(Renaissance Oil Corp., 11.Jan.2017) – Renaissance Oil Corp. announced that PJSC LUKOIL, one of the world’s largest oil producers, has chosen Renaissance as their partner for the Integrated Exploration and Production Contract for the 230 km2 (56,800 acres) Amatitlán block, near Poza Rica, Veracruz, Mexico.
Highlights
— Renaissance acquires 25% indirect interest in Amatitlán contract for US$1,750,000 — Finalizing options to acquire up to 62.5% — Renaissance will take the lead role in operations — Amatitlan holds 4.2 billion barrels of oil and 3.33 trillion cubic feet of natural gas originally in place in shallower Chicontepec formation1 — Deeper oil-rich Upper Jurassic shales are highly prospective for development
About the Amatitlán Block
The Amatitlán block is located within the Tertiary aged Chicontepec paleochannel formation, in East Central Mexico. The Chicontepec formation, referred to as Aceite Terciario del Golfo in Mexico, covers approximately 3,800 km2 and contains the country’s largest hydrocarbon resource, with certified original oil in place estimated at 59 billion barrels of oil equivalent.
“The Upper Jurassic shale interval is widely considered to be the major carbonate source rock for the oilrich Chicontepec formation but the Upper Jurassic formations have not been commercially developed,” stated Renaissance Chief Geochemist Dan Jarvie. “Renaissance’s analysis indicates the Upper Jurassic interval is an oil-rich, hybrid system in the Amatitlán block and is highly prospective for targeted stacked pay development of this thick unconventional resource.”
“Innovations in drilling and completion techniques have dramatically improved recoveries in tight oil formations and shales throughout the United States and Canada”, said Renaissance Drilling and Completions Advisor Nick Steinsberger. “Our goal is to apply modern oilfield development technologies in Amatitlán to re-establish production in the underdeveloped Chicontepec formation and to commercialize the Upper Jurassic shale formations.”
Discovered in 1962, and still largely undeveloped, the main field Amatitlán has produced over 175,000 bbls of light oil ranging from 34° to 44° API with peak production of 650 bbl/d in 2005. As a result of the lack of recent drilling and development activities on the Amatitlán Block, production has currently declined to negligible volumes. The Comisión Nacional de Hidrocarburos evaluation of resources effective January 1, 20161 estimates Amatitlán contains, in the Chicontepec formation only, 4.2 billion bbls of crude oil and 3.33 trillion cubic feet of natural gas originally in place. Previous exploration wells on the Amatitlán block have shown the presence of oil and natural gas at various depths of drilling throughout the block. The Integrated Exploration and Production Contract for Amatitlán allows for the development of the full stratigraphic column, however, to date oil has been produced only from the Chicontepec formation.
Transaction Overview
Renaissance has entered into a definitive agreement with LUKOIL and Marak Capital S.A. whereby the company will acquire an indirect 25% interest from Marak in Petrolera de Amatitlán S.A.P.I., the contractor of the Integrated Exploration and Production Contract for the Amatitlán block for $1,750,000. Marak currently owns a 50% indirect interest in Petrolera, with the remaining 50% held by LUKOIL.
The company and LUKOIL have agreed that Renaissance will take the lead role in operations for Petrolera for joint development of the Amatitlán block currently held by Pemex-Exploración y Producción. The Integrated Exploration and Production Contract is expected to migrate into a Contract of Exploration and Extraction in Q4 2017 with an improved fiscal regime, pursuant to the constitutional amendments of December 20, 2013 reforming the Mexican Energy Industry. Upon closing of the Transaction, and with the expected migration to a Contract of Exploration and Extraction (“CEE”), the Amatitlán CEE will join the existing portfolio of four CEEs now held by Renaissance.
Renaissance is finalizing separate option agreements whereby Renaissance will have an exclusivity period to increase its participating interest in Petrolera up to 62.5%, by acquiring a further 12.5% from Marak and 25% from LUKOIL, upon migration of the Integrated Exploration and Production Contract to a CEE.
Renaissance expects the closing of the Transaction to occur in late January 2017.
“Renaissance, while playing the lead role in operations, is delighted to be working alongside LUKOIL in order to fully develop this high potential property,” stated Renaissance Chief Executive Officer Craig Steinke. “Amatitlán is a strong strategic fit for Renaissance as the leading independent on-shore oil field operator in Mexico with a solid technical team of global experts in shale resource development.”
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