Pacific Exploration & Production Corp. through its wholly-owned subsidiary Pacific Stratus Energy Del Peru S.A. has been awarded a two-year contract to operate Block 192 by Perupetro S.A. (the State company that, on behalf of the Peruvian State is responsible for promoting, negotiating, underwriting and monitoring contracts for exploration and exploitation of hydrocarbons). Block 192 is located onshore Peru and is the largest producing oil block in Peru. The Agreement was signed by the Government of Peru by way of Presidential decree on August 29, 2015 and the Company commenced operations on August 30, 2015.
Block 192 is located in the highly prolific Northern Maranon Basin of Peru, adjacent to the Peru-Ecuador international border. The block has been in production for 40 years, with a cumulative production of 725 MMbbl at the end of 2013, and a peak production of 117,000 bbl/d in 1979. The block has a total of 17 light, medium and heavy oil fields and production comes from 12 of these fields, which represents approximately 17% of Peru's total oil production. The block is currently producing approximately 12,000 bbl/d, of an average 18.9o API oil with a water cut of 97.9%.
The Company's remuneration under the Agreement will be based on an R-factor calculation, which gives the Company a larger percentage of initial production and declines as the investment is recovered. The initial work program contemplates the reactivation/workover of wells identified by the Company with further activities subject to well and field performance.
Ronald Pantin, Chief Executive Officer of the Company, commented:
"Pacific firmly believes that the reserves and the resource upside on this block have the potential for increased production levels. The application of Pacific's strong and proven expertise in heavy oil production and water handling operations should result in production upside through optimization of current operations, re-activating wells and fields currently shut-in and future development drilling. As with all of our activities in all of the countries where we are working, the Company will ensure that Block 192 operations continue to be conducted with the utmost respect for the environment and the social well-being of the local communities."
