(PentaNova Energy Corp., 17.Aug.2018) — PentaNova Energy Corp. announced the SINU-9 Farm Out Agreement with Panacol Oil & Gas, a wholly owned subsidiary of LATAM Oil & Gas failed to close by the agreed closing date. Extensions to the closing dates were given, but Panacol was unable to complete the financing commitments required as closing conditions of the Agreement and, as a consequence, the Agreement has been terminated.
Under the terms of the Agreement the $2.4 million security placed by Panacol as guarantee in front of the ANH for the SINU-9 license commitments will remain in place until the commitments are deemed complete by the ANH. These commitments of a minimum of 127.75 km2 of 3D seismic and one exploration well with a minimum spend of $22.4 million have to be completed by December 22, 2020.
The company has offered to continue discussions with Panacol to negotiate an alternative agreement and also intends to initiate discussions with a number of other interested parties.
Additionally, the company received a letter from Clean Energy Resources S.A.S as party to the SN-9 Purchase and Sale Agreement (SINU-9 PSA) by which the company received its 80% economic beneficial interest in January 2017, alleging that the company was in breach of certain obligations under the SINU-9 PSA and that as a consequence the SINU-9 PSA was immediately terminated.
The company also received an identical letter from ColPan Oil & Gas Limited, as counterparty to the Tiburon Purchase and Sale Agreement (Tiburon PSA) by which the company received its 60% economic beneficial interest in February 2017 alleging that the company was in breach of certain obligations under the Tiburon PSA and that as a consequence the Tiburon PSA was immediately terminated.
The company, in consultation with legal counsel, considers that the alleged breaches are without merit and that the unilateral termination by Clean and/or ColPan is not legally valid or enforceable. The company has requested that Clean and ColPan retract these letters and have advised of the consequences of failure to do so, but without success. The company will take all legal measures to make Clean and ColPan fully aware of their inability to terminate the PSAs, that the alleged breaches are without merit, and that Clean and ColPan will be held fully responsible for any and all damages arising from their actions. The company intends to vigorously defend itself and will pursue all means available to protect its interests in the SINU-9 and Tiburon Blocks.
SINU-9 Block
The 313,638 acre SINU-9 block is located in the northern province of Cordoba, in the Lower Magdalena Basin of Colombia.
The company has completed the prior consultation process required to acquire seismic in the block and is currently receiving bids for the acquisition of 140km2 of 3D seismic and related services. The company expects to delay the acquisition of the 3D seismic to the dry period starting in January 2019, which although being later than initially planned, should result in reduced acquisition costs.
The prior consultation and permitting process required for drilling on the block has started with bidding for the required services. On completion of this process, anticipated for the third quarter of 2019, civil works will commence with a view to spudding the first exploration well before the 2019 year end.
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