LG International and GeoPark announced the acceleration of their strategic partnership by the acquisition of and investment in certain upstream oil and gas interests of each company.
In 2010, GeoPark and LGI entered into a strategic partnership to acquire a portfolio of oil and gas upstream assets in Latin America. As an initial step to cement this relationship, GeoPark has reached an in-principle agreement to sell to LGI a 10% interest in GeoPark Chile Limited, a company registered in Bermuda, for US $70 million. The transaction is expected to close in 2Q 2011.
In addition, in a separate transaction, and subject to obtaining regulatory approvals, GeoPark has reached an in-principle agreement to invest up to US $10 million in the drilling of an exploration well on the Sholkara prospect in the LGI-operated Block 8 in Kazakhstan, which would give GeoPark effectively a 25% participating interest in Block 8. The Sholkara prospect has an unrisked mean oil resource estimate of 100-400 million barrels and represents an exciting opportunity for GeoPark outside its historical and principal area of focus.
LGI is the energy, natural resource and trading affiliate of LG Corporation, the large international Korean company with 147 subsidiaries operating in over 50 countries and with annual sales exceeding US $100 billion. LGI has successfully invested and operated in the oil and gas exploration and production business for over twenty years including current upstream oil and gas projects in Oman, Vietnam and Kazakhstan. LGI has adopted a long term strategy of investing in oil and gas upstream investments in emerging resource-rich countries and has targeted Latin America as a new growth region.
Both transactions are subject to the signing of definitive legal agreements and final approval of the GeoPark and LGI Boards of Directors.
Commenting on today's announcement, James F. Park, Chief Executive Officer of GeoPark, said, "GeoPark views its strategic partnership with LGI as a key element of its future growth and expansion in Latin America. The opportunity to cement this relationship by an initial sharing of projects builds a solid base for a promising long term and committed acquisition partnership. It also clearly demonstrates the value of the business that GeoPark has developed since 2006. GeoPark's primary operational focus will continue to be on developing an exploration and production business in Latin America and we look forward with genuine excitement to the prospect of growing our business across Latin America in partnership with LGI."
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