Under the terms of the agreement Black Rock has a 100-day option period in which to acquire a 20% interest in hydrocarbons occurring down to and including the Carboniferous. The consideration for this acquisition will be a combination of a cash sum to reimburse past costs and 40% of the costs of a 2-D seismic program. Should Black Rock fail to exercise the option a break fee of $50,000 will be payable. CDS has the option to terminate this option in the event that there is a change in control of the company or in the event that a third party agrees to farm-in for a percentage greater than 30% over the same target formation.
John Bentley, Chairman of CDS, stated: "We are pleased that Black Rock has decided to participate with us in the continued exploration of the Paraguayan properties. This participation by an industry partner confirms our confidence in the potential for these properties."
The Boqueron Concession CDS commissioned a study in September 2006 of the Emilia oil prospect from CAS International LLC (Collarini) of Houston, Texas (the "CPR") to evaluate the extent of the Emilia target and its resource potential. As set out in that announcement, the CPR estimates that the mid-case resource potential in the 142 hectares area of the Emilia prospect is 27.2 million barrels of original oil in place, of which 6.4 million barrels are thought to be recoverable. There are several other Emilia analogs on the Boqueron Concession. The key technical and financial assumptions of the report for the 143-hectare Emilia Well area on the Boqueron Block is available in the CDS announcement of 20 November 2006.
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