Petroamerica has entered into a farm-in agreement with Parex Resources Colombia Ltd. Sucursal ("Parex") to farm-out 50% of its working interest in the Los Ocarros block (the "Farmout"). Petroamerica's 50% working interest in the Los Ocarros block is derived from a farmout with Talisman (Colombia) Oil & Gas Ltd. ("Talisman"), which was announced on January 4, 2011.
As a consequence of the Farmout, Petroamerica and Parex have agreed to fund an exclusive operation to drill a sidetrack well to the Las Maracas-2 exploration well. The Farmout requires that Parex pay the first US $7.0 million of costs associated with the sidetrack well, after which Parex and Petroamerica will each bear 50% of any additional costs relating to the exclusive operation. Petroamerica and Parex will share equally any of the non-consenting party's working interest that becomes available as a result of the exclusive operation.
The Las Maracas-2 well reached a total depth of 13,100 feet and was found to be on the edge of structural closure with minor hydrocarbon shows encountered in the Mirador and Gacheta reservoirs. Petroamerica interprets a transition zone from oil to water on wireline logs in the uppermost part of the Mirador reservoir. The deeper part of the well has been plugged back and the well is currently being sidetracked to test the closure in a structurally higher position, at an estimated true vertical depth of around 11,000 feet for the Mirador reservoir.
Nelson Navarrete, CEO and President of Petroamerica commented "given Parex's operational experience in the immediate vicinity on Block LLA-16 and the Kona Field, this is a very positive development to have them as a partner with Petroamerica in this exclusive operation".
The transfer of Petroamerica's 50% working interest pursuant to the Talisman farmout remains subject to approval by the Colombian National Hydrocarbon Regulatory Authority (the "ANH"), and the subsequent transfer of 50% of such working interest (net 25%) to Parex is subject to approval by both the ANH and the operator of the block.
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