GeoPark Limited (GPRK) announced it has obtained final regulatory approval for its acquisition of the Morona Block in Peru.
In its first project returning to the upstream business, the Peruvian state-owned company Petroleos del Per S.A. (Petroperu) awarded a 75% working interest (WI) in and operatorship of the Morona Block to GeoPark by a Joint Investment and Operating Agreement dated October 1, 2014, and its amendments (the Agreement). The Agreement was subject to Peru regulatory approval, which was completed on December 1, 2016 following the issuance of Supreme Decree 031-2016-MEM.
The Morona Block covers an area of 1.9 million acres in the Maranon Basin, a priority target basin for GeoPark and one of the most prolific hydrocarbon basins in Latin America, with over 1 billion barrels of oil produced. The Morona Block contains the Situche Central oil field, which has been delineated by two wells (with short term tests of approximately 2,400 and 5,200 bopd of 35-36° API oil) and by 3D seismic. The block also includes extensive geophysical surveys, an operating field camp and logistics infrastructure. The area has undergone oil and gas exploration activities for the past 40 years, with ongoing association agreements and cooperation projects with the local communities.
DeGolyer & MacNaughton, the independent reserve engineering firm, has certified 2P reserves of 40.2 million
barrels of oil (mmbo) and 3P reserves of 82.9 mmbo for the Situche Central oil field (at 100% WI) with no oilwater contact yet encountered in the field. Gaffney, Cline & Associates has audited a maximum unrisked upside potential in the Situche Central oil field to be approximately 200 mmbo (at 100% WI). The total Morona Block also includes a large exploration potential with high impact prospects and plays – including gross unrisked exploration resources ranging from 300 to 500 mmbo, as audited by Gaffney, Cline & Associates.
In accordance with the terms of the Agreement, GeoPark has committed to carry Petroperu on a work program
that provides for testing and start-up production of one of the existing wells in the field, subject to certain
technical and economic conditions being met. Expected capital expenditures in 2017 for the Morona Block are
mainly related to facility maintenance and environmental and engineering studies.
James F. Park, Chief Executive Officer of GeoPark, said: “We appreciate the support of the Peruvian government to advance the Morona Block and we very much look forward to partnering with Petroperu and the local communities in developing and exploring this exciting project. The Morona Block is the type of highvalue project we look for in Latin America – with an already-discovered big oil field and the opportunity to convert existing reserves into production and cash flows, combined with high impact exploration potential in a proven and prolific hydrocarbon system. The timing and size of this project also fits very well within GeoPark’s existing high quality portfolio of production and exploration assets across the region and represents an important piece of GeoPark’s ambitious medium to long term growth plans.”
