Gran Tierra made its offer to purchase the interests of CGC in eight properties in the Noroeste Basin of Argentina in February 2006. The disposition of CGC's assets was subject to approval of local courts within Argentina, which was received in late-October 2006. According to its offer of February 2006, Gran Tierra was obligated to purchase CGC's interests in four properties and retained an option to proceed with the acquisition of the remaining four interests, which were subject to rights of first refusal among joint venture partners and other third party consents. Following court approval, the initial four properties were acquired in early November 2006 for a total purchase price of $2.1 million.
Gran Tierra has declined to exercise its option to acquire of CGC's 17.85% interest at Palmar Largo and 5% participation at Aguarague, considering the likelihood that joint venture partners would exercise their rights of first refusal, the need for other third party consents, and in light of more attractive investment opportunities. The Company has determined its drilling program for the coming year has a higher priority and offers greater upside for the Company, and intends to fund a ten-well program to the end of 2007 from available cash and cash flow.
The total purchase price for the acquisition of CGC's interests in all six properties acquired is $4.6 million. Post-closing adjustments which reflect original values assigned to the properties, amended terms, revenues and costs from the effective date of January 1, 2006 are expected to amount to a net cash outlay of approximately $3.5 million.
Dana Coffield, President and Chief Executive Officer of Gran Tierra, stated, "The CGC acquisitions complete our initial growth strategy in Argentina, providing us with a production base and a significant land position for future remedial work, production enhancement and exploration. Our initial offer to acquire CGC's assets was made at a time before our entry into Colombia and before subsequent moves in Peru and Argentina. Today we are a more diverse company, with a mandate and opportunity to move into a more aggressive phase of growth -- advancing from a period of acquisition to a period of drilling activity. Our expanded portfolio and cash position allow us to high grade our investment decisions, and this is what we are doing. We have a solid foundation for growth, as we move into an active drilling stage of our business plan."
Gran Tierra Energy, Inc. is an international oil and gas exploration and production company, headquartered in Calgary, Canada, incorporated and traded in the United States and operating in South America. The Company now holds interests in producing and prospective properties in Argentina, Colombia and Peru.
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