Hocol and Stratus Oil & Gas (Colombian branches of the foreign companies: Hocol S.A. and Pacific Stratus Energy) entered into a Private farm-out agreement, signed on August 17th, 2005, in which HOCOL would be willing to assign 50% of its current participation in the Doima and Ortega Contracts in Colombia, subject to required regulatory approvals. According to Colombian legislation, the assignment of interests derived from said Agreement requires formal government approval issued by Ecopetrol and the National Hydrocarbon Agency, in order to take effect.
On November 10, 2005, Pacific Stratus issued an unauthorized press release regarding their operations in the Doima Contract. As of November 10th, 2005 STRATUS had not complied with Ecopetrol's requirements in order for the assignment of interests to be approved, therefore STRATUS was not entitled to any participation in either the Doima or Ortega Blocks, as confirmed by Ecopetrol communications.
The relevant farm-out Agreement provided ninety (90) days to comply with government approval procedures, by submitting appropriate and required documentation. Failure to do so would cause the termination of the Agreement without further responsibilities to the parties. As Stratus has not complied with such requirements within this period, the Agreement was irrevocably terminated. Therefore, Stratus is no longer a party to the above Agreement.
However, Hocol reiterates its positive and open attitude in potentially reinstating or negotiating a new Agreement with Stratus after proper remediation of damages caused to Hocol.
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