Petrominerales Ltd.

Petrominerales Ltd.

June 04, 2012 12:13 ET

Petrominerales Enters Agreement to Acquire Remaining 20% of Block 126 in Peru

CALGARY, ALBERTA--(Marketwire - June 4, 2012) - Petrominerales Ltd. ("Petrominerales" or the "Company") (TSX:PMG)(BVC:PMGC), is pleased to announce that we have entered into a share purchase and sale agreement and related arrangement agreement (the "Agreements") with Veraz Petroleum Ltd. ("Veraz") pursuant to which Petrominerales will acquire the remaining 20 percent working interest in Blocks 126, 141 and 161 in Peru (the "Transaction").

Under the terms of the Transaction, Petrominerales will acquire remaining 20 percent working interest in Blocks 126, 141 and 161 for total consideration of US$5 million, payable in common shares of Petrominerales on the closing date of the Transaction, which is anticipated to be late-July 2012. As a result of the transaction, Petrominerales will acquire Veraz's Peru operating subsidiary that holds the 20 percent working interest in Blocks 126, 141 and 161, is expected to have working capital of US$2 million on closing and also has the rights to contingent consideration of up to US$8 million that was payable by Petrominerales to Veraz under previous agreements subject to reaching certain production thresholds.

The Transaction will be completed pursuant to the Agreements which contain certain conditions precedent, including the approval of at least two-thirds of the votes cast by Veraz shareholders at a special meeting to be called to consider the Transaction, estimated to be held late-July, and other customary regulatory, stock exchange, court and other approvals. The Agreements prohibit Veraz from soliciting other offers for any of the shares or assets of Veraz Peru.

We believe that by acquiring the remaining working interest in these Blocks we provide our shareholders with maximum exposure to the large exploration potential on the blocks and gives Petrominerales complete flexibility to evaluate future strategic partnerships in Peru.

On Block 126, a 2.6 million acre block in the Ucayali Basin located in east central Peru, we have started moving the drilling rig to our Sheshea prospect, the second exploration well to be drilled on the Block. Our operations remain on schedule and we expect to commence drilling operations in early July, subject to weather conditions. The Sheshea prospect is a potentially large, 10,000 acre, closed structure located approximately 50 kilometres south of our first exploration well, La Colpa 2X. Based on our geological and geophysical analysis, we estimate that the prospect could potentially contain over 100 million barrels of original oil in place.

On Block 161, a 1.2 million acre block also in the Ucayali Basin, we are working on a revised EIA submission for our planned 353 kilometre 2D seismic program and we are also awaiting feedback on our first round of community workshops. We expect to acquire the 2D seismic in 2013.

Block 141, a 1.4 million acre Block in the Titicaca Basin situated in southern Peru, is subject to force majeure due to new government regulations requiring additional community consultations prior to obtaining permits. As a result, our current commitment to complete a 300 kilometre 2D seismic program by July 2012 has been suspended pending completion of these additional consultations.

Petrominerales Ltd. is an international oil and gas company operating in Latin America since 2002. Today, Petrominerales is the most active exploration company and the fourth largest oil producer in Colombia. Our high quality land base and multi-year inventory of exploration opportunities provides long-term growth potential for years to come.

Forward Looking Statements. Certain information provided in this press release constitutes forward looking statements. Specifically, this press release contains forward looking statements relating to the anticipated closing date of the Transaction, planned exploration and development activities and the potential geological characteristics of the Sheshea prospect. The forward looking statements are based on certain key expectations and assumptions, including expectations and assumptions concerning the satisfaction of the conditions precedent to the completion of the Transaction, the availability of capital, the receipt of applicable regulatory approvals, the success of future drilling and development activities, the performance of existing wells, the performance of new wells, prevailing commodity prices and economic conditions, the availability of labour and services, the ability to transport and market our production, timing of completion of infrastructure and transportation projects, weather, access to drilling locations and geological and geophysical matters. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be incorrect. Actual results achieved during the forecast period will vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors. The Transaction may not close at the anticipated time or at all. You can find a discussion of those risks and uncertainties in our Canadian securities filings. Such factors include, but are not limited to: failure to satisfy the conditions precedent to the completion of the Transaction, general economic, market and business conditions; fluctuations in oil prices; the results of exploration and development drilling, recompletions and related activities; timing and rig availability; availability of transportation and offloading capacity, outcome of exploration contract negotiations; fluctuation in foreign currency exchange rates; the uncertainty of reserve estimates; changes in environmental and other regulations; risks associated with oil and gas operations; and other factors, many of which are beyond the control of the Company. There is no representation by Petrominerales that actual results achieved during the forecast period will be the same in whole or in part as those forecast. Except as may be required by applicable securities laws, Petrominerales assumes no obligation to publicly update or revise any forward looking statements made herein or otherwise, whether as a result of new information, future events or otherwise.

Contact Information

  • Petrominerales Ltd.
    Corey C. Ruttan
    President and Chief Executive Officer
    403.705.8850 or 011.571.629.2701

    Petrominerales Ltd.
    Jack F. Scott
    Chief Operating Officer
    403.705.8850 or 011.571.629.2701

    Petrominerales Ltd.
    Kelly D. Sledz
    Chief Financial Officer
    403.705.8850 or 011.571.629.2701