The company will pay $22.6m and fulfill certain commitments, including in part, the drilling of two wells in 2011, to get the working interest in blocks REC-T-129, 142, 155 and 224.
Under the agreement, Gran Tierra will become the operator of these blocks and will pay 100% of the costs to drill an exploration well on each of blocks REC-T-129 and 142 and its working interest share of the 130sqkm 3D seismic program currently being conducted on the four blocks.
The transaction is subject to Gran Tierra obtaining the customary regulatory approval from Brazil’s Agencia Nacional de Petroleo Gas Natural e Biocombustiveis.
The Reconcavo Basin covers an area of approximately 10,000sqkm, contains 129 oil and gas fields, and has produced over 1.5 billion barrels of oil to date.
Production from this basin is characterized by light oil ranging between 35 degrees and 40 degrees API.
Earlier this year, a 38 degrees API oil discovery was made on block REC-155, and the current gross production from the discovery is approximately 500 barrels of oil per day from the Sergi formation.
Gran Tierra anticipates drilling additional wells to further delineate this discovery and potentially increase production and reserves from the field, and this discovery currently has unaudited estimated gross recoverable resources of six million barrels of oil.
In addition, the company has identified a new oil resource play that will potentially employ multi-staged frac horizontal well technology and intends to investigate this opportunity with Alvorada Petroleo.
Headquartered in Calgary, Canada, Gran Tierra is focused on oil and gas exploration and production in South America.
