The Valle Lunar TEA increases Global's acreage position by approximately 70% to a total of 5.1 million acres. Global now holds 5 Contracts and a TEA agreement in Colombia, one Contract in Peru, and is in the process of converting an existing TEA into an exclusive Contract in Panama. Global holds 100% ownership interest in all contracts.
The Valle Lunar area has been subject to prior exploration activity by an international petroleum company in 1981 with two exploration wells reported as productive at that time. The Valle Lunar TEA targets medium heavy oil deposits and grants Global the exclusive option to sign a future Exploration and Production Concession contract, typically 25 years in duration, for acreage within the TEA area that Global identifies as prospective and suitable for exploratory drilling and production operations. The TEA duration is 16 months.
The TEA requires Global to complete within 12 months the reprocessing and interpretation of 800 linear kilometers of existing 2D seismic and certain other geophysical measurements and analysis, including the acquisition of aeromagnetic data. Aeromagnetic surveys provide a fast, low-cost method of structurally mapping large areas and the Company intends to identify subsurface geologic features within the 2.1 million acres with geophysical characteristics similar to other large, producing Llanos Basin fields.
Global intends funding the work program and other costs required under the TEA, expected to total approximately $544,000 with cashflow from production. Global is currently producing from four of the Company's six contracts.
"We are extremely excited about our new Valle Lunar TEA located in the established Llanos Basin region," said Stephen Voss, Managing Director of Global Energy Development PLC. Industry experts have predicted there is considerable further potential pointing to the known highly effective petroleum system and its analogy with the heavy oil belt of Venezuela. Global believes it is an area of potentially significant medium heavy oil reserves which is of a less expensive and technically straightforward class to extract, as substantiated by data already available. Medium heavy oil has become of paramount importance to the oil industry as it and heavy oil are expected to increasingly dominate the world's hydrocarbon reserves.
"We will seek to evaluate potential reservoirs using the latest aeromagnetic techniques and based upon the results of our geophysical efforts, the Company anticipates signing a Concession contract and proceeding with shallow borehole testing in late 2006.
"We anticipate the potential deposits to be at shallow depths requiring relatively modest costs and look forward to commencing our work program and exploration efforts under this TEA against a backdrop of production from several contracts we hold."
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