Brownstone Ventures Inc.
TSX VENTURE : BWN

Brownstone Ventures Inc.

October 05, 2009 11:02 ET

Brownstone Announces Colombian Agreement

TORONTO, ONTARIO--(Marketwire - Oct. 5, 2009) - Brownstone Ventures Inc. (TSX VENTURE:BWN) ("Brownstone") is pleased to announce that it has entered into several assignment agreements with private company, Fenix Energy Inc. ("Fenix"), to acquire 50% of Fenix's interests in three blocks in the Llano Basin, Colombia. Quetzal Energy Inc. (TSX VENTURE:QEI) ("Quetzal") will acquire the remaining 50% of Fenix's interest, such that Brownstone and Quetzal will acquire 100% of Fenix's interests (the "Fenix Interests").

The Fenix Interests comprise interests in three blocks in the Llanos basin, Colombia, being blocks 21, 27 and 36 (the "Blocks"). Pursuant to the assignment agreements entered into with Brownstone and Quetzal, Fenix has assigned its interests in three letter agreements as follows:

  • Rights to acquire 28% of Llanos Block 36 with NCT Energy Group C.A. Colombia ("NCT");
  • Rights to acquire 68.5% of Llanos Block 27 with NCT; and
  • Rights to acquire 70% of Llanos Block 21 with Omega Energy ("Omega")

All three of the Blocks were recently awarded by the Agencia Nacional de Hidrocarburos ("ANH") to MONTECZ , NCT and Omega, respectively.

About the Interests

Brownstone and Quetzal, as to 50% each, can earn an interest in each of the Blocks by paying 100% (total) of the work commitments associated with the Blocks over the next 36 months. Brownstone and Quetzal will also be entitled to recover all costs paid on behalf of NCT and Omega, for work commitments and investments in respect of each block.

On Llanos Block 36, Brownstone and Quetzal will pay all costs attributed to 40% of the block until payout, and will be entitled to 36.4% of the net revenue until cost recovery, following which the parties will assume their working interests being Brownstone 14%, Quetzal 14%, MONTECZ 60% and NCT 12%.

On Llanos Block 27, Brownstone and Quetzal will pay all costs attributed to 100% of the block until payout, and will be entitled to 90.55% of the net revenue until cost recovery, following which the parties will assume their working interests being Brownstone 34.25%, Quetzal 34.25%, MONTECZ 19.5% and NCT 12%.

On Llanos Block 21, Brownstone and Quetzal will pay all costs attributed to 100% of the block until payout, and will be entitled to 91% of the net revenue until cost recovery, following which the parties will assume their working interests being Brownstone 35%, Quetzal 35%, Omega 30%.

Llano 27 block totals 16,470 hectares and it is surrounded by producing oil and gas fields (including La Punta, Entrerrios, Santiago and Estero), and is on strike with the La Punta Block 2244 oil field which has historic production of over 3.7 MMBO and total recoverable field reserves estimated between 6-9 MMBO and July 2009 production rate in excess of 3,600 BOPD of 34 degree API oil from 2 wells (Ministerio de Minas Y Energia, Forma 9). Work commitments over the first 36 month phase total approximately US$6.48m and includes completion of 144km of 2D seismic and the and drilling of an exploratory well.

Llanos 36 block totals 33,356 hectares and it is also offset by producing fields (including Chichimene, Apiay and Castilla) and oil and gas infrastructure, including pipelines and roads. Work commitments of the first 36 month phase total US$5.5m and includes completion of 93km of 2D seismic and the drilling of an exploratory well.

Llanos 21 Block totals 7,108 hectares and is offset by several oil fields. Work commitments of the first 36 month phase total approximately US$7m and includes 20 km of 2D seismic and 50 square km of 3D seismic and the drilling of 2 exploratory wells.

To acquire its 50% interest from Fenix, Brownstone will:

  • In respect of NCT 28% interest in Llanos 36, Brownstone will issue 400,000 shares and pay US$100,000 to Fenix
  • In respect of NCT 68.5% interest in Llanos 27, Brownstone will issue 600,000 shares and pay US$150,000 to Fenix
  • In respect of Omega 70% interest in Llanos 21, Brownstone will issue 1,500,000 shares and US$200,000 cash to Fenix

The assignment agreements and the transactions contemplated are subject to a completion of formal documentation, approval of the Board of Directors and approval of the TSX Venture Exchange.

About Brownstone – Brownstone Ventures Inc. is a Canadian-based, energy focused investment company with equity interests and direct interests in oil and gas exploration projects, including working interests in almost 300,000 acres in the Piceance/Uinta Basins of Colorado and Utah; 295km2 in the Assam/Arakan Basin, Northeast India; 253,000 acres in Rio Negro, Argentina; interests in several projects in Brazil; a 50% interest in approximately 160,000 hectares in the Quėbec Lowlands and a 15% participating interest in a 97,000 acre off-shore Israel oil and gas block. For additional information, please see Brownstone's website: www.brownstoneventures.com

Forward Looking Statements – Certain information set forth in this news release may contain forward-looking statements that involve substantial known and unknown risks and uncertainties. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond the control of Brownstone and Quetzal, including, but not limited to the impact of general economic conditions, industry conditions, volatility of commodity prices, risks associated with oil and gas activities, currency fluctuations, dependence upon regulatory approvals, the availability of future financing and exploration risk. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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