Global will own 100% of the contract subject only to an initial 8% royalty payable to the Colombian Ministry of Energy. The final size of the royalty is to be determined by future production levels. The contract duration is approximately six years for the exploration phase and 24 years for the exploitation phase.
The contract grants Global exclusive exploration and production rights to 85,000 acres which adjoin the established, producing Palo Blanco field. Terms of the contract require Global during phase 1 to drill one exploratory well. The time period for phase 1 is 16 months.
If Global elects to enter phase 2 of the contract, Global must drill either one well or acquire 50 kilometers of 2D seismic. Phases 3, 4 and 5, also optional, require one exploratory well to be drilled per phase. Phases 2, 3, 4 and 5 have a time period of 12 months each.
"We are very excited to have signed this new contract," said Stephen C. Voss, Managing Director of Global. "The Los Hatos acreage is contiguous with our existing Alcaravan acreage allowing the company the opportunity to potentially expand the established Palo Blanco Field to the south. The Los Hatos contract supplements our current active drilling program in Palo Blanco where previous drilling activity has indicated that additional reserves may exist in or near the field.
"We plan to pursue the drilling of at least one exploratory well in the new contract area, to be located south of our Cajaro # 1 well which was drilled during 2003 and is now producing high quality oil. Should this exploratory well be successful, we believe additional drilling locations, reserves and production could be added to our expanding Palo Blanco complex area. At December 31, 2003, Harken listed proved reserves of approximately 1.8 million net barrels related to its interest in the Palo Blanco field.
"We believe the Los Hatos contract, together with our recently signed Rio Verde contract provides Harken with considerable opportunities going forward."
Most Popular Articles