VANCOUVER, Sept. 28, 2017 /CNW/ - PentaNova Energy Corp. (the "Company") (TSXV: PNO), is pleased to announce that it has agreed to the terms of a Farm-out Agreement on the Sinu-9 block in the Lower Magdalena Valley Basin.
PentaNova and American Oil and Gas ("AOG") have entered into a Letter of Intent outlining the terms and conditions for the Farm-in by AOG on PentaNova´s private interest held in the Sinu-9 block (313,639 gross acres), located in the Cordoba Province in the Lower Magdalena Valley Basin of Colombia. To complete the agreement, AOG will Farm-in for half of the Company´s 80% beneficial working interest, by way of replacing the US$ 2.4 million guarantee required by the ANH license, as well as funding 100% of the Phase I minimum exploration work program under the ANH contract, equivalent to US$ 22 million. PentaNova shall reimburse 50% of the funds invested by AOG in the Phase I activities from 70% of PentaNova´s net production. Further capital commitments will be assumed proportionally by the partners. The remaining working interest on the block is held 15% by Desarrolladora Oleum and 5% by Clean Energy.
This strategic arrangement permits PentaNova and its partners to accelerate development of the low-risk exploratory gas block that shows 18,000 acres of structural closure mapped with 2D seismic, and defined "in-situ" gas accumulations. Seismic analysis and adjacency to Canacol´s Esperanza block with proven reserves provide strong evidence for large gas potential on Sinu-9. The parties will begin technical work to define the capital program implementation.
The block is located 75km from the export terminal of Coveñas and approximately 14km from the Northern gas trunk line, with scheduled spare capacity. This allows significant optionality for the partners to negotiate final gas marketing arrangements.
About PentaNova Energy Corp.
PentaNova Energy Corp. is a publicly traded E&P company focused on proven oil & gas plays in Latin America. The Company holds a large diversified portfolio of unexploited assets in Colombia and Argentina where it will leverage its amplitude of technical expertise and proven track record building companies and creating value.
About American Oil and Gas
American Oil & Gas Inc. is an exploration and production company with headquarters in Houston, Texas. Our focus is to acquire and develop oil and gas assets in the Andean region. The Company is led by a top-tier management team with a history of building and operating world-class assets.
Except for the statements of historical fact, this news release contains "forward-looking information" within the meaning of the applicable Canadian securities legislation that is based on expectations, estimates and projections as at the date of this news release. The information in this news release about the completion of the operations described herein, and other forward-looking information includes but is not limited to information concerning the intentions, plans and future actions of the parties to the transactions described herein and the terms of such transaction.
Factors that could cause actual results to differ materially from those described in such forward-looking information include, but are not limited to, risks related to the Company's inability to perform the proposed operations.
The forward-looking information in this news release reflects the current expectations, assumptions and/or beliefs of the Company based on information currently available to the Company. In connection with the forward-looking information contained in this news release, the Company has made assumptions about the Company's ability to complete the planned operations and activities. The Company has also assumed that no significant events will occur outside of the Company's normal course of business. Although the Company believes that the assumptions inherent in the forward-looking information are reasonable, forward-looking information is not a guarantee of future performance and accordingly undue reliance should not be put on such information due to the inherent uncertainty therein.
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SOURCE PentaNova Energy Corp.
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