Apco Argentina Partner Receives New Exploration Permit

The province of Rio Negro in Argentina has awarded a hydrocarbon exploration permit to Petrolera Entre Lomas S.A. for the Agua Amarga area.

Apco Argentina Inc. holds 40.724 percent of the stock of Petrolera, which also operates the Entre Lomas concession. Apco participates in the Entre Lomas joint venture with Petrolera and Petrobras Energia S.A.

The Agua Amarga property is immediately adjacent and to the south of the Entre Lomas concession. It has a total surface area of 374 square kilometers, or approximately 92,000 acres.

Evaluation of available 2D seismic information revealed areas of the Agua Amarga permit to have geology similar to the Entre Lomas concession that may be attractive exploration drilling targets to the same formations that are productive in Entre Lomas.

"As I mentioned in our first-quarter quarter earnings report, we continue to position Apco Argentina for future growth in our core positions," said Ralph Hill, Apco's chairman and chief executive officer. "Agua Amarga is an excellent bolt-on opportunity, and we are appreciative of Petrolera's efforts in acquiring the area."

The terms of Petrolera's bid includes a work commitment over three years for both the acquisition of 3D- seismic information and exploration drilling. The bid also provides for a royalty interest for the Rio Negro province of 18.5 percent.

Petrolera, Petrobras and Apco -- the parties in the Entre Lomas joint venture -- have subsequently executed a letter agreement stating that the Petrolera bid for the Agua Amarga area was made on behalf of the Entre Lomas joint venture partners and that the participation interest of the parties in the Agua Amarga Area, net of provincial royalties, will be 73.15 percent for Petrolera, 3.85 percent for Petrobras and 23 percent for Apco. These are the same interests of the parties in the Entre Lomas joint venture.

As a result, Apco's direct participation interest in Agua Amarga and its stock ownership in Petrolera will combine for a total direct and indirect interest in the Agua Amarga Area of 52.79 percent. Petrolera will be the operator of the property.

"This is an excellent addition to our portfolio because both the Petrolera and Apco teams are familiar with the subsurface geology of the area after having worked in the Entre Lomas concession for so many years," said Thomas Bueno, Apco's president and chief operating officer.