Petrolifera farms out 25% of Vaca Mahuida to Brownstone
Petrolifera Petroleum Ltd (C:PDP)
Shares Issued 50,084,010
Last Close 7/25/2007 $20.85
Thursday July 26 2007 - News Release
Also Brownstone Ventures Inc (C:BWN) News Release
Mr. Richard Gusella of Petrolifera reports
PETROLIFERA PETROLEUM ENTERS INTO FARMOUT WITH BROWNSTONE VENTURES INC.
Petrolifera Petroleum Ltd. has entered into a farm-out by way of a participation agreement with Brownstone Ventures Inc., whereby Brownstone Ventures can earn a 25-per-cent interest in Petrolifera Petroleum's 253,000-acre (approximately 1,025-square-kilometre) Vaca Mahuida block in the province of Rio Negro, Argentina. The Vaca Mahuida block is situated south of and is contiguous with Petrolifera's 100-per-cent-owned Rinconada block, which comprises a part of the Puesto Morales/Rinconada concession in Argentina's Neuquen basin.
Under the terms of the participation agreement, Brownstone will be obligated to incur 50 per cent of the actual costs to be incurred in the conduct of the work program which comprised the successful bid submitted by Petrolifera in a recent round of awards made by the government of Rio Negro. The Vaca Mahuida program, as accepted by the tendering government, is anticipated to entail the reprocessing 560 square kilometres of existing 3-D seismic, the acquisition of a minimum of 1,150 square kilometres of new 3-D seismic over the block and the drilling of 12 new wells to depths ranging from 1,000 to 1,500 metres, all over a three-year period. Upon completion of the work program, and assuming commerciality, a production licence of 25 years would be issued. Under current arrangements, this would be owned 75 per cent by Petrolifera, the operator, and 25 per cent by Brownstone or its nominee.
Based on current market conditions, the approximate cost of the earning program is estimated at $10-million for Brownstone, with a like amount to be incurred by Petrolifera in discharging the block's work obligations. A royalty rate of 23 per cent would be payable to the province on any commercial production from the area once commerciality has been declared and production initiated from the region.
The farm-out was undertaken by Petrolifera as part of its risk management strategy. The transaction affords Brownstone the opportunity to diversify its resource exposure to a new country and opportunity with an established, successful joint venture operator. The primary objective of the proposed exploration program on the block will be to identify shallow crude oil accumulations, primarily in the Sierras Blancas formation. Other prospects and objectives had also been identified by Petrolifera prior to its successful acquisition of the block at competitive auction.
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