Petro Vista announced that its wholly-owned Colombian subsidiary Petropuli Ltda. has signed a farm-out agreement with Omega Energy Colombia ("Omega") and Green Power Corporation (collectively, the "Farmees"), two private oil and gas exploration companies based in Colombia. Pursuant to the agreement Petro Vista will farm-out an aggregate 30% participating interest in its 100% owned Morichito Block located in the Llanos Basin, Colombia, for a combination of cash and drilling commitments. Petro Vista remains the operator with a 70% participating interest.
In announcing the agreement, Petro Vista President, Read B. Taylor, commented, "Our farm-out strategy in Morichito allows us to preserve corporate funds for other development and exploration projects and reduce risk while maintaining appropriate significant interest levels in this key project. We look forward to establishing our first production in Colombia with the completion at Morichito #2 in February 2009 and exploring for significant upside reserve and production potential with the two planned exploration wells. I am pleased we have secured this source of funds and look forward to executing our operations plan. The agreement is in line with our corporate strategy of preserving cash, maximizing our oil production development opportunities while reducing overall risk in our exploration programs by entering into farm-out agreements and joint ventures that are beneficial to the Company and its shareholders."
Under the terms of the agreement, the Farmees will acquire an aggregate 30% participating interest in the exploration and production contract governing the Morichito Block by paying:
The estimated total value of the Farm-out to the Company is US $4,400,000 dollars.
The completion of the transaction is subject to all necessary approvals including approval to the assignment by the Agencia Nacional do Hidrocarburos and the TSX Venture Exchange and completion of due diligence by the Farmees.
The Morichito Block
The Morichito Block is located in the Llanos Basin, Colombia, and comprises 57,252 gross acres. Extensive geotechnical (3D seismic reprocessing and well log evaluations) and engineering analysis has been completed on five exploration prospects in the Morichito Block. Based on the earlier independent third party review by Petrotech Engineering Limited in their NI 51-101 Report Effective Date March 31, 2008 "Evaluation of the Interests of Petro Vista Energy Corp. in the Morichito Block Llanos Basin Colombia" and revised to reflect a 100% interest level is estimated to contain Probable reserves of 141,350 BL plus prospective Oil Resources (Best Case) of 3.47 MMBL for a total of 3.6 MMBL with an estimated net present value of over C$121MM before taxes using a discount rate of 10%.
The Company has secured a rig and plans to complete the Morichito #2 well commencing in January 2009. The Morichito #1N prospect exploration well is being planned for Q1 2009 with the second exploration well (Morichito #3) to follow once Morichito #1N is completed. The Company has previously initiated the building of several access roads, the build out of the drilling pads and obtained necessary permits.
Note that estimated values disclosed do not represent fair market value. The estimates of reserves and future net revenue for individual properties may not reflect the same confidence level as estimates of reserves and future net revenue for all properties, due to the effects of aggregation. There is no certainty that it will be commercially viable to produce any portion of the resources. Contingent resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from a known accumulation using established technology or technology under development, but which are not considered to be commercially recoverable due to one or more contingencies.
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