Suroco Energy Inc. (TSX VENTURE:SRN) ("Suroco" or the "Corporation") is pleased to announce that its wholly owned subsidiary, Suroco Energy SLU, has acquired a 25% interest in the Putumayo 2 Block in Colombia (the "Block") from PetroNova Inc.'s (TSX VENTURE:PNA) wholly owned subsidiary, PetroNova Colombia Inc. ("PetroNova"). Upon approval by the Agencia Nacional de Hidrocarburos of Colombia, the 25% economic interest in the Block acquired from PetroNova will convert into a full 25% undivided working interest in the Block.
Mr. Alastair Hill, the Corporation's President and Chief Executive Officer commented, "We are very excited to have come to this agreement with PetroNova because we believe that the Putumayo 2 Block is located in a prospective area of the basin for hydrocarbon charge. Within this undrilled Block there is an excellent quality 3D seismic grid which was acquired by PetroNova in 2011 and which confirmed the presence of several features, including a large four-way dip closed structural feature in the northern area of the Block which will be drilled with the first well. An added benefit to Suroco is that the southern area of the Block contains a large structural lead, previously recognized by both Suroco and PetroNova, which extends across the Block boundary into Suroco's Alea 1947C Block and therefore allows us to consolidate our ownership in this lead. In addition to pure structural plays, we believe the Block contains potential for combined structural-stratigraphic plays similar to the Cohembi oilfield which we are actively developing at this time. Completing this acquisition shortly before drilling operations has allowed us to minimize the cycle time from first investment to exploration drilling".
Suroco Energy SLU has acquired the 25% interest in the Block in exchange for: (a) the payment to PetroNova of US$3 million, representing 25% of the back costs for 2D and 3D seismic incurred to date on the Block, (b) the payment of US$199,165 representing 25% of the incurred costs in preparation for the first exploration well to be drilled on the Block, and (c) the agreement by Suroco Energy SLU to fund the first US$6 million in costs for the first exploration well drilled on the Block, after which PetroNova will pay the next US$3 million in such costs, and thereafter, if applicable, the parties will pay costs on the basis of their respective interests in the Block.
Civil construction activities are underway and it is anticipated that the first exploration well at the Canelo Sur 2 location will commence drilling in the third quarter of 2013. The well is targeting multiple reservoir objectives in the Villeta Formation and is expected to take approximately 45 days to drill, excluding any testing and completion activity that may be required.
Fit to Strategy
The acquisition of the interest increases the Corporation's net right holdings in the central Putumayo Basin by over 24,000 acres (approximately 97 sq kms). It provides a near-term opportunity for exploration drilling and adds to the scope of the Corporation's exploration portfolio. The Corporation concluded a US$21 million credit facility in March 2013 and expects to fund this drilling opportunity with cash on hand.
The Corporation 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.
An updated corporate presentation setting forth details of the Corporation's 2013 program will be available shortly on the Corporation's website at www.suroco.com.