Quetzal & Brownstone Enter Agreements in Llanos Basin

Source: www.gulfoilandgas.com 1/4/2010, Location: South America

Brownstone Ventures Inc and Quetzal Energy Inc are pleased to announce that they have entered into definitive participation agreements with Montecz S.A and Asetz Energy Corporation governing their interests in the Block LLA 36, in the Llanos Basin, Colombia (the "LLA 36 Block") and with Omega Energy Colombia ("Omega") governing their interests in the Block LLA 21, in the Llanos Basin, Colombia (the "LLA 21 Block")

As announced on October 5, 2009 and further to the terms of the letters of intent, the Participation Agreements enables Brownstone and Quetzal to:

In respect of LLA 36 Block:

- earn a net 28% (Brownstone 14%; Quetzal 14%) participating interest in the 33,356 hectare LLA 36 Block, by paying 40% (Brownstone 20%; Quetzal 20%) of the costs associated with the work program prescribed by the Colombian Agencia Nacional de Hidrocarburos ("ANH").

- Brownstone and Quetzal will be entitled to 36.4% (Brownstone 18.25%; Quetzal 18.25%) of any net revenue until they have fully recouped costs spent on fulfilling the work commitments on the LLA 36 Block, following which the parties will assume their working interests being Brownstone 14%, Quetzal 14%, Montecz 60% and NCT 12%. Work commitments over the first 36 month phase total approximately US$5.5m and includes completion of 93km of 2D seismic and the and drilling of an exploratory well.

- Brownstone and Quetzal have also each posted inpidual letters of credit with the ANH in the amount of US$546,000 (US$1,092,000 in the aggregate), representing a portion of their share of the required work program.

In respect of LLA 21 Block:

- earn a net 70% (Brownstone 35%; Quetzal 35%) participating interest in the 7,108 hectare LLA 21 Block, by paying 100% (Brownstone 50%; Quetzal 50%) of the costs associated with the work program prescribed by the Colombian Agencia Nacional de Hidrocarburos ("ANH").

- Brownstone and Quetzal will be entitled to 91% (Brownstone 45.5%; Quetzal 45.5%) of any net revenue until they have fully recouped costs spent on fulfilling the work commitments on the LLA 21 Block, following which the parties will assume their working interests being Brownstone 35%, Quetzal 35% and Omega 30%. Work commitments over the first 36 month phase total approximately US$7m and includes completion of 20km of 2D seismic, 50km2 3D seismic and the and drilling of 2 exploratory wells.

- Brownstone and Quetzal have also each posted inpidual letters of credit with the ANH in the amount of US$2,700,000 (US$5,400,000 in the aggregate) representing a portion of their share of the required work program.

The LLA 21 Block is approximately 20km along trend (northeast) from the Careto-5 well recently drilled by Alange Energy Corp. on its producing Cubrio block and adjacent to the Guachiria block recently acquired by Lewis Energy Colombia from Gran Tierra Energy Inc and reportedly producing approximately 1,600 bopd from two wells. The LLA 36 Block is also offset by producing fields (including Chichimene, Apiay and Castilla) and oil and gas infrastructure, including pipelines and roads.

Pending receipt of all applicable regulatory approvals, Brownstone and Quetzal plan to complete the payments to the assignor of the interests in the LLA 36 Block and LLA 21 Block, Fenix Energy Inc., as follows: (A) In respect of LLA 36 Block, by making payments of (1) US$100,000 and the issuance of 400,000 common shares of Brownstone for Brownstone's interest and (2) the issuance of 2,000,000 common shares of Quetzal for Quetzal's interest; and (B) In respect of LLA 21 Block, by making payments of (1) US$200,000 and the issuance of 1,500,000 common shares of Brownstone for Brownstone's interest and (2) US$200,000 and the issuance of 5,000,000 common shares of Quetzal for Quetzal's interest; all as set forth in the press releases of Brownstone and Quetzal dated October 5, 2009. The completion of the Participation Agreements remains subject to the final approval of the TSX Venture Exchange.

Brownstone and Quetzal are also in the process of completing the registration processes with the ANH and anticipate being able to commence the seismic program on the LLA 36 Block and LLA 21 Block early in the new year.


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Related Categories: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 

Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 


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