Pacific Rubiales has been awarded six new Blocks in Colombia through its Colombian subsidiaries, Meta Petroleum Ltd. and Pacific Stratus Energy Colombia Ltd. The Agencia Nacional de Hidrocarburos of Colombia (ANH), which organized this bidding, offered 43 blocks located in five geological basins: Llanos Orientales (17), Sinu San Jacinto (10), Cesar Rancheria (6), Cordillera Oriental (6) and Guajira (4), with 39 companies participating. The company won rights to two blocks by itself and rights to four blocks in consortium with other companies, but in all of the six blocks that were awarded, the company's subsidiaries will be the operator.
CPO1: Pacific Rubiales has a 100% working interest and the block carries an additional royalty of 6%. The block has an area of 61,776 hectares and is located 80 kilometers north of the Rubiales field operated by the company. The 36 month-long first exploration phase requires a minimum investment of US $9.6 million, which will be spent on the acquisition of 200 km of 2D seismic and the drilling of one exploratory well.
CPO12: This block was awarded to a consortium formed by Meta Petroleum (40%), CEPSA Colombia Ltd. (30%) and Talisman Colombia Oil and Gas (30%); the block carries an additional royalty of 28%. The block has an area of 286,827 hectares located to the southwest of the Rubiales field. During the first exploration phase, the consortium will invest in the acquisition of 850 km of seismic and the drilling of three exploratory wells, for a total amount of US $35 million.
CPO14: This block was awarded to a consortium formed by Meta Petroleum (62.5%) and CEPSA Colombia Ltd. (37.5%); the block carries an additional royalty of 2%. This block has an area of 209,488 hectares and is located to the southeast of the Rubiales field. The first exploration phase will require a minimum investment of US $32 million, to be spent on acquiring 850 km of 2D seismic and drilling three exploratory wells.
SSJN3: The company has a 100% working interest and it offered an additional royalty of 2% for the block. This block has an area of 256,718 hectares and is located 70 km north of the La Creciente Gas Field discovered and operated by the company. The first exploration phase includes the acquisition of 500 km of 2D seismic and the drilling of one exploratory well, for a total investment of US $23 million.
SSJN7: This block was awarded to a consortium formed by Pacific Stratus (50%) and ONGC Videsh (50%), offering an additional royalty of 14%. The block has an area of 270,702 hectares and is adjacent to the La Creciente Gas Field to the west. The first exploration phase will require an investment of US $23 million, to be spent on the acquisition of 550 km of 2D seismic and the drilling of one exploratory well.
CR1: This block was awarded to a consortium formed by Pacific Stratus (60%) and Petrobras Colombia Limited (40%); and the block carries a 22% additional royalty. The block, with an area of 124,394 hectares, is located in the northernmost part of the Cesar-Rancheria Basin in the La Guajira Peninsula on the boundary with Venezuela. This area is highly prospective because it represents the western extension of the Maracaibo Basin into the Colombian territory. The first exploration phase will require an investment of US $12 million, to be spent on the acquisition of 250 km of 2D seismic and the drilling of one exploratory well.
With the completion of the bidding process, Pacific Rubiales has become the second largest company in Colombia, measured by total acreage for exploration and production. The exploration activities planned for these blocks must be completed within 36 months from the signature of the contracts; the company expects that the first expenditures will occur in 2010. Pacific Rubiales has already executed the bidding round minutes and the final signature of the contracts with the ANH is expected to take place by mid-January, 2009.
Commenting on the outcome of the bidding process, Ronald Pantin, Chief Executive Officer of the company, stated "We are very pleased with the results of the bidding round because it validates our strategy and consolidates our position in two of the basins where the company has focused its exploration and production activities of heavy oil and gas, namely the Llanos Orientales and Lower Magdalena Basins."
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