Subsequent to this farmout, Solana and CEPCOLSA will each hold a 50% participating interest in Garibay. The Garibay block is subject to an Exploration and Production Contract with Agencia Nacional de Hidrocarburos, the Colombian Government agency regulating the petroleum sector. The farmout to CEPCOLSA requires the previous approval of ANH to be effective.
Under the terms of the agreement CEPCOLSA will be responsible for 100% of the costs associated with the third phase exploration well, which must be drilled by October 2008. CEPCOLSA, the operator of a neighboring block, will also be the operator of Garibay, subject to the approval of ANH. The exploration well location will benefit from the extensive 3D seismic, which Solana acquired in early 2007.
This farmout furthers Solana's exploration strategy to concentrate on the five contiguous blocks it operates in the eastern portion of the Llanos basin (Guachiria, Guachiria Norte, Guachiria Sur, Colona and San Pablo) and the highly prospective operated Catguas block in the Catatumbo basin.
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