The blocks awarded to the company were VMM28 in the Middle Magdalena basin and LLA57 in the Llanos basin.
Block VMM28, covering an area of 54,552 hectares (136,390 acres), lies to the west of and immediately adjacent to the company’s existing La Paloma block containing the Colon field. The newly acquired block has some historic 2D seismic coverage which suggests that the type of structure which has proven to be oil productive on the La Paloma block may also hold commercial oil reserves on VMM28.
The company said that the award represents a continuation of its strategy of building a large and profitable area of core license interests in the Middle Magdalena basin and increases to five the number of contiguous blocks held by PetroLatina in this area.
Block VMM28 should potentially enable the company to leverage its existing operational capacity and local expertise and expand its current aggregate production from its current level of more than 2,000 bopd gross.
Under the proposed terms of the exploration and production contract (the E&P Contract) with ANH, PetroLatina will be required to drill at least one exploratory well within the first three years of the licence term. PetroLatina’s proposal for the VMM28 block also included $8.6m in additional seismic work commitments, and a 1% net production revenue payment after royalties to ANH. The E&P Contract comprises two three year exploration phases and a 24 year production phase.
The second block, LLA57, covers 42,304 hectares (105,760 acres) and is located in the Llanos Basin. It forms part of the company’s new strategy to develop a second production base in Colombia.
Block LLA57 is located between the Cano Garza producing field to the west and a string of discoveries to the east including the Primavera, Los Aceites and Palmitas fields operated by Pereneco. The existing 2D seismic data available on the LLA57 block indicates that the same structural play type which has now been proven to hold commercial sized reserves to the east and west, also exists on block LLA57.
Under the proposed license terms for the LLA57 block, PetroLatina will be required to drill at least one exploratory well within the first three years. PetroLatina expects to finalize and sign the formal E&P contracts for the two blocks with ANH during the fourth quarter of this year.
