CALGARY, ALBERTA--(Marketwired - May 23, 2014) -
NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA
Suroco Energy Inc. (TSX VENTURE:SRN) ("Suroco" or the "Corporation") is pleased to announce that further to its May 7, 2014 press release, its wholly owned subsidiary, Suroco Energy SLU, has completed the acquisition of a 50% interest in the Putumayo-7 Block in Colombia (the "PUT-7
Block") from Petrocaribbean Resources Ltd. ("PCR"). Upon approval by the Agencia Nacional de Hidrocarburos of Colombia (the "ANH"), the Corporation's 50% economic interest in the PUT-7 Block will convert into a full 50% undivided working interest.
On May 6, 2014, the Corporation entered into a definitive agreement (the "Agreement") with PCR and PetroGranada Colombia Limited ("PGC") to acquire a 50% interest in the Putumayo-7 Block in Colombia (the "PUT-7 Block") from PCR. Consideration paid by Suroco under the Agreement was (a) the payment to PCR of US$141,500, representing a portion of the back costs in the PUT-7 Block, and (b) the agreement to pay a 10% royalty to PCR on Suroco's share of production in the PUT-7 Block (as further described below). Pursuant to the Agreement, PCR has also sold a 50% interest in the PUT-7 Block to PGC. In accordance with the Agreement, PGC is providing US$18.6 million of guarantees for the Letters of Credit required by the ANH to guarantee the first phase of the PUT-7 exploration program.
The terms of the royalty payable to PCR allows for transportation costs, marketing and handling fees, government royalties and the 1% 'X' factor payment to be deducted from production revenue prior to the royalty being paid. Pursuant to the Agreement, Suroco is liable for funding its 50% interest share of the work program on the PUT-7 Block, effectively on 'ground-floor' terms, with no promote. The work program on the PUT-7 Block is expected to include a 3D seismic program in late 2014 and the drilling of two exploration wells in late 2015. In order to fund the majority of its share of the proposed 2014 seismic program, Suroco completed a US$5 million loan from an existing shareholder which the Corporation expects will be repaid upon completion of its recently announced agreement with Petroamerica Oil Corp. ("Petroamerica") to sell all of the Corporation's issued and outstanding common shares to Petroamerica (see the Corporation's April 28, 2014 news release).
In connection with the transactions contemplated by the Agreement, application will also be made to the ANH for their approval to transfer the operatorship from PCR to Suroco.
Operational Update - Suroriente Block
Normal production operations have resumed with the lifting of road blockages imposed across southern Colombia by an agricultural strike (see the Corporation's press release dated May 7, 2014). Production is currently being ramped up to full capacity.
Drilling Update, Quinde Field
The recently discovered oil pool containing the Quinde-4 and Quinde-6 wells (the Quinde West pool) continued producing oil at reduced rates during the production slowdown referenced above. Since the commencement of production in January of 2014, the Quinde West pool has now produced 279,000 gross barrels of oil (41,000 barrels of oil net to the Corporation after royalties) with no significant water production. Suroco also announces that the Quinde-7 well has been spudded from the same multi-well pad as the Quinde West wells. This well is an exploratory test of an analogous seismically mapped amplitude feature that is a continuation of the Quinde West pool trend on the opposite side of a major structural fault.
Suroco is a Calgary-based junior oil and gas company, which explores for, develops, produces and sells crude oil, natural gas liquids and natural gas in Colombia. The Corporation's common shares trade on the TSX Venture Exchange under the symbol SRN. Additional information can be found in an updated presentation available on the Corporation's website at www.suroco.com.
PGC is a subsidiary of PetroGranada Limited, a UK based, privately held oil and gas company.
Certain statements included in this press release constitute forward-looking statements under applicable securities legislation. These statements relate to future events or future performance of Suroco. All statements other than statements of historical fact are forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential", "continue", or the negative of these terms or other comparable terminology. Forward-looking statements or information in this press release include, but are not limited to, the receipt of necessary consents, including from the ANH, the successful completion of the transaction with Petroamerica, repayment of the loan from an existing shareholder upon completion of the transaction with Petroamerica, business strategy, priorities and plans, expected production, the evaluation of certain prospects in which Suroco holds an interest, estimated number of drilling locations, expected capital program (including its allocation), production growth, reserves growth, the receipt of and the timing of receipt of environmental licenses, the ability to sell crude volume and other statements, expectations, beliefs, goals, objectives assumptions and information about possible future events, conditions, results of operations or performance. Readers are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, estimates, forecasts, projections and other forward-looking statements will not occur, which may cause actual performance and results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward-looking statements. Business priorities disclosed herein are objectives only and their achievement cannot be guaranteed.
These assumptions, risks and uncertainties include, among other things, the inability to obtain all necessary approvals for completion of the transaction with Petroamerica; assumptions inherent in current guidance; projected capital investment levels; the state of the economy in general and capital markets in particular; fluctuations in oil prices; the results of exploration and development drilling, recompletions and related activities; changes in environmental and other regulations; risks associated with oil and gas operations and future exploration activities; the uncertainty of reserves estimates; the uncertainty of estimates and projections relating to production, costs and expenses; the need to obtain required approvals from regulatory authorities; product supply and demand; market competition; risks in conducting foreign operations (for example, civil, political and fiscal instability and corruption); and other factors, many of which are beyond the control of Suroco. You can find an additional discussion of those assumptions, risks and uncertainties in Suroco's Canadian securities filings.
The forward-looking statements contained in this press release are made as of the date of this press release. Except as required by law, Suroco disclaims any intention and assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Additionally, Suroco undertakes no obligation to comment on the expectations of, or statements made by, third parties in respect of the matters discussed above. New factors emerge from time to time, and it is not possible for management of Suroco to predict all of these factors and to assess in advance the impact of each such factor on Suroco's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement or information. The forward-looking statements contained herein are expressly qualified by this cautionary statement. Moreover, neither Suroco nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements.
The TSX Venture Exchange Inc. has in no way passed upon the merits of the transaction and has neither approved nor disapproved the contents of this press release.
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.