Canacol has entered into a binding term sheet, subject to the finalization of definitive Farm-in and Joint Operating Agreements, with C&C Energia Ltd. for the farm-in to a portion of the Operators working interest in the Andaquies and Coati Exploration and Production contracts located in the Putumayo basin in Colombia. The Coati and Andaquies E&P contracts are royalty contracts governed under the terms of the Agencia Nacional de Hidrocarboros. C&C Energia Ltd. will continue to function as the Operator of both blocks.
Charle Gamba, President and CEO of Canacol, commented, "We are pleased to be partnering with C&C Energia on these two contracts, which add three light oil exploration wells to our four well exploration drilling program in Colombia this year."
Upon the Corporation meeting its obligation to pay 72% of the cost associated with acquiring seismic and drilling one exploration well it will earn 36% of the Operators 90% working interest in the Andaquies E&P contract. Upon the Corporation meeting its obligation to pay 80% of the cost associated with acquiring seismic and drilling one exploration well it will earn 40% of the Operators 100% working interest in the Coati contract.
The Operator plans to drill three exploration wells targeting light oil prospects in the second half of 2011, two on the Andaquies contract and one on the Coati contract, pending the receipt of all necessary permits and approvals.
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