-- Canada-based Parex Resources and strategic partner Ecopetrol (EC) have executed an agreement under which Parex will earn a 50% participating share in the Casabe and Llanito blocks in Colombia's Magdalena Basin, in exchange for $250 million of capital investments over five years, Parex said Monday.
The two blocks produce a combined 14,900 barrels of medium crude oil and have an estimated original oil in place of more than 3 million barrels with average recovery of less than 15%.
Parex, a Colombia-focused company, will commit the stipulated $250 million of capital of which $125 million will be carry capital, Parex said in a statement, once regulatory approval has been obtained.
Parex's base production participation starts upon spudding the first well on each block, something that it expects to happen in the second half of this year. The company will be executor of all future drilling and capital activities while Ecopetrol will remain operator of current and future production.
Priority development work will be infill drilling, waterflood optimization and enhanced oil recovery initiatives, areas in which Parex has demonstrated expertise in the Llanos and Magdalena Basins.
Upon completion of the first phase under which Parex receives its 50% share of the projects and provides committed capital, all capital thereafter will be shared on a 50:50 basis, Parex's statement said.
Parex described the fields as mature, with recently reprocessed 3D seismic that provides a path to raise production. The fields also have potential for horizontal drilling, the statement said.
The company said a direct pipeline connection to Ecopetrol's Barrancabermeja refinery already exists, to maximize netbacks.