Gran Tierra Energy, Inc announced that the company has signed a License Contract for the Exploration and Exploitation of Hydrocarbons in Peru, covering Block 122. The contract was signed on June 8, 2006 between Gran Tierra Energy Peru and Per'uPetro S.A. and will become effective once ratified by Supreme Decree, which is expected in July, 2006.
Block 122 is located on the eastern flank of the prolific Mara~non Basin of northern Peru, on the crest of the Iquitos Arch. This is a frontier exploration block covering approximately 1.2 million acres, in a geologic position that is analogous to significant petroleum accumulations found elsewhere in the world. The nearest producing field is the Corrientes field, with estimated ultimate reserves in excess of 200 million barrels.
The exploration term is divided into four exploration periods spread over seven years. The minimum committed work program includes technical studies, seismic acquisition and the drilling of one exploration well, with a total financial commitment of US$ 5.0 million. The exploitation term for oil is thirty years.
Dana Coffield, President and Chief Executive Officer of Gran Tierra, stated, "Our entry into Peru essentially completes the first stage of our growth strategy in Latin America. The addition of the Peru acreage to our current asset base and pending acquisitions in Argentina and Colombia creates a diverse portfolio across three countries. That portfolio provides a broad base of proven reserves and cash flow, development opportunities and exploration lands with a mix of risk and reward profiles, positioning us to move into a second phase of growth that is focused on drilling activity. Block 122 is a unique addition to our portfolio: a pure exploration play with higher risk but huge potential. It is an asset that makes sense in our expanding company, offering an opportunity for quantum growth in the medium/long-term to supplement an aggressive drilling and work campaign in the shorter term."
