Sagres Finalizes Farmout Agreement with Canacol Energy on El
Sagres Finalizes Farmout Agreement with Canacol Energy on El Triumfo Block in Colombia
CALGARY, ALBERTA -- (Marketwire) -- 11/06/12 -- Sagres Energy Inc. (the "Company") (TSX VENTURE:SGI) announced today that it has finalized its farmout agreement with Canacol Energy Ltd. on the El Triunfo Block, which is comprised of 25,205 gross acres in the oil-rich Llanos Basin in the Department of Casanare, Colombia (the "Block"). The Block contains an undeveloped discovery well, La Cabana-1, that was drilled in 1984, on the flank of the 3D seismically defined San Sebastian prospect, and tested 736 bopd with water from the Mirador Formation and 338 bopd with no water from the Gacheta Formation, however was not put on production due to mechanical reasons. To date, there has been no commercial production on the Block, but there are several undrilled prospects that have been identified on 3D seismic.
As previously announced Sagres entered into a purchase and sale agreement and farmout agreement to acquire the right to earn a participating interest in the Hydrocarbon Exploration and Production Agreement (the "E&P Agreement") related to the Block. Pursuant to the terms of the E&P Agreement, the participating interest holders are required to drill two exploration wells on the Block. Sagres has the right to earn an undivided 70% participating interest and assume operatorship in the Block by paying 100% of the costs relating to the first of the two wells, with the opportunity to earn an additional 12.5% participating interest after the drilling of the second well.
Under the terms of the farmout agreement among Sagres and Canacol, Canacol acquired 50% of Sagres' 70% net working interest in the Block by agreeing to pay 50% of outstanding back costs related to the Block, which is approximately US $2,432,380, and by paying its pro-rata share of future costs related to the Block. In exchange for the back cost payment, Sagres issued Canacol an interest-free secured promissory note which will fall away upon the spudding of the first well on the Block. Canacol also has an option to pick up an additional 10% working interest from Sagres, up until the spudding of the first well, by paying 20% of the total costs associated with Phase 5 of the exploration program, which includes the drilling of the first exploration well along with all related G&G and other associated costs.
Sagres also announces that it has entered into a promissory note with Aberdeen International Inc., pursuant to which Aberdeen has agreed to lend the Company US$350,000. Sagres also entered into a second promissory note with Forbes & Manhattan, Inc., pursuant to which Forbes has agreed to lend the Company US$150,000. The Company intends to use the proceeds of the promissory notes for general working capital purposes. The principal under the promissory notes will incur an interest rate of 8% per year and shall mature on October 18, 2013. The promissory notes are secured against all of the assets of Sagres.
Sagres Energy Inc. is a Canadian based international oil and gas exploration company with exploration assets in Colombia. The common shares of Sagres are listed for trading on the TSX Venture Exchange under the symbol "SGI".
This press release contains "forward looking information" within the meaning of applicable Canadian securities legislation. Forward looking information includes, but is not limited to, statements with respect to the farmout of the Block; the potential of the Block; the entering into of promissory notes and the use of proceeds of the promissory notes. Generally, forward looking information can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information, including but not limited to: general business, economic, competitive, geopolitical and social uncertainties; the actual results of exploration activities; regulatory risks; risks inherent in foreign operations; and other risks of the oil and gas industry. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
Contacts: Sagres Energy Inc. Jaime Lalinde CEO (+571) 805-0240