Pebercan Seeks Farm-in Partners for Exploration Blocks

Montreal-based independent oil company Pebercan is seeking partners to farm-in to four blocks it operates in Cuba, a Pebercan source told BNamericas. Pebercan has licenses to operate five blocks in Cuba, but has just one production sharing agreement (PSA) with Cuba's state oil company Cubapet, said the source, which means that Pebercan can use reserves and production from its existing production asset - block 7 - as a guarantee for investments on the other four blocks. "The blocks are not ring-fenced. We have the ability to recover all the expenses from the four blocks from block there is no financial risk," the source said.

Pebercan has hired France's CGG to begin a 2D onshore campaign on the blocks starting August. Pebercan has a 52.5% stake in block 7, while Canada's Sherritt International has the remaining 47.5%.

After significant volatility in Pebercan's share price earlier this week, the company published a statement Friday stating that its operations continue as normal and it expects to post strong annual results sometime towards the end of April. Starting Monday, Pebercan's shares slumped about 25% to $Cdn 1.55 a share Wednesday. "We don't know what this was about. We think it may have been a margin call," the source told BNamericas. By Friday afternoon, the shares recovered to $Cdn 1.89.

Pebercan is currently producing between 16,000-18,000 barrels a day (b/d) from two fields: Canasi and Seburuco on block 7. This should rise once the Canasi 9 well begins production shortly. This will also grow once the company completes construction of treatment facilities that will be able to process 20,000b/d, separating oil, natural gas and water. The plant should be ready by around July.

In 2002, production from the two fields reached 5.23mb, bringing Pebercan's net share to 2.52mb. Pebercan sells all its output to the Cuban government because of strong local demand, but is not subject to any restrictions with regard to selling its oil, Pebercan said. The company pays a 30% tax on profits, but no royalties. Pebercan is recently completed a 2D seismic program and is planning an additional 3D seismic campaign on block 7. It also plans to drill an exploration well, evaluate the Faustino field with a view to development, and is evaluating another production well, Canasi 10, the source said. BEICIP, a subsidiary of the French Petroleum Institute, is currently assessing Pebercan's total reserves. "The information received so far leads us to believe the results will be highly positive. Once this study is finished, in a few weeks at the most, we will release its results to the attention of all shareholders of the company," Pebercan CEO Gerard Bourgoin said in a statement.

Pebercan plans to publish year-end results by the end of April. The company said it generated cash flows from operations of US$0.46 a share for the first three quarters of 2002, including US$0.27 per share for the third quarter alone.

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