OSLO: Interoil Exploration and Production ASA announced a new transaction which adds further momentum to the Company’s exploration activity in Colombia. In addition, Interoil will invest in further development activity in Argentina.
In Colombia, Interoil has signed a participation agreement with SLS and Quantum Resources for the drilling of up to two exploration wells in LLA-47, namely Jaca.x-1 and Malevo.x-1. This agreement is subject to Interoil’s obtainment of the funding required to meet its obligations under the agreement.
In Argentina, Interoil will invest in the re-opening of the remaining 19 wells in the Mata Magallanes Oeste (MMO) oil field. The Company had earlier signed an agreement with Argentine drilling services company Velitec SA, for the re-opening of an initial 15 wells.
The contemplated issue of new shares in the Company announced herein is aimed at securing funding for the investments mentioned above. The Share Issue will be based on a Norwegian national prospectus covering the offering of new shares with gross proceeds of up to NOK 37 million.
Leandro Carbone, CEO of Interoil, commented: “These are exciting times for Interoil and our shareholders. We are very encouraged by the overwhelming investor response from the previous share issue, and I am looking forward to presenting to existing and new investors with the opportunity to participate in the Company’s exploration campaign in LLA-47, where we deepen our long-lasting partnership with SLS and Quantum Resources.
Interoil recognizes that the Jaca.x-1 and Malevo.x-1 exploration prospects are very promising and should untap potential oil resources that could be transformative to Interoil’s future production profile. In addition, the complete re-opening of our wells at MMO promises to further unlock valuable barrels in Argentina.”
Exploration Colombia
Drilling of the Jaca.x-1 and Malevo.x-1 exploration prospects in the LLA-47 block will commence shortly. As part of the agreement, SLS and Quantum Resources will retain a 22 percent equity interest in the well and cover 60 percent of the drilling expense. The cost of the Jaca.x-1 well is estimated at between US$ 2.9 million (for a dry well) and US$ 3.2 million (for a successful discovery); while the cost for the Malevo.x-1 well is estimated at between US$ 3.1 million (for a dry well) and US$ 3.3 million (for a successful discovery).
The Jaca.x-1 well will target the Carbonera formation. Interoil estimates the prospective resources at Jaca.x-1 to amount to 4.0 MMbbls with a 30 percent probability of success. The Malevo.x-1 well is a twin exploration well to Vikingo.x-1, where the primary exploration target will be the Gacheta formation and will also target the Carbonera formation to optimize its development.
Interoil’s exploration commitment at LLA-47 consists of a total of 9 wells to be drilled by February 2022.
If any of the wells result in commercial discovery and production, 55% of the net oil operating income (oil sales after royalties and operating and lifting costs) will be allocated to repay the investments, 40% Interoil and 60% SLS and Quantum Resources. The remaining 45% will be split as per equity interest. Once investment pay-out is reached, then the net oil operating income will be split as per equity interest, with 78% share to Interoil.
Argentina MMO field re-opening
Plans in Argentina involve the complete re-opening of the remaining 19 oil wells at the MMO field. Interoil expects to reach a total daily production estimated at around 230 bopd (from the current 17 bopd) once all wells are re-opened, including the 120 bopd resulting from the intervention of the first 15 wells in partnership with Velitec SA.
The investment will be carried by Interoil. Under the JV agreement, Petrominera Chubut SE, a minority JV partner that is the Provincial Government’s oil and gas and mining company, is not required to make cash contributions for the proposed investment.
Funding by Interoil of such portion of the investment shall be repaid with the future net oil operating income (oil sales after royalties and lifting costs) corresponding to Petrominera’s participating interest that shall be allocated to reimburse Interoil until Petrominera’s share in the investment program is fully covered. Once investment pay-out is reached, then the net oil operating income will be split as per equity interest, with 80% share to Interoil.
Progress with Mazorca.x-1 and first 15 wells at MMO
Interoil has already initiated contact with local communities to introduce the scope of drilling in Mazorca.x-1. Furthermore, Interoil and Petroland SAS have agreed on the commercial terms for the engagement of the drilling rig. The contract is expected to be signed in the coming days.
At MMO, Interoil requested the necessary certifications and approvals of the drilling rig prior to accepting it for the work-over program.
Share Issue
The Company is announcing an offering of new shares in the Company with gross proceeds of up to NOK 37 million. The Share Issue is directed towards Norwegian investors and international institutional investors pursuant to and in compliance with applicable exemptions from relevant registration, filing and prospectus requirements, and subject to other applicable selling restrictions.
The minimum subscription amount in the Share Issue will be NOK 10,000. The subscription price in the Share Issue is established at 1.46 NOK per share.
The net proceeds from the Share Issue will be used for capital investments in the well/s and development activities above-mentioned.
Advokatfirmaet Schjødt AS is acting as legal advisor to the Company in connection with the Share Issue.
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