Canacol to Farm Out Interest in Colombia
Canacol has entered into a definitive agreement with Sintana, the South American operations subsidiary of Drift Lake Resources, to farm out 30% of its 100% operated working interest on the COR 11 and COR 39 Exploration and Production Contracts located in the Upper Magdalena Basin of Colombia. The Corporation was awarded a 100% operated working interest in the E&P Contracts in February 2011 by the Agencia Nacional de Hidrocarburos.
Under the terms of the definitive agreement, Sintana will pay 60% of the work commitment costs associated with the Phase 1 Exploration Phase for each of the contracts in order to earn a 30% working interest in each of the contracts. The Phase 1 work commitments for the COR 11 E&P contract include the acquisition of 155 kilometers ("km") of 2D seismic and the drilling of one exploration well. The Phase 1 commitments for the COR 39 E&P Contract include the acquisition of 120 km of 2D seismic and the drilling of 2 exploration wells. The Phase 1 period for each of the contracts is 3 years in length, expiring in February 2014. Canacol shall remain the operator of both of the E&P contracts.
The Corporation will use the capital saved by the farm out of these blocks to fund exploration activities on its other blocks in Colombia.