PetroLatina has committed to the 2nd exploration phase at La Paloma, which calls for either the re-entry of an existing well or the drilling of a new exploration well within the next 12 months. The newly acquired seismic data in the La Paloma block shows a well-defined four way dip closure at base Tertiary / Cretaceous level. Macquarie Bank has a mandate to provide finance for the second phase.
The Company has also committed to the 2nd and 3rd phases at Midas, which calls for 20 kilometers of new 2D seismic and the drilling of two exploration wells within the next 24 months. The newly acquired seismic data shows some very interesting prospects. A Farm Out is being considered for this block.
Colombian Producing Fields
The Company is currently in discussion with Macquarie Bank in relation to the terms of a $20 million debt financing to fund the second payment for Petroleos Del Norte and the further development of the PDN interested fields, Santa Lucia and Los Angeles, on the Tisquirama license.
At the same time, PetroLatina is involved in ongoing discussions with Ecopetrol, the Colombian State Oil Company, to reach mutually acceptable terms regarding the extension of the Tisquirama License.
PetroLatina is also finalizing the logistics to put the Serafin gas well on production in August 2007.
The decision has been made to Farm-Out the Company's Guatemalan assets. PetroLatina has signed a US$ 175,000 four-month option contract with a potential local buyer to acquire the assets for US$ 4 million. The Company shall also retain a 20% carried interest in the first three wells.
The decision to sell and Farm-Out the Guatemalan assets will result in a large write-down in the 2006 financials.
The London office will we closed, leaving just a small representation in the United Kingdom. This action will reduce the general and administrative overhead of the Company by an estimated US$ 2 million a year. All technical work will be carried out in Colombia, with some work being outsourced where required.
Rudoph Berends, President and CEO commented:
"Since I took over as Chief Executive Officer on 14th March 2007, and following a complete review of the Company in every respect, there has been a need to make some difficult but constructive decisions to ensure the operational and financial future of PetroLatina. This update outlines actions that have been taken to this end, thus giving the Company every chance of realizing its goal of providing value to shareholders in the future"
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