Once Adulis has raised the cash, it can close a deal to take 40% ownership of the five hydrocarbon prospects stake belonging to Canadian oil company Solana Petroleum's Colombian unit by funding US$8mn of the drilling costs, Antony said.
According to a June 14 exploration participation agreement (EPA) between Solana and the Ramshorn International affiliate of drilling contractor Nabors Industries, Solana will fund 96% of Ramshorn's share of drilling costs as laid out in a shared risk contract between Ramshorn and Colombia's state oil company Ecopetrol.
In return Solana will receive a 75% share of Ramshorn's interest in all hydrocarbons produced from the prospects in question. Part of Solana's funding commitment to Ramshorn comes from the US$8mn provided by Adulis, under the terms of a March 30 funding and assignment agreement (FAA).
The project involves commitment well drilling on each of the five prospects within three years. "From what I understand, there is an expectation to drill some of those [wells] this year," Antony said. The five wells will cost an estimated US$41mn to drill.
Meanwhile, Adulis has delayed drilling its first well in the Salinas exploration block on northern Colombia's Guajira peninsula until it receives an environmental permit from the Colombian government, Antony said.
Adulis had planned to drill the well by January 2004, but it has still not been able to do so because of a delay in obtaining an environmental permit for the block, Antony said.
On May 28, Ecopetrol granted an additional extension until August 28, 2004, of Adulis' commitment to drill the first exploratory well on the Salinas block. The extension was to allow Adulis sufficient time to secure an environmental license for the well.
Adulis is required to submit to Ecopetrol a copy of the executed well drilling contract within two weeks of securing the environmental license. "The last thing we heard about a week ago was that more studies need to be done, so we just need to go down and clarify what exactly we have to do next," Antony said
. Adulis acquired a 100% working interest in Salinas from Calgary-based Bayford Investments, which had acquired the concession from fellow Calgary companies Mera Petroleum and its partner Bear Creek Energy, formerly Millenium Energy, in October 2003.
Adulis also owns a 25% working interest in the Guachiria block of the Llanos basin, which was acquired for US$800,000 in December 2003. The Colombian operator completed its first well - the Malabares No. 1 - in May and should have finished analyzing the drilling results in 30-60 days, Antony said.
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