Petrobank to Sign 2 Exploration Contracts by End-March

Canadian oil company Petrobank Energy and Resources (TSE: PBG) aims to sign two exploration contracts and a technical evaluation agreement (TEA) with Colombia's national hydrocarbons regulator ANH by end-March, Petrobank president and CEO John Wright told BNamericas.

Petrobank recently received confirmation to "proceed with finalizing definitive contractual terms" on the blocks, the company said in a statement. The contracts would be for blocks in the Putumayo region in southern Colombia and the Llanos basin. "We've received notification on these [blocks] that they [Colombia's hydrocarbons regulator ANH] is prepared to negotiate directly with us, which means that we are not necessarily the only ones [interested in the blocks] but we are the first ones in line," Wright said.

The exploration contracts will be governed by the new ANH fiscal terms whereby the company pays 100% of the exploration costs and initially receives 100% of revenues subject only to an 8% royalty, the statement said.

The first of these exploration blocks is contiguous with Petrobank's existing Orito block and contains at least one significant prospect. This block will initially be evaluated with a 3D seismic program. The other block is in the Llanos basin where "a series of geological trends" will be covered with 3D seismic, the statement said.

Investment in the blocks, if contracts are signed, would likely start in 2006, Wright said. Petrobank has 79% and 69% respective working interests in incremental production on the Orito and Neiva blocks, which are in the Putumayo region and the Upper Magdalena basin about 300km northeast of Orito. Petrobank's only Latin American operations are in Colombia.

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