3,200 feet.
Xun Energy Inc. does not believe that the acquisitions of these leasehold interests in and of themselves have resulted in a change of shell status. The Company believes that further work on these leasehold interests is required before Xun Energy will no longer be considered a shell.
The Company commenced a workover program on well number XUN001 on March 16, 2011. The well produced 31 barrels of crude oil during the process of working over the well. On April 15, 2011, Xun Energy Inc. completed their workover program on well number XUN001. They have placed the well into production for crude oil.
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