Pine Cliff Completes Argentina Farm-ins
Pine Cliff Energy Ltd. has completed two major farm-in arrangements in Argentina that will result in the company earning interests in a total of 912,810 gross acres (542,410 net acres) of exploration and exploitation lands.
Canadsn Ramirez Property
CanAmericas Energy Ltd., a 93.3-percent owned subsidiary of Pine Cliff, has earned a 49% interest and is the largest interest owner in 47,940 gross acres (23,490 net acres) of an exploitation concession situated in the western part of the San Jorge Basin, Argentina, by committing to fund 100% of exploration costs totaling $US 5,500,000 over the next two years. The commitment includes conducting a 3D seismic program and drilling three wells in the first year at an estimated cost of $US 4,630,000. In the second year of the commitment, CanAmericas is committed to spend the remainder of the $US 5,500,000 on drilling.
The acreage is bordered by several producing oil fields. Over 40 separate prospective reservoirs belonging to the Upper-Mid Cretaceous-aged Bajo Barreal and Castillo Formations, exceeding 13 feet in thickness, are known to exist within the farm in area at depths between 1950 - 5000 feet. Additionally, Neocomian aged source rocks within the farm in area have been proven to be oil generating and over pressured.
CanAmericas is conducting a 75 square mile 3D seismic survey that is to be completed and assessed by the end of Q2, 2007, the first to be recorded over the producing and earned areas that will permit detailed stratigraphic and structural confirmation of multiple leads that were initially developed from existing 2D coverage. An agreement was made with an adjacent operator to trade seismic data providing the Company with data over a total of 93 square miles. This will allow CanAmericas to tie in its seismic data to seismic conducted over an existing producing oil field. A drilling rig has been contracted and drilling of three prospects is scheduled to begin by August, 2007.
San Jorge Basin Property
CanAmericas has negotiated exclusive rights to progressively earn a 60% interest in 864,870 gross acres (518,920 net acres) of an exploration permit situated in the north-central San Jorge Basin, Argentina. CanAmericas has the right to become Operator of the permit and will likely decide to do so after it has completed its due diligence pertaining to the ability to transfer the property and to review specific tax matters.
CanAmericas is committed to fund 100% of the costs to conduct an aero-magnetic and aero-gravity survey over the entire permit area, acquire 39 square miles of 3D seismic, and drill two exploration wells to earn a 30% participating interest in the entire permit. The surveys are to be completed within one year of the effective date of the agreement and the wells are to be drilled within two years of the effective date, but it is anticipated that drilling will commence within a shorter period.
CanAmericas will earn an additional 30% in the entire permit by drilling two additional wells within three years of the effective date of the agreement. CanAmericas will receive 100% of cash flow from this property until it has recovered 100% of its costs for the two work programs. The estimated cost for both work programs is $US 4,620,000. After completion of the two work programs, costs will be shared on a 60% CanAmericas/40% Farmor basis.
Principal reservoir objectives are multiple sands of the Upper-Mid Cretaceous Bajo Barreal and Castillo Formations that are known to exist throughout the permit at depths ranging between 1000 - 5000 feet. An oil field lies adjacent to the southern border of this permit, and existing seismic data and well control suggests the productive trend may extend into the southern portion of this permit. Additionally, numerous oil and gas shows encountered by older wells drilled throughout the permit during the 1960's - 1980's prove that the permit contains an active hydrocarbon system.
CanAmericas will initially acquire the regional aero-gravity and aero-magnetic surveys over the entire permit and with this information will determine where to best conduct a 3D seismic survey. This is expected to assist in better understanding and to confirm the existence of several prospects that were identified from limited existing 2D seismic coverage.
Pine Cliff said that it is very excited about the geological potential and the size
of this concession and permit. A land position of this magnitude is extremely
difficult to obtain and provides the potential for a large number of drill
locations in many different geological prospects. Additional funding will be
required to complete commitments for these farm ins and Pine Cliff is
presently evaluating its options with regard to this funding and will proceed
with it in Q2, 2007. CanAmericas is presently negotiating to obtain additional
exploration, exploitation, and producing properties.