Shona Energy announces commercialization of Nelson gas asset

Wednesday, March 14, 2012
  • Shona is generating approximately US$2 million per month of gross revenue, with the majority of the gas sales coming from Shona's Nelson field.
  • Shona will provide a firm volume of 11.0 mmcfpd for 2012 and 2013.

Shona Energy (TSXV: SHO) announced that it is delivering a total of 14.0 million cubic feet per day (mmcfpd) of natural gas into the Colombian gas market under two contracts. At this delivery rate, Shona is generating approximately US$2 million per month of gross revenue, with the majority of the gas sales coming from Shona's Nelson field.

"The initial commercialization of this important gas asset is essential to Shona's growth strategy going forward," said James L. Payne, CEO of Shona Energy. "With our existing gas reserve base, we have the capability to produce an additional 30 mmcfpd of natural gas. Our challenge now is to finalize these sales either through exercise of existing options, or through new opportunities in the Colombian gas market. "

Under the terms of Geoproduction's larger contract, Shona will provide a firm volume of 11.0 mmcfpd for 2012 and 2013, and a firm volume of 12.5 mmcfpd from 2014 to 2021. Under the terms of the smaller contract, Shona will sell a firm 3 mmcfpd and an interruptible 2 mmcfpd over a seven year term. Pending mutual agreement on pricing and terms, both purchasers have options to acquire additional gas volumes.

The Nelson gas discovery on Shona's Esperanza Block is located in Colombia's Lower Magdalena Basin. The block is 100% owned and operated by Geoproduction, a wholly-owned subsidiary of Shona. The Nelson field has gross reserves of 164 billion cubic feet (bcf) according to the NI 51-101 compliant report effective December 31, 2010 and entitled "Forecast of Production and Revenue in and related to Arianna, Canaflecha, Katana and Nelson Fields located in Esperanza Block, Colombia", which was prepared by Collarini Associates.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser. More

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