Argosy's oil production in 2005 averaged 1,070 barrels per day (net before royalty); remaining proven reserves at December 31 2005, are estimated at 2.8 million barrels with probable reserves of 1.63 million barrels (net before royalty, according to independent estimates). Argosy's net land position is approximately 153,000 acres.
The agreement to acquire Argosy is Gran Tierra's third acquisition agreement since mid-February. Upon completion of the announced acquisitions, Gran Tierra's share of production (before royalty) is expected to increase to approximately 2,600 barrels of oil equivalent per day from the current 330 barrels per day. Remaining proven reserves are estimated to increase to approximately 6.5 million barrels of oil equivalent (before royalty, natural gas conversion 20:1) and Gran Tierra's land inventory is expected to increase to 1.7 million net acres.
Terms of the acquisition include a payment of $37.5 million cash plus $3.5 million paid in common shares of Gran Tierra and certain overriding and net profit interests in the acquired assets valued at $1 million. Closing is scheduled to occur by the end of May and is subject to customary closing conditions.
"We are extremely excited about the addition of Argosy International's assets and people into our company," said Dana Coffield, Gran Tierra's president and CEO. "Argosy is an experienced and qualified operator in Colombia. The company provides an exceptional mix of personnel, projects, and upside in a country with a wealth of both proven and unproven potential and attractive fiscal terms. In a single transaction, Gran Tierra will have an immediate presence and stature in Colombia, a portfolio of production and exploration opportunities, and a significant platform for future drilling and acquisitions, providing a perfect complement to our growing business in Argentina."
Coffield said that, after only five months as a public company, Gran Tierra is poised for an eight-fold increase in production and a nearly ten-fold increase in reserves. "Today we are announcing a significant expansion into a country
we had identified as a target," he said. "We intend to continue moving our business plan
forward, positioning our company for continued growth in South America."
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