Petro Andina Resources has signed a joint venture agreement with Pampetrol S.A.P.E.M for the Gobernador Ayala I Exploration Concession (GA I Block) in the Neuquen Basin of Argentina.
The GA I Block comprises 293 square kilometres (72,400 acres) and is located adjacent to the northeast boundary of Petro Andina's operated CNQ-7/A acreage. The Company's land position along the northeast flank of the Neuquen Basin now totals 529,000 acres (net 297,000 acres).
Under terms of the joint venture agreement, Petro Andina will operate the GA I Block with a 50 percent working interest. Pampetrol will hold the remaining 50 percent. The Company will drill two exploratory wells at its sole expense during a six month period commencing December 5, 2007. The Company will then have a three month evaluation period during which it can elect to complete the earning of its interest by carrying out a work program.
Including the cost of the initial two wells, this work program is estimated to be approximately two million US dollars. Petro Andina will recover Pampetrol's share of the costs, including the exploration expense, out of production from the Block.
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