Global Energy Development PLC, the Latin America focused petroleum exploration and production company, is pleased to announce that the Company has reached an agreement to farm-out 60% of its interest in the Peruvian Block 95 Licence Contract to Gran Tierra Energy, Inc.. Following the farm-out, Global will retain a 40% interest in the Contract through its wholly-owned subsidiary Harken del Peru Limitada.
Under the terms of the agreement, GTE will become the operator of the Contract, subject to and following approval from the Peruvian authorities, and will assume 100% of the costs of an exploration well up to a maximum of US$ 15 million. GTE will also assume its share of the past costs incurred by the Company on the Contract for US$ 2 million.
The Contract is under force majeure until the final environmental sub-permits are received. The Company anticipates receiving the remaining sub-permits in the first half of 2011. The exploration well is therefore expected to be drilled before the end of 2011.
The Contract area is located in the Maranon Basin of north-eastern Peru and contains the Bretana-1 discovery well, which was drilled in 1974 and tested 18 degrees API gravity oil at natural flow rates of approximately 800 barrels of oil per day. As certified by our independent reserve engineers, Ralph E. Davis Associates, Inc., the 2P reserves associated with the Contract are estimated at 21 million barrels (3P reserves at 63.9 million barrels).
This agreement represents an important opportunity for Global to accelerate its development and unlock these important 2P and 3P reserves.
Commenting, Stephen Voss, Vice Chairman, said:
"We are very pleased to have reached this agreement with a partner that has an impressive track record of oil exploration and subsequent development success in South America and are convinced that it will bring significant mutual benefits to both companies."
