Pacific Stratus Energy Ltd. has entered into a memorandum of understanding to acquire a 26.25% interest in the Quifa Association Contract, which is located in the Llanos Basin of Colombia.
The Quifa Association Contract consists of an area of 234 km(2) located in the Puerto Lspez area, within the Vichada and Meta departments in Colombia. This block surrounds the Rubiales and Piriri fields, which are currently producing approximately 18,500 barrels of heavy crude oil per day, with previously assessed proven and probable reserves of over 375 million barrels of heavy crude oil (12.5 degrees API).
Pacific has signed the memorandum of understanding with Consolidated AGX Resources Corp., which recently announced the acquisition of interests in the Quifa and other areas in the Llanos Basin through its acquisition of Meta Petroleum. Pacific has agreed to solely fund all of AGX's share of costs and expenses associated with the remaining exploration phases under the Quifa Agreement, which are estimated to be US$5.3 million and include seismic acquisition/processing and the drilling of three exploratory wells. The memorandum also provides that AGX will transport a portion of its Rubiales production to Pacific's production facilities at Guaduas in order to produce a blend suitable for pipeline transport and sale, and further provides that the parties shall act jointly in future bidding rounds in Colombia for heavy crude projects in the Llanos Basin. The memorandum is subject to Colombian regulatory approval.
Jose Francisco Arata, Chief Executive Officer of Pacific, stated "This agreement with AGX gives us an important entry into the heavy crude areas of Colombia with an experienced producer, and allows us to diversify our property portfolio. It also gives us an important partner as we seek to expand our operations in Colombia."
