Acambuco Partners to Spend US$70mn on Macueta Project

Partners in the Acambuco oil and gas concession in Argentina's Salta province will invest US$70mn in a project in the Macueta field that would start production in 2006 at the earliest, US-based Apco Argentina said in its 10-Q filing to the US securities and exchange commission.

Apco owns 1.5% of the concession. Argentina's Pan American Energy is the operator and owns 52%, Anglo-Dutch company Shell and Argentina's YPF each own 22.5%, and the Northwest Argentina Corp subsidiary of the US's Williams Corp owns 1.5%.

The work includes completion of the Macueta x-1001(bis) well, the drilling of subsequent development wells, the construction of a gas pipeline and capacity expansion of the concession's gas treatment plant. Construction will begin in 2005, the statement said.

The activity has been spurred by the Argentine government giving the green light to natural gas producers in April this year to renegotiate gas sales contracts.

Also as a result of that agreement, Apco and partners reactivated activities in the second quarter with development drilling and workovers on its 47.64%-owned Entre Lomas concession in Río Negro and Neuquén provinces.

At Apco's 81.82%-owned Cañadón Ramírez concession in Chubut province, two wells were completed and placed on production after six workovers were performed in the second quarter. The two wells could produce 100 barrels a day.

During the second quarter, Apco completed the acquisition of 130sq km. of 3D seismic. That seismic is currently being interpreted, and Apco would drill a well there in the "near future" if findings are positive, the statement said.

In March 2004 Apco entered into a farm out agreement with Argentine companies Chevron San Jorge and Advantage for an exploration well in the CNQ 31 exploration permit, known as Puesto Galdame. That well was dry, plugged and abandoned, and partners returned the block to provincial authorities.

By putting up costs of a 3D seismic study, Apco has also acquired 50% of the 2.1 million acre Capricorn exploration block in northern Argentina.

Apco Argentina increased its first half net income 20.4% from 2003 to US$7.8mn in the first six months of 2004. Total revenues increased 17% to US$20.6mn, and Apco put the increase down to higher operating revenues (which increased by US$1.7mn year-on-year) and equity income (which increased by US$1.3mn).

Oil sales during the period increased 3% from 1H03 to 426,000b, and LPG volumes increased 13% from 1H03 to 8,200 tons due to continued improved performance at the Entre Lomas plant following a revamp completed in 2002.

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