Major, now a wholly owned subsidiary of the Company, entered into an agreement in December 2006 with Pacific Stratus Energy Ltd. ("Pacific Stratus") under which the parties agreed to combine their efforts to apply for a Technical Evaluation Agreement ("TEA") over an area of approximately 300,000 hectares in the Arauca Department (the "ARAUCA Area") Llanos Basin, Republic of Colombia. The ARAUCA Area is located to the south of the Venezuela border and approximately 60 kilometers east of the Cano Limón oil field. Under its agreement with Pacific Stratus, Major has the right to earn up to a 50 percent interest in any Exploration and Production Contract, which results from the TEA. In order to earn that interest, Major is required to fund the costs required under the TEA (estimated at US$10.5 million) which includes seismic re-processing, landsat interpretation of oil and gas anomalies, the preparation of a tectono-stratigraphic model for the ARAUCA Area as well as the costs of two exploration wells. Within the ARAUCA Area, the two exploration wells will test an identified antithetic faulted-block structure as well as a large, Paleozoic inverted anticline structure. Drilling of the two exploration wells is planned to commence early next year.
Commenting on the completed acquisition, Mr. Ronald Pantin, President and Chief Executive Officer, stated "the acquisition of Major and the resulting exploration opportunity within the ARAUCA Area demonstrates the Company's commitment to further growth within the highly prospective, Llanos Basin of Colombia".
Petro Rubiales, a Canadian-based company and producer of heavy crude oil, acquired a 75 percent interest in Rubiales Holdings Limited, owner of 100 percent of Meta Petroleum Limited, a Colombian oil and gas operator which operates the Rubiales and Piriri oil fields in the Llanos Basin in association with Ecopetrol S.A. the Colombian, state-owned oil company. The Company is focused on identifying opportunities primarily within the eastern Llanos Basin of Colombia.
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