PAE Signs $800M Investment Deal with Santa Cruz

Anglo-Argentine oil company, Pan American Energy (PAE), has signed an agreement with Argentina's Santa Cruz province to guarantee investment in its Piedra Clavada, Koluel Kaike and Cerro Dragon concessions, PAE told securities regulator CNV in a letter.

PAE will invest a minimum of US$500mn through 2017 and an additional US$300mn from 2018-27 in E&P activities in the three hydrocarbons areas, according to the letter. PAE also will invest US$80mn in offshore exploration activities in the Gulf of San Jorge Marina.

If hydrocarbons reserves are discovered in the gulf, PAE has agreed to invest US$500mn through 2017 in the area and will act in a consortium with Santa Cruz province energy company Formicruz.

PAE also agreed to work with Chubut province energy company Petrominera Chubut if reserves are found in the gulf area in Chubut province.

PAE will provide Santa Cruz province with US$40mn to create infrastructure and economic diversification funds for the regions surrounding the Gulf of San Jorge.

PAE will pay 3% of the net revenues generated from the four concessions to Santa Cruz Province.

The agreement will go before the provincial legislature in Santa Cruz for final approval, the letter said.

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