Mobilization of the Petrex drilling rig to the Corvina platform using the BPZ-01 barge was successfully completed and drilling operations on the Corvina CX11-21XD well began after final rig assembly and acceptance testing were achieved. Assuming normal operations, the Company expects to reach total depth of 10,114 feet in approximately 30 to 40 days. Logging, completion, and testing procedures will begin immediately upon reaching total depth.
A delay was incurred during the second mobilization trip to the platform due to a navigation incident which caused the BPZ-01 barge to be grounded on a sand bank. The BPZ-01 barge is a US flagged vessel and as such was inspected by the US Coast Guard, to their satisfaction, after the incident. The Company believes that the majority of the costs associated with this incident will be reimbursed by third parties or through insurance. This incident has no impact on the ongoing drilling operations.
The Company has secured all environmental permits required to develop the Corvina Gas-to-Power project. These permits cover the 10-mile offshore gas pipeline, the onshore gas processing facilities, and the 160 MW thermal power plant which will be located at the coastal village of Nueva Esperanza. These permits are also a prerequisite for disbursements of the senior debt facilities which the Company is pursuing with the IFC.
The IFC has granted an extension of its mandate letter to November 30, 2006. The original letter was set to expire on August 31, 2006. This extension grants the additional time needed for the IFC to complete its ongoing due diligence which is now considered to be in the final phase.
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