Adulis plans to close a CDN$4.5mn share offering, designed to pay for the CDN$3.3mn well, and hold preliminary discussions with a drilling contractor before December 15, he said. "That's what we're hoping, that by December 15 we will have closed this and then we can seriously negotiate a drilling contract," Antony said. "We're still waiting for certain approvals from the stock exchange but once we get those then we're pretty well ready to close [the share offering]," Antony said.
Adulis recently acquired a 100% working interest in Salinas from Calgary-based Bayford Investments, which had acquired the concession from fellow Calgary companies Mera Petroleum and its partner Bear Creek Energy, formerly Millenium Energy, in early October.
Mera and Bear Creek wanted out of the concession, signed in early 2000, because they did not have the cash to meet their drilling commitments on the block on their own and they could not find a drilling partner. Bayford transferred its rights to the concession and the letter of credit to Adulis in return for 5 million shares in Adulis (at a reference price of Cdn$ 0.60 per share) and reimbursement for other expenses relating to the concession.
On October 30, Adulis reached a 'farmout agreement' with Mera and Bear Creek, which replaced the original transfer agreement with Bayford. Colombia's state oil company Ecopetrol agreed to extend the first well commitment on the concession to February 28, on the condition that Adulis would drill two wells, Antony said. There are currently three exploration prospects on the concession.
Depending on the success of the first well, which should be completed by end-March, the company will drill a second well at an estimated cost of Cdn$3mn, Antony said. "We aren't raising enough money to drill and test two wells, so after we've drilled the first well we'll have to make a decision [whether to raise more money]" he added.
The 325,000 acre concession lies approximately 8km southeast of the Caribbean Sea and approximately 13km northwest of the Colombian/Venezuelan border.
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