Avenue Group expects to complete the Esperanza Block purchase and sale agreement on or before December 15, 2005. At closing, Avenue Energy is required to pay $2.7 million to earn a 45% interest in the entire contract area. The cost of drilling the Arianna Nr 1 discovery well and associated geophysical and geological work are included as part of this payment. Subsequent to the closing payment, Avenue will hold a ground floor 45% working interest in all future exploration activities subject to a series of cash payments and drilling commitments and confirmation of remaining reserves by a reputable independent engineering firm.
The closing is subject to due diligence and the raising of additional capital. No assurance can be given that the contemplated transaction will be completed or that if completed, will be profitable to Avenue Group.
About the Esperanza Block
Discovered by Exxon (Esso SA) in the 1970s. The Esperanza Block covers 45,975 hectares or approximately 114,000 acres and includes areas formerly designated as the Jobo, Tablon, Castor, Coral and Sucre Gas Fields, that have produced approximately 70 BCF of natural gas in the aggregate. Geoproduction, a Lafayette Louisiana-based company with a branch office in Bogota, and Ray Oil Tools, a Louisiana-based corporation, were awarded The Esperanza Contract in August 2004 by Colombia's Agencie Nacional de Hidrocarbures (ANH).
In August 2005, Geoproduction drilled its first well on the area, the Arianna Nr. 1. According to a report recently completed by Halliburton Inc, Arianna Nr. 1 tested capable of producing 3.5 mmcfg per day. The well is located among a number of wells drilled in the 1970s by Exxon (Esso SA) which produced at similar daily rates. Geoproduction is in the process of connecting production from the Arianna Nr. 1 well to a gas pipeline located less than two kilometers away.
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