In accordance with its strategy of making complementary acquisitions in its core areas, Vintage has signed a definitive agreement with Shell C.A.P.S.A., a wholly-owned affiliate of Royal Dutch Shell. The agreement calls for Vintage to acquire Shell's 40 percent, non-operated, working interest in two producing blocks in the Cuyo basin of west central Argentina for $50.4 million, subject to customary closing adjustments. The effective date of the agreement is March 1, 2001, with an anticipated closing date at the end of August 2001, subject to regulatory approvals. The blocks, located in close proximity to Vintage's existing concessions acquired in the Cuyo basin last year, produce 3,000 net barrels daily of 29 degree API light, sweet oil. The oil is produced from multiple sandstone formations and sold to the operator, Repsol YPF S.A., under a long-term contract which yields a net price to Vintage of 85 percent of the prevailing NYMEX price of oil. Two recent 3-D seismic surveys cover approximately 75 percent of the block and are anticipated to generate additional exploitation drilling, waterflood expansion and optimization opportunities in the future.
"We remain committed to both expanding in our core areas and reducing our debt ratio. This acquisition builds on our initial entry into the Cuyo basin of Argentina and adds more 3-D seismic-driven exploitation opportunities to our inventory. To maintain our debt targets, we are offsetting the cost of the acquisition by reducing our 2001 capital budget $40 million to $238 million and increasing our target for non-strategic property sales by $15 million to $50 million," said S. Craig George, CEO.