Apco Enters 2 Farm-In Agreements for Colombian E&P Ventures
Apco Oil and Gas International has entered into two farm-in agreements to expand its oil and gas activities into Colombia. Both agreements are subject to the approval of the Colombian Agencia National de Hidrocarburos.
In one transaction, Apco agreed to acquire a 50 percent working interest in the Turpial Exploration and Production Contract in the Middle Magdellena basin from Petrolifera Petroleum Ltd.
In the other transaction, Apco agreed to acquire a 20 percent working interest in the Llanos 32 Exploration and Production Contract located in the Llanos basin from TC Oil and Services Ltd.
Apco plans to fund both investments with cash on hand. The combined investments total approximately $10.6 million through 2012.
Turpial E&P Contract
Turpial covers 111,066 acres of underexplored area between the Velazquez and Cocorna oil fields in the Middle Magdellena Basin.
Under the farm-in agreement, Apco will partially reimburse the operator Petrolifera for its first-phase sunk costs and will carry second-phase expenditures up to $1.9 million to earn its 50 percent working interest.
The partners plan to extend seismic coverage acquired during the first phase by acquiring 144 kilometers of additional 2D seismic during the second phase.
Apco plans to invest a total of approximately $4.8 million - including the aforementioned $1.9 million - during the remainder of 2009 and 2010 related to Turpial activity.
Llanos 32 E&P Contract
Llanos 32 covers 100,297 acres in the Llanos basin of western Colombia which was awarded to a consortium of TC Oil and Services Ltd and Ramshorn International Ltd. by the Colombian Agencia National de Hidrocarburos in 2008.
Apco has agreed to fund approximately $5.8 million - or 27 percent - of exploration activities during a three-year period ending in early 2012 to earn its 20 percent working interest.
The work commitments associated with the block include the acquisition of at least 200 square kilometers of 3D seismic and the drilling of at least 2 exploration wells. The partners plan to commence seismic acquisition activities prior to year-end.
"This is the first step in our diversification plan to expand Apco's E&P interests into other South American countries," said Thomas Bueno, Apco's president and chief operating officer.
"We believe Colombia offers great opportunities for us to select projects that fit our investment criteria and notably grow our business.
"With these two agreements, Apco is working toward securing significant working interests in more than 200,000 acres of exploration acreage in two proven Colombian oil basins.
"Our interests in Argentina continue to be the core of our business and we will continue to seek projects in Argentina's basins where we have expertise, but we also believe that Colombia offers outstanding opportunities to add projects to our portfolio which have excellent technical and economic characteristics," Bueno added.