Petrolifera has executed the Magdalena exploration contract with the Agencia Nacional de Hidrocarburos ("ANH") for the conversion of the Sierra Nevada II TEA into the Magdalena License, covering lands adjacent to the company's Sierra Nevada License in the Lower Magdalena Valley, onshore Colombia. The Magdalena License comprises approximately 595,000 acres that is considered to be mainly prospective for natural gas and natural gas liquids. The minimum work commitment associated with the Magdalena License for the initial 15 month phase is primarily 150km2 of 3D seismic. As required by ANH, Petrolifera has established and funded a US $4.1MM trust, which in effect funds the assigned value of the initial work commitment of the License.
Separately, Petrolifera has reduced its outstanding debt under its reserve backed credit facility to US $60 million, as was agreed with the lending syndicate. The US $5 million reduction was funded from proceeds of the recently completed equity offering. Petrolifera anticipates it will further reduce the amounts outstanding under the reserve backed facility prior to the end of this year.
The company continues to evaluate its preferred option in respect of securing equipment and services to reenter and further test the La Pinta No. 1 well. This will likely include mobilization of a snubbing unit to the wellsite from the United States. While a final decision is anticipated shortly, issues to be resolved include timing, pricing and the suitability of alternative proposals, given the complicated and challenging nature of the La Pinta No. 1 wellbore, including overpressured down hole conditions and the apparent casing split which occurred during recent testing efforts.
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