Antrim Acquires Argentine Exploration Interest
Antrim Energy has entered into an agreement to acquire a 50.1% interest in and operatorship of the 307,215 acre Cerro los Leones exploration concession, located in Argentina's Neuquén Basin.
Cerro los Leones is situated in the northern portion of the Neuquén Basin in the Province of Mendoza. The existing 2-D seismic coverage of 700km provides regional control and has identified numerous lower Tertiary and Cretaceous structural and stratigraphic leads at drilling depths of between 1,500 and 2,500 metres. Subsurface control is provided by seventeen previously drilled wells, which indicate the presence of reservoir, source and seal rock at multiple horizons. Sixteen of these wells reported oil and gas shows, with one flowing medium gravity oil at rates of up to 350 bopd on extended test. The region boasts easy access and is close to infrastructure.
Based on published reserve records of the Secretaría de Energía of Argentina, producing oil fields adjacent to and on trend with the Cerro los Leones Licence typically have ultimate recovery estimates of between 15 and 30 million barrels, with up to 500,000 barrels per well. Antrim will apply for inclusion of production from the Cerro los Leones concession in the Gas and Oil Plus incentive programs in Argentina, which provide for higher prices than other Argentine production earns.
The concession provides for a state royalty of 16% and carries an obligation to the government to acquire seismic data and drill up to five wells during a three year exploration period. The cost of the work commitment to the province is valued at US$13.85 million (net to Antrim - US$6.94 million). Antrim's interest in the block is being acquired from a private Argentine company. The terms of the acquisition include a re-imbursement of approximately US$1,000,000 of exploration and permit expenses (net~US$500,000) and for the payment to the vendor of a 2.5% gross overriding royalty.
Antrim is currently working on obtaining the necessary environmental approvals to shoot a 3-D seismic program in the first half of 2011. Up to two exploration wells are planned for the latter part of 2011.
The concession is being acquired jointly with a publicly listed Canadian exploration and development company and it is the intent of both parties to enter into a joint venture agreement to manage activities on the property.
Antrim's portion of the acquisition, seismic and drilling program will be fully funded utilizing cash and free cash flow from the Company's existing Argentina operations.
Stephen Greer, President and Chief Executive Officer of Antrim Energy, stated, "This is an important acquisition for Antrim, underscoring our commitment to growing the Company's business in the resource-rich provinces of Argentina. We believe that Argentine commodity prices will continue to strengthen as a result of the growing supply/demand energy deficit in the country. This represents a unique opportunity to acquire prospective acreage in a major oil producing basin at low acquisition costs. The concession is of particular interest given that it has remained fallow for a number of years, has never had 3-D seismic shot and is adjacent to and on trend with several oil producing fields. Antrim intends to aggressively pursue this opportunity and plans to shoot 3-D seismic and drill in 2011."
In Tierra del Fuego, Argentina, Antrim has completed its previously announced ten (2.6 net) well drilling program. Eight (2.1 net) of these wells were successful and two (0.5 net) were dry and abandoned. Of the eight successful wells, six have been tested and the remaining two are expected to be tested shortly. Three wells have been tied in and the remaining five wells are expected to be tied in and placed on production in early 2011. The region provides a solid production base for Antrim and allows the company to self-fund expansion elsewhere in the country.