Amerisur has entered into a Commercial Agreement with Reto Petroleum Limited Colombian Branch (Reto) under which Reto has the right to acquire a working interest in the Fenix Exploration and Production contract (100% owned and operated by Amerisur) in exchange for completing certain work programs and investments.
Phase 1 of the agreement contemplates the drilling of 10 wells to appraise and develop the Isabel structure. These wells will be funded 100% by Reto. Once this work program is completed to Amerisur's satisfaction, the Company will cede a 20% undivided working interest in the Fenix contract to Reto, subject to regulatory approvals.
The drilling operations associated with Phase 1 must be completed within 18 months of the effective date of the agreement.
Phase 2 of the Commercial Agreement gives Reto the right, subject to satisfactory completion of Phase 1, to earn an additional 10% undivided working interest in the Fenix block in exchange for the funding (100%) of the acquisition and processing of a seismic program of at least 75 line kilometers within the Fenix contract area. In the event that Reto does not exercise this right, they will fund 20% of this seismic program.
Amerisur Exploracion Colombia, the Company branch established in Colombia will remain the operator of the contract. The effective date of the agreement is April 6, 2011.
John Wardle, CEO, said, "I am very pleased to welcome Reto, whose principals have enjoyed great success in the Colombian E&P sector in the past and who bring a wealth of experience and background understanding to the Fenix contract. Your board believes this is a strong win-win deal for both parties, which will expose us to significant activity in the Fenix block without impacting upon progress or taking our focus away from our principal challenge this year, the development of the Platanillo asset. The terms of the agreement may also cover off our exploration commitments in the Fenix contract for the next two phases, which begin on April 22. Naturally this agreement also demonstrates the level of industry interest in Fenix, which we continue to believe has very significant potential. These work programs will go a long way to defining and accessing that potential."
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