The Promotion License signed with PeruPetro on October 15, 2004 with PeruPetro for Block XI (now renamed Block XXI) onshore Sechura Basin has been converted to an Exploration and Production License. The License now goes to the Ministry of Energy and Mines for approval which could be forthcoming anytime between February and May of this year.
The terms of the E&P License commit the Company to either shoot 120 km of 2D seismic or drill a well in the first period of five over a seven year term. The remaining four periods require the Company to either drill a well or drop the acreage. The License is for a term of 30 years for oil and 40 years for gas, with a minimum royalty of 5% on wellhead production for the first 5000bopd (30 MMscfd for gas) rising to 20% if and when production reaches 100,000 bopd (600 MMscfd for gas).
Commenting on the announcement, Gary Moore, Managing Director of Gold Oil, stated: "The qualification as operator and signing of the E&P License are major steps forward for the Company. We are now actively sourcing equipment to be ready to drill up the Block as soon as the approval by the Ministry of Energy and Mines is obtained. We already have the well locations identified and the environmental Impact Assessment completed and expect to sign the drilling management contract shortly with a local Peruvian contractor".
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