Gran Tierra to acquire Petrolifera Petroleum

By OGJ editors
HOUSTON, Jan. 18
– Gran Tierra Energy Inc. will acquire Petrolifera Petroleum Ltd. in a deal worth $195 million. Both are Calgary firms that operate in South America.

Petrolifera’s board approved the deal and recommended that shareholders approve it at a meeting to be scheduled in March 2011.

Petrolifera’s yearend 2009 reserves were 7.8 million bbl of oil equivalent proved and 14.3 million boe proved and probable. The acquisition will boost Gran Tierra’s reserves to 29.5 million boe proved and 41.7 million boe proved and probable.

Petrolifera owns an interest in 11 exploration and production blocks. Three are in Colombia, three in Peru, and five in Argentina. The Colombian blocks total 850,000 acres in the Lower and Middle Magdalena basins.

One crude oil discovery, La Pinta, and one natural gas discovery, Brilliante, have been made in the Sierra Nevada Block in the Lower Magdalena basin. Petrolifera is the operator of and owns a 100% working interest, subject to recent agreement to transfer a 25% working interest to Gran Tierra upon regulatory approval.

Both discoveries require further tests and delineation drilling to determine commercial viability. In addition, a new exploratory well, San Angel X-1001, is expected to be drilled in the 2011 first quarter in the adjacent Magdalena block where Petrolifera is operator with 100% working interest. Petrolifera is operator with 50% working interest in the Turpial block in the Middle Magdalena basin, which is prospective for heavier crude oil.

Petrolifera operates three 100% working interest blocks in Peru totaling 4 million acres. Block 106 is in the Maranon basin near Corrientes field, largest field in the basin. This block is just west of Gran Tierra’s acreage in Peru. Blocks 107 and 133 are in the Ucayali basin northwest of Camisea gas-condensate field. Numerous leads and prospects have been identified on this acreage with indications the region has proven petroleum systems generating light crude oil and natural gas, with evidence of reservoir quality sandstones.

In Argentina, Petrolifera operates five contiguous Neuquen basin blocks that total more than 220,000 net acres with 25-100% working interest. In the Puesto Morales/Rinconada concession, which accounts for the majority of production, Petrolifera is operator with 100% working interest.

Investment on the Neuquen producing assets has been limited lately due to capital constraints, Gran Tierra contemplates increasing activity as steadily rising regional commodity prices through 2009 and 2010 may facilitate the potential to realize additional shareholder value through reinvestment of internally generated cash flow from operations in Argentina.

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