Blocks 204, 219, 234 and Test Well Block 235 - Reconcavo
Under the terms of this farm-in agreement, PetroLatina can earn a 42 percent interest of the Test Well Block 235 and a 42 percent interest of Blocks 204, 219 and 234, all Blocks being located in the State of Bahia in the Reconcavo basin, Brazil, by paying 70% of the costs associated with the drilling of a test well. The test well on Block 235 has spud and it is expected to complete drilling in December 2007.
Blocks 94, 105, 115 and 116 - Reconcavo
Under the terms of the second farm-in agreement, by PetroLatina paying 40% of the costs associated with a 120 square kilometer 3D seismic shoot, it can earn a 20% interest in each of Blocks 94, 105, 115 and 116, which are all adjacent to the Fazenda Santa Estevao Field located in the State of Bahia in the Reconcavo basin, Brazil. The licensing and permitting for the seismic program has already commenced.
Brazil Round 9 Land Auction Results
BrazAlta is pleased to also announce that together with Brownstone Ventures, PetroLatina and W.Washington that the Agencia Nacional do Petroleo, Gas Natural e Biocombustiveis ("ANP"), Brazil's National Petroleum Agency, has awarded a consortium led by W.Washington, which is BrazAlta's, Brownstone's and PetroLatina's joint venture partner, 1 onshore block known as REC-T-170, covering approximately 28 square kilometers in the Reconcavo area of North Eastern Brazil. The gross bonus paid and work commitment made for the block was R$35,000 ($19,570) and 1,000 work units. The work units can be satisfied by drilling one well on the block or by paying R$3,000 ($1,677) per unit to the ANP. This is an exploration block and once the concession contract is signed with the ANP, the first exploration period is for a total of three years.
BrazAlta also wishes to announce that it has entered into a consortium agreement (the "Round 9 Agreement") pursuant to which BrazAlta, W.Washington, PetroLatina, and Brownstone will co-operate on the ownership and development of Block REC-T-170 awarded in the recent Round 9 land auctions. Per the terms of the Round 9 Agreement, the parties have agreed to allocate the beneficial ownership of the Round 9 concessions obtained by the parties through a consortium structure with the following working interests: 56.25% to BrazAlta and W.Washington, 25% to PetroLatina and 18.75% to Brownstone.
BrazAlta Round 9 Award - Espirito Santo Basin
In addition, BrazAlta was awarded three blocks in the Round 9 auction in the on-shore Espirito Santo basin located in Central Eastern Brazil. The Espirito Santo Blocks acquired in Round 9 are known as Blocks ES-T-318, ES-T-362 and ES-T-380. These exploration blocks cover approximately 30 square kilometers each, and once the concession contract is signed with the ANP, the first exploration period is for a total of three years. The gross bonus paid and work commitment made for the blocks was R$115,000 ($64,300) and 1,020 work units, the work units can be satisfied by drilling one well on Block ES-T-318 and performing other qualifying exploration work on Blocks ES-T-362 and ES-T-380, or by paying R$3,000 ($1,677) per unit to the ANP. The Espirito Santo Blocks are BrazAlta's first entry in this basin as an oil and gas explorer, however it should be noted that BrazAlta's drilling services subsidiary, BCH Ltd., already operates a drilling services base in the region located in Sao Mateus.
Brazil's Round 9 auction of oil and gas exploration concessions saw record bidding activity. Out of 271 concessions on offer, 117 found buyers, bringing over 2.1 billion Brazilian Reais ($1.2 billion) in premiums to the Brazilian government, above the record 1.0 billion Brazilian Reais ($0.6 billion) paid during the seventh annual round two years ago. In the Reconcavo basin there were 32 blocks offered and 29 awarded with total bonuses of R$54,759,695 ($30,617,666) and additional work commitments made of 49,600 work units. Based on R$3,000 per work unit, the total value for the entire Reconcavo basin was R$203,559,700 ($113,815,879) for an average of R$7,019,300 ($3,924,685) per block. In the Espirito Santo basin, there were 10 blocks offered and 8 awarded with total bonuses of R$4,035,670 ($2,256,455) and additional work commitments of 11,050 work units. Based on R$3,000 per work units the total value for the entire Espirito Santo basin was R$37,185,670 ($20,791,540) for an average of R$4,648,209 ($2,598,943) per block.
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