Under the extensions, Apco Oil and Gas and its partners agreed to pay a total bonus of $12.5 million and spend $237 million for future exploitation and exploration.
In addition, the provincial production tax increases from the current level of 12% to 15% and could increase up to a maximum of 18% depending on future increases in product price realizations.
“This extends the reserve life for our fields located in Neuquen province and provides us with the time we need to develop the additional reserves in a rational manner consistent with our best practices,” said Ralph Hill, Apco Oil and Gas’ chairman and chief executive officer.
“The province also benefits because it assures a continued stream of investments and creates future employment for local residents,” Hill said.
The Bajada del Palo concession is located entirely in Neuquen province. The Entre Lomas concession straddles the provinces of Neuquen and Rio Negro. This extension agreement does not apply to the portion of the Entre Lomas concession located in Rio Negro province.
“This is an important first step for Apco Oil and Gas and its joint venture partners. We will now try to secure the extension for the portion of Entre Lomas located in Rio Negro province,” said Thomas Bueno, Apco Oil and Gas’ president and chief operating officer.
“Petrolera Entre Lomas S.A., the operator of both concessions that represented the joint venture partners in the negotiations with the province of Neuquen, hopes to commence discussions with the province of Rio Negro in the near future,” Bueno said.
Apco Oil and Gas has a 23% direct participation interest in both the Entre Lomas and Bajada del Palo concessions and a total combined direct and equity participation in both concessions of 52.85% as a result of its 40.803% stock ownership in Petrolera Entre Lomas S.A.
