Jayhawk Energy announce Farmout Agreement in southeast Kansas

Source:Jayhawk Energy, Inc.

Jayhawk Energy announce Farmout Agreement in southeast Kansas Jayhawk Energy, Inc. (OTCQB: JYHW) ("Jayhawk", the "Company") is pleased to announce that it entered into a Farmout Agreement with Vast Petroleum, Corporation ("Vast" or "Vast Petroleum") covering Jayhawk's natural gas pipeline and adjacent natural gas wells in Crawford and Bourbon County, Kansas.

Jayhawk Energy CEO Kelly Stopher said, "We have been working diligently to attract a strong technical partner who understands the potential upside contained within the Jayhawk asset base. The successful closing of this Farm-out Agreement provides the Company with the local presence necessary to operate the field efficiently and effectively. Vast provides the boots on the ground personnel needed to optimize the Company's gas production levels. With natural gas prices strengthening, the Farmout Agreement with Vast will allow Jayhawk to resume ongoing production from 32 wells along its 17 mile pipeline for the first time in 24 months. Vast will also evaluate additional potential sites in acreage within reasonable proximity to the entire length of the pipeline. As well, we are also looking forward to their evaluation of potential oil production in the region and a long-term relationship with Vast Petroleum."

"Vast Petroleum sees excellent potential in the Cherokee Basin and we are pleased to enter into a strategic relationship with Jayhawk Energy in Southeast Kansas. We believe that with this large acreage footprint, we can relatively quickly leverage the existing infrastructure to monetize the potentially substantial natural gas reserves in the region together," said Scott Mahoney, CEO of Vast Petroleum, Corporation.

Details of the Agreement
Under the terms of the Agreement, Vast shall reinstate production of natural gas, from one or more of the leases, within one year after the execution of the Agreement. Once actual production of natural gas is reinstated from one or more leases, Vast shall have earned 50% interest in the Farmout Area, subject to certain terms and conditions as set forth in the Agreement. Vast also agrees to evaluate, prospect and study the leases to determine whether oil exists in commercially viable quantities and, if so, to drill test wells upon the leases until the sooner of (1) the completion of twenty (20) test wells or (2) Vast discovers that it would be imprudent to drill any additional wells upon the leases.

Under the terms of the Agreement, Vast shall be assigned all operational rights with respect to the leases and shall operate the leases pursuant to the terms of the Joint Operating Agreement (Vast shall incur all costs associated with the performance of the development requirements as set forth in the Agreement). Once development requirements have been performed by Vast, all parties to the Agreement will be responsible for their respective share of all development and operating expenses. All revenue attributable to the working interest in the leases generated from the sale of oil or gas produced from the leases shall be distributed as forth in the Agreement.

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