Avenue Energy Inc., a subsidiary of Avenue Group Inc. has allowed its option with Geoproduction Oil and Gas, Inc. to acquire a 45% interest in the Esperanza Contract, to expire. In October of this year, Avenue and Geoproduction entered into a Letter of Intent (LOI) whereby Avenue had an option to earn a 45% interest in the contract area by paying certain bonuses to Geoproduction and fulfilling its share of the work program under the Contract. The LOI was subject to further technical and legal due diligence to be carried out by Avenue. In November, Avenue sent a technical team to Colombia to carry out a detailed review of the contract area. The results of this work have been under review and discussion with Geoproduction. While Avenue's due diligence team felt that the contract area had merit for establishing gas reserves, it also recommended that certain provisions of the agreement be reexamined. Unfortunately, Avenue and Geoproduction were unable to reach agreement on these recommendations and has ceased discussions with Geoproduction.
Norman Singer, exploration head of Avenue Energy, said, "While we are disappointed that we were unable to reach final agreement with Geoproduction to work together to develop the Esperanza area, we are still enthusiastic about upstream opportunities in Colombia and will be pursuing other exploration and production plays in the Area. We expect to return to Bogota after the first of the year to renew discussions with other operators and will consider opening our own technical office in Bogota."