Taghmen Energy has closed the first stage of the acquisition of Petroleos del Norte S.A. on June 16, 2006.
Nicholas Gay, Chief Executive Officer, commented:
"This is a key milestone in the development of Taghmen. The acquisition of PDN gives Taghmen infrastructure from which the Company can immediately generate operating cash flow. Since its creation, Taghmen has moved from holding one exploration license in Guatemala to a company with operating platforms in two countries, proven reserves and production in Colombia and the platform to continue its expansion."
Rationale and Strategy:
- Provides Taghmen with current production of approximately 500 barrels of oil per day ("bopd").
- Complements Taghmen's existing acreage in the Middle Magdalena Valley in Colombia and provides Taghmen with immediate infrastructure and a pipeline to exploit its license interests in Midas and La Paloma.
- Gives Taghmen a second core business in Latin America alongside its Guatemala operations.
- Provides significant upside potential from existing oil fields and complementary exploration prospects.
- Increases the drilling and work over program scheduled over the next twenty four months to 14 wells, between Guatemala and Colombia.
PDN is a Colombian company that:
- operates three fields in the Middle Magdalena Valley in Colombia, which produces approximately 1,000 bopd, approx. 500 bopd net,
- has proven and probable reserves of 6.9 million barrels (net to its interests),
- holds three additional exploration (technical evaluation) licenses in Colombia,
- owns and operates the Rio Zulia - Ayucucho Pipeline, which generated US $1 million in tariff income in 2005,
- generated approximately US$ 3.08 million in operating cash flow in 2005, and
- has a high quality local operating team in place.
- Taghmen agreed to acquire PDN for US $32 million the equivalent of US $4.63 per proven and probable barrel, payable in two tranches. The first installment of US $19 million was paid on 16 June, 2006 and gives Taghmen control of the company with the second tranche of US$ 13 million payable on extension of the Tisquirama license.