TORONTO, Nov. 12, 2012 /CNW/ - Sintana Energy Inc. (TSX-V:
SNN) ("Sintana" or the "Company") is pleased to announce that
Patriot Energy Oil & Gas Inc. ("Patriot"), wholly-owned by the
Company, has entered into a Farmout Agreement (the "Agreement")
with ExxonMobil Exploration Colombia Limited, a wholly owned
subsidiary of Exxon Mobil Corporation ("ExxonMobil") (NYSE: XOM)
for the exploration and development of unconventional oil and gas
resources underlying the 43,000 acre VMM-37 Block in Colombia's Middle Magdalena Basin.
Major elements of the VMM-37 Agreement are as follows:
PARTICIPATION INTERESTS:
- Subject to approval by the Agencia Nacional de Hidrocarburos of
Colombia (the "ANH"), ExxonMobil
will acquire an undivided 70% participation interest and
operatorship in the formations defined as unconventional by
completing the Work Program described below.
- Patriot will retain the remaining 30% interest in the
unconventional play as well as its current 100% participation
interest in the conventional resources overlying the top of the
unconventional interval.
UNCONVENTIONAL vs. CONVENTIONAL:
- For purposes of this Agreement, unconventional formations are
defined as the La Luna and deeper.
WORK PROGRAM:
- ExxonMobil will pay 100% of all Exploration Phase I well costs
(3 wells). The estimated timing for the commencement of
drilling operations on the first exploration well is the third
quarter of 2013. A consideration will be paid that will
compensate Sintana for its past expenses connected with the
block.
- ExxonMobil will have an option to proceed to the next
phase. In this development phase, it will pay 100% of all
additional costs to a maximum of US $45
million, of which US $10
million will be recouped by ExxonMobil from 50% of Patriot's
production proceeds.
- As agreed by Patriot and ExxonMobil, as joint participants in
the Block, good faith efforts will be made to locate exploration
wells targeting the unconventional play in such a way as to also
test conventional prospects.
- At various stages of the Work Program, as defined in the
Agreement, ExxonMobil will have the right to withdraw from the
project, relinquish operatorship and reassign to Patriot the right
to the 70% participation interest it would have retained had it met
all investments and activities requirements of the Agreement.
SUPPLEMENTAL INVESTMENT CAPITAL:
- In the event that exploration and development of the
unconventional resources continue beyond the activities and costs
enumerated above, those costs will be shared based on the parties
participating interests.
- Further exploration and subsequent development plans for the
unconventional and conventional formations will be decided on once
technical data obtained from drilling the deeper unconventional
play, and other sources, are analyzed.
WARRANTIES:
- The ANH requires that operators provide secured performance
warranties for various phases of the contractual Work
Program. Sintana currently has in place a letter of credit in
satisfaction of this requirement. ExxonMobil will assume
responsibility for providing these warranties resulting in the
release of restricted Sintana funds currently on deposit to secure
the existing letter of credit.
Sintana's CEO, Doug
Manner, commented, "Both the conventional and unconventional
formations on VMM-37 offer tremendous potential for large
discoveries with compelling economics. ExxonMobil owns
interests in, and is the operator of, a number of very large,
highly complex unconventional projects in multiple countries.
It is on the leading edge of developing and applying highly
technical methods and complex processes to discover, develop and
produce unconventional reserves. We are fortunate to have
ExxonMobil as our partner and look forward to a long and very
successful working relationship."
The Company will host a conference call on
November 13th at
2:00 pm (EST) to discuss key
highlights of the transaction. A question and answer session
will follow. Details regarding the conference call, including
dial-in instructions, will be disclosed later today.
ABOUT SINTANA ENERGY
The Company is primarily engaged in petroleum
and natural gas exploration and development activities in
Colombia and Peru. The Company's exploration strategy is to
acquire, explore, develop and produce superior quality assets with
significant reserve potential. The Company currently holds a
25% interest in the 175,000 acre Bayovar Block XXVII in the Sechura
Basin, Peru. The Company's private
participation interests in Colombia include 30% in 58,570 acres in the
Talora Block and 30% in 272,021 acres in the COR-39 & COR-11
Blocks in the Upper Magdalena Basin. In the Middle Magdalena Basin,
private participation interests are 100% in the 43,158 acre VMM-37
Block and 25% (carried) in the 154,909 acre VMM-4 and 59,522 acre
VMM-15 Blocks. In the Llanos Basin, the company has a carried 25%
private participation interest in the 11,624 acre LLA-18 Block.
These interests are subject to all applicable regulatory and
governmental approvals, including those of Colombia's National Hydrocarbon Agency (ANH).
The Company continues to evaluate a portfolio of exploration
opportunities in South
America.
On behalf of Sintana Energy
"Doug Manner"
Chief Executive Officer
Forward-Looking Statement
This news release includes forward-looking
statements related to the expected occurrences in relation to the
properties identified. A multitude of factors can cause actual
events to differ significantly from any anticipated development and
although the Company believes that the expectations represented by
such forward-looking statements are reasonable at the time of
preparation; there can be no assurance that such expectations will
be realized in whole or in part. These forward looking statements
are based on assumptions that the Company has made concerning the
oil and gas industry in South
America, that all applicable regulatory approvals will be
obtained, the reliability of available data regarding the
properties and increasing demand for oil and gas. Risk factors
which may cause actual results to differ from those anticipated in
such forward looking statements include but are not limited to, the
risk that ExxonMobil may opt to withdraw from the VMM-37 project at
various stages of the work program, risks associated with the
uncertainty of exploration results and estimates, currency
fluctuations, the uncertainty of conducting operations under a
foreign regime, exploration risk, the uncertainty of obtaining all
applicable regulatory approvals, the availability of labour and
equipment, the fluctuating prices of oil and natural gas, the
availability of financing and the Company's dependence on Sintana's
management personnel and other participants in the property areas,
including ExxonMobil. Neither the Company nor any of its
subsidiaries nor any of its officers or employees guarantee that
the assumptions underlying such forward-looking statements are free
from errors, nor do any of the foregoing accept any responsibility
for the future accuracy of any of the opinions expressed in this
document or the actual occurrence of forecasted
developments.
Undue reliance should not be placed on these
forward-looking statements as there can be no assurance that such
expectations will be realized. The forward-looking statements
contained in this document are made as of the date hereof and the
Company undertakes no obligation to update publicly or revise any
forward-looking statements or information, whether as a result of
new information, future events or otherwise, unless so required by
applicable securities laws. This press release does not constitute
an offer to sell or a solicitation to buy any of the securities of
Sintana Energy Inc. in the United
States.
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release.
SOURCE Sintana Energy Inc.