VANCOUVER, Aug. 16, 2018 /CNW/ - PentaNova Energy Corp. (the "Company" or "PentaNova") (TSXV: PNO), announces the SINU-9 ("SN-9") Farm Out Agreement (the "Agreement") with Panacol Oil & Gas ("Panacol"), a wholly owned subsidiary of LATAM Oil & Gas failed to close by the agreed closing date. Extensions to the closing dates were given, but Panacol was unable to complete the financing commitments required as closing conditions of the Agreement and, as a consequence, the Agreement has been terminated.
Under the terms of the Agreement the US$2.4 million security placed by Panacol as guarantee in front of the ANH for the SN-9 license commitments will remain in place until the commitments are deemed complete by the ANH. These commitments of a minimum of 127.75 km2 of 3D seismic and one exploration well with a minimum spend of US$22.4 million have to be completed by December 22, 2020.
The Company has offered to continue discussions with Panacol to negotiate an alternative agreement and also intends to initiate discussions with a number of other interested parties.
Additionally, the Company received a letter from Clean Energy Resources S.A.S ("Clean") as party to the SN-9 Purchase and Sale Agreement ("SN-9 PSA") by which the Company received its 80% economic beneficial interest in January 2017, alleging that the Company was in breach of certain obligations under the SN-9 PSA and that as a consequence the SN-9 PSA was immediately terminated. The Company also received an identical letter from ColPan Oil & Gas Limited ("ColPan"), as counterparty to the Tiburon Purchase and Sale Agreement ("Tiburon PSA") by which the Company received its 60% economic beneficial interest in February 2017 alleging that the Company was in breach of certain obligations under the Tiburon PSA and that as a consequence the Tiburon PSA was immediately terminated.
The Company, in consultation with legal counsel, considers that the alleged breaches are without merit and that the unilateral termination by Clean and/or ColPan is not legally valid or enforceable. The company has requested that Clean and ColPan retract these letters and have advised of the consequences of failure to do so, but without success. The Company will take all legal measures to make Clean and ColPan fully aware of their inability to terminate the PSAs, that the alleged breaches are without merit, and that Clean and ColPan will be held fully responsible for any and all damages arising from their actions. The Company intends to vigorously defend itself and will pursue all means available to protect its interests in the SN-9 and Tiburon Blocks.
The 313,638 acre SN-9 block is located in the northern province of Cordoba, in the Lower Magdalena Basin of Colombia.
The Company has completed the prior consultation process required to acquire seismic in the block and is currently receiving bids for the acquisition of 140km2 of 3D seismic and related services. The Company expects to delay the acquisition of the 3D seismic to the dry period starting in January 2019, which although being later than initially planned, should result in reduced acquisition costs.
The prior consultation and permitting process required for drilling on the block has started with bidding for the required services. On completion of this process, anticipated for the third quarter of 2019, civil works will commence with a view to spudding the first exploration well before the 2019 year end.
The Tiburon Block currently covers an area of approximately 245,850 acres in the northern most area in the department of La Guajira, Colombia.
The Tiburon E&P Contract is currently in Phase 3 of the exploration period with an existing minimum work obligation to acquire 200 km of 2D seismic, which can be replaced with an equivalent minimum commitment to acquire 69.75 km2 of 3D seismic. The phase commitment is currently suspended due to "Force Majeure and Third-Party Acts".
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: 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 timeline to for its operational 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 expectations regarding the timing of receipt of such 3D seismic data, the Company's timing for the prior consultation and permitting process required for drilling on the SN-9 block in, 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]