Field Already Producing Approximately 1,300 bbls/day
VANCOUVER, Nov. 23, 2017 /CNW/ - PentaNova Energy Corp. (the "Company") (TSXV: PNO), today signed the final agreement with Argentina's National Oil Producer YPF ("YPF") to farm in on 11% of the Llancanelo heavy oil field as previously announced in the press release on November 13, 2017. This agreement which is subject to standard regulatory approval takes PentaNova to a 50% working interest partnership in the field and is the result of a successful strategy to consolidate the position in the field by acquiring interest from three different parties.
The Llancanelo area is located to the north of the Neuquén Basin, in a basin-edge position in the province of Mendoza, 37 km southeast of the city of Malargüe. It is located between the main producing areas of the Neuquén basin and the 106,000 bbls/day processing capacity Lujan de Cuyo refinery, which is immediately south of Mendoza city. The field is close to existing road, pipeline and airport infrastructure.
The Llancanelo field was discovered by YPF in 1937 after drilling two exploratory wells that tested oil in the Tertiary levels. In the 1980's Union oil completed a successful steam injection pilot program before abandoning the efforts due to low oil prices. The fields potential was first fully recognized when horizontal wells were shown to be more productive, and provided the current profile of cold flowing, very low water cut 11-14 api crude that is the hallmark of Llancanelo today. In 2016, a development campaign of horizontal wells were drilled into the large heavy oil body. YPF entered a phase of evaluation and planning after drilling these wells, and during the month of September 1277 boepd conventional cold flow horizontal wells.
"Acquiring our full 50% working interest in the Llancanelo field positions PentaNova to begin a partnership with YPF to rapidly develop this asset is an important step in PentaNova becoming a major oil producer." said PentaNova Chairman and Executive Director Serafino Iacono. "By working with our partners YPF, we plan to take this field — already producing 1300 bbls/day — to its full potential and make Llancanelo the cornerstone of a heavy oil strategy in Argentina."
The acquisition of Llancanelo will see PentaNova pay a $3 million deposit ($0.5 million already paid), fund a $54 million development work program over 3 years and conditionally pay a $10 million payment on the third anniversary of the agreement. Beyond this work program, the partners will carry their proportional share of investment into the block. The farm in terms provide rights to PentaNova over the surrounding Llancanelo R block, the detailed terms and conditions of will be finalized in the coming months with YPF.
PentaNova and YPF have entered into an agreement where a comprehensive evaluation of the optimal development techniques based on the work that YPF has completed will be undertaken over the coming months to plan a development drilling campaign to be initiated in mid-2018. In the interim, the field has seen the recent application of a downhole heater, and a coil tubing unit is being mobilized in the coming weeks to complete a workover and cleanout campaign to improve production from the existing wells.
PentaNova management team and the technical team assigned to the Llancanelo project have extensive experience in developing and rapidly scaling up production in heavy oil assets in which include Canada, Venezuela, Colombia and Argentina.
About PentaNova Energy Corp.
PentaNova Energy Corp. is a publicly traded E&P company focused on proven oil & gas plays in Latin America. The Company holds a large diversified portfolio of producing, development and unexploited assets in Colombia and Argentina, where it will leverage its amplitude of technical expertise and proven track record building companies and creating value.
Except for the statements of historical fact, this news release contains "forward-looking information" within the meaning of the applicable Canadian securities legislation that is based on expectations, estimates and projections as at the date of this news release. The information in this news release about the completion of the operations described herein, and other forward-looking information includes but is not limited to information concerning the intentions, plans and future actions of the parties to the transactions described herein and the terms of such transaction.
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SOURCE PentaNova Energy Corp.
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