Loon Spuds Second Well on Buganviles Block
Loon Energy has spud of the Tuqueque-1X well which has a planned total depth of 7,600 feet and is targeting the Tetuan and Caballos formations of Cretaceous age. The Buganviles Association Contract land is located in the Upper Magdalena Valley area of central Colombia. The well was spud on November 4, 2010 and is currently drilling at a depth of 276 feet. The well, which is operated by a wholly-owned subsidiary of Pacific Rubiales Energy Corp., is expected to reach total depth in approximately 50 days.
The Tuqueque prospect is located approximately 15 kilometres to the northwest of the Visure-1X discovery well announced last week.
Loon has a 10% privately held interest in the Tuqueque-1X well, the Visure-1X well and in the Buganviles Association Contract. The drilling costs of Loon in the Tuqueque-1X well are being paid by Petrodorado South America S.A. ("Petrodorado S.A.") pursuant to a farmout agreement. Loon had previously announced the farmout agreement with Petrodorado S.A. under which Petrodorado S.A. will pay Loon's 20% share of the AFE cost to drill and complete two wells on the Buganviles Block in Colombia to earn 75% (net 15%) of the interest of Loon in the Buganviles Association Contract (the "Farmout"). The Farmout provided for a reduction in the earning interest of Petrodorado S.A. from net 15% to net 10% upon payment by Loon of 10% of the completion costs of both wells, if the proposed acquisition of Loon by Petrodorado Energy Ltd. ("Petrodorado"), first announced on July 19, 2010, did not close. It was disclosed on October 25, 2010 that the proposed acquisition would not close and on November 03, 2010 Loon provided notice to Petrodorado S.A. that it would pay its entire 10% share of completion costs for both the Visure-1X and the Tuqueque-1X wells and would then retain a 10% privately held interest in the Visure-1X well, the Tuqueque-1X well and in the Buganviles Association Contract.