Pacific Rubiales has executed an agreement with Petrodorado South America S.A. (a wholly-owned subsidiary of Petrodorado Energy Ltd.) for the earn-in of an additional participating interest in the Buganviles Block.
This new agreement is the result of negotiations regarding the drilling of two new exploratory wells in the Buganviles Block and complements the previous farm-out arrangement between the parties previously announced by the Company on November 25, 2009. Under the new agreement, Petrodorado Energy will earn an additional participating interest in the Visure and Tuqueque Prospects by covering 100% of the Company's costs in exchange for a 29.5% and 25% additional participating interest, respectively (for a 49.5% and 45% total participating interest, respectively). The farm-outs in this block will result in an approximate reduction in the Company's exploratory commitments of US $8.94 million for the next two wells. The Company has retained operatorship of the block.
At the Visure Prospect, drilling of the Visure-1X exploration well is expected to commence on September 13, 2010. The planned total depth of the well is 3,600 feet and targets the Lower and Upper Guadalupe and the Barzalosa formations.
At the Tuqueque Prospect, drilling of the Tuqueque-1X exploration well is expected to start on September 29, 2010 subject to governmental authorizations. The planned total depth of Tuqueque-1X is 8,500 feet and targets the Tetuan and Caballos Cretaceous formations.
The farm-out process will allow the Company to continue concentrating its investments on core assets without losing the potential upside from promising exploration activities, while also divesting of some of the risk of exploration.
Ronald Pantin, Chief Executive Officer, commented, "The additional farming out of our Buganviles exploratory portfolio will permit the Company to focus its investments on its producing assets and low risk exploration. This process strengthens our ability to pursue the growth strategy which the Company has envisioned for 2011 and beyond."
The assignment by the Company of the working interests is subject to Colombian governmental and/or regulatory approvals.
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