VANCOUVER, June 21, 2018 /CNW/ - PentaNova Energy Corp. (the "Company" or "PentaNova") (TSXV: PNO), is pleased to announce the signing of the SN-9 Farm Out Agreement (the "Agreement") with Panacol Oil & Gas ("Panacol"), a wholly owned subsidiary of LATAM Oil & Gas. Under the terms of the Agreement, Panacol will fully fund the Company's commitments during the first phase of the SN-9 Exploration and Production Contract for the amount of US$22.29 million, which will give Panacol the right to earn up to a 40% economic beneficial interest in the SN-9 Block from the Company's 80% economic beneficial interest. Assignment of working interests for both parties is subject to approval from the National Hydrocarbon Agency of Colombia. The Agreement is expected to close within the next 30 days during which time Panacol will be required to place US$3.0 million in escrow to fund near-term activities. In addition, Panacol is required to provide a standby letter of credit for US$3.0 million to guarantee further payments into the escrow account and pay approximately US$650,000 in past costs. Under the terms of the Agreement, Panacol will recover 50% of the funds invested from 70% of the proceeds of the Company's net production.
Ralph Gillcrist, President and CEO, commented:
"The SN-9 block has all the hallmarks of being an exceptional core asset for PentaNova being adjacent to the prolific Canacol Energy Ltd. ("Canacol") gas producing assets. By entering into this Agreement with Panacol, PentaNova is in a position to execute the exploration program required to confirm the gas potential of the block. We look forward to leveraging the abundant experience of the Panacol team to complement the PentaNova team and accelerating our operational activities."
The 313,638 acre SN-9 block is located in the northern province of Cordoba, in the Lower Magdalena Basin of Colombia directly adjacent to, and west of, the major gas producing area operated by Canacol. Canacol produces 88% of its 106 million cubic feet per day ("MMscfd") gas production from this area and reported aggressive expansion plans in their Q1 2018 investor update on May 16, 2018, reflected in their 1Q 2018 Conference Call Transcript published on the Canacol website (www.Canacolenergy.com). PentaNova believes that the gas play being developed by Canacol extends into the south eastern portion of the SN-9 block. The SN-9 block has over 736 km of 2D seismic lines and one discovery well, Hechizo-1, drilled in 1992 that tested a combined rate of 10.3 MMscfd, confirming the likely extension of the gas play from Canacol's area into SN-9. Given the proximity to the gas infrastructure that supplies the north of Colombia, the south eastern structures of the SN-9 block will be the focus of immediate activities for the Company.
SN-9 Future Planned Activities
The Company anticipates completing the prior consultation process required to acquire seismic in the block by the end of June 2018 and plans to issue tenders for the acquisition of 140km2 of 3D seismic, and related services, over the next two weeks. The Company expects to acquire the 3D seismic in October and November of 2018.
The prior consultation and permitting process required for drilling on the block is expected to start in July 2018, as soon as the prior consultation for seismic is complete. On completion of this process, anticipated for mid 2019, civil works will be initiated with a view to spudding the first exploration well midyear 2019.
PentaNova is investing in proven leadership and technology to develop oil and natural gas fields it has acquired in areas surrounding some of the key energy producing areas in Colombia and Argentina. With decades of proven experience in Latin America and global energy development, PentaNova's leadership is working with local partners and service providers, including YPF, Argentina's respected energy producer, to deliver the energy for Latin America's future.
This news release contains "forward-looking statements" and "forward-looking information" (collectively referred to herein as "forward-looking statements") within the meaning of applicable securities legislation. Such forward-looking statements include, without limitation, forecasts, estimates, expectations and objectives for future operations that are subject to a number of material factors, assumptions, risks and uncertainties, many of which are beyond the control of the Company.
Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects", "plans", "anticipates", "believes", "intends", "estimates", "continues", "projects", "forecasts", "potential", "budget" and similar expressions, or are events or conditions that "will", "would", "may", "could" or "should" occur or be achieved. This news release contains forward-looking statements, pertaining to, among other things, the following: Panacol's funding of the Company's commitments during the first phase of the SN-9 Exploration and Production Contract for the full amount of US$22.29 milllion, the expected closing date for the Agreement, Panacol's recovery of the Company's share of the investment from 70% of the proceeds of the Company's net production, the quality of the SN-9 block as an exceptional core asset for the Company, the Company's ability to execute the exploration program required to confirm the gas potential of the SN-9 block, the Company's leveraging of the experience of the Panacol team to complement its own team, the Company's plans to accelerate its operation activities, the extension of the gas play from Canacol's gas producing area adjacent to the SN-9 block into the SN-9 block, the Company's intention to focus on the south eastern structures of the SN-9 block in the immediate term, the Company's completion of the prior consultation process required to acquire seismic in the SN-9 block by the end of June 2018 and plans to issue tenders for the acquisition of 140km2 of 3D seismic, and related services, over the next two weeks, the Company's expectations regarding the timing of receipt of such 3D seismic data, the Company's intention to start the prior consultation and permitting process required for drilling on the SN-9 block in July 2018 and the timing thereof, the Company's plans regarding the initiation of civil works and the timing thereof, and the Company's plans regarding the timing for the spudding of the first exploration well on the SN-9 block.
Although the Company believes that the material factors, expectations and assumptions expressed in such forward-looking statements are reasonable based on information available to it on the date such statements are made, undue reliance should not be placed on the forward-looking statements because the Company can give no assurances that such statements and information will prove to be correct and such statements are not guarantees of future performance. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties.
Actual performance and results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to: known and unknown risks, including those set forth in the Company's Management's Discussion and Analysis for the year ended December 31, 2017 (a copy of which can be found under PentaNova's profile on SEDAR at www.sedar.com); the risks associated with the oil and gas sector, including current and expected oil and natural gas prices; exploration and development costs and delays; reserves discovery and decline rates; pipeline and transportation capacity; weather, health, safety and environmental risks; integration of acquisitions, competition, and uncertainties resulting from potential delays or changes in plans with respect to acquisitions, development projects or capital expenditures and changes in legislation including, but not limited to, tax laws, royalties, incentive programs and environmental regulations; stock market volatility and the inability to access sufficient capital from external and internal sources; operations in foreign jurisdictions; general economic, market or business conditions; global economic events; changes to PentaNova's financial position and cash flow; the availability of qualified personnel, management or other key inputs; currency exchange fluctuations; changes in political and security stability; risks and uncertainty related to distribution and pipeline constraints; and other unforeseen conditions which could impact the Company. Accordingly, readers should not place undue importance or reliance on the forward-looking statements. Readers are cautioned that the foregoing list of factors is not exhaustive.
Statements, including forward-looking statements, contained in this news release are made as of the date they are given and the Company disclaims any intention or obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.
Additional information on these and other factors that could affect the Company's operations and financial results are included in reports on file with applicable securities regulatory authorities and may be accessed under PentaNova's profile on SEDAR at www.sedar.com.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE PentaNova Energy Corp.
For further information: PentaNova Energy Corp., Ralph Gillcrist, CEO & President; Chris Reid, CFO, Tel: (604) 609-6110, E-mail: [email protected]