Petrolifera Petroleum Limited reports that the Governor of the Province of La Pampa, Argentina has advised senior management of the company that Petrolifera was successful in its recent bid to acquire the Salinas Grande 1 Block ("Block"). Formal awarding of the Block will await official approval by the Government of La Pampa Province, anticipated to occur within about one month's time.
The Salinas Grande 1 Block is 4,280 square kilometers (approximately 1,057,611 acres) in size and is situated immediately north of Petrolifera's Rinconada block, which comprises a portion of the Puesto Morales/Rinconada Concession in Rio Negro Province, Argentina. By comparison, the Puesto Morales/Rinconada Concession covers approximately 95,000 acres.
A work commitment of US$6.5 million, anticipated to be comprised of extensive 2D seismic and several wells, is anticipated over a three-year period during the exploratory phase of this basin margin Block. Although there is extensive aeromagnetic and gravity coverage over the Block, limited seismic has been shot. Only one well has ever been drilled on the acreage and it was dry and abandoned. Drilling depths for prospective exploratory wells are anticipated to be less than 1,000 meters. A successful exploration program would result in conversion to a long-term production concession.
Following the formal award, ownership of the Block will dramatically increase Petrolifera's 100 percent-owned land position in Argentina. It is anticipated the new concession will provide the company with prospective continuity to its exploration and exploitation program in the immediate vicinity of recent drilling success and current operations. Petrolifera anticipates adjusting its 2006 capital budget upwards following the formal awarding of the Block to provide for activity on the acreage prior to year end 2006, with an expanded program in 2007 to discharge a significant portion of its work commitments. Activity would be totally funded from available working capital and anticipated cash flow.