The approvals are in the form of Supreme Decrees, which are to be published in the Official National Gazette. March Resources has announced that it expects the definitive Special Operations Contract ("SPOC") for each of these areas to be finalized shortly. The purpose of the SPOC is to outline the exploration and development rights on the blocks, which are valid for a period of 35 years, and to detail the work commitments that are required for each of the two blocks.
As has been previously announced, California Oil and Gas has entered into a letter of intent with March Resources that will permit California Oil and Gas to farm-in on this exploration program. Under the letter of intent, California Oil and Gas must commit to drilling 2 wells to casing point in order to earn a 50% interest in Pica North. March Resources will contribute US$ 1 million per well, but California Oil and Gas will be responsible for the balance of the costs to bring each well to casing point. Completion and testing will be at the after earned interest. If California Oil and Gas earns in to Pica North, it will have the option to earn a 50% interest in the Pica South Block for a cash payment of $US 2 million. March Resources and California Oil and Gas intend to jointly manage the project through March Resources Chile. With the receipt of the Decrees, work has begun to prepare to drill the initial exploration wells as soon as practical after the execution of the SPOC.
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