/NOT FOR DISTRIBUTION TO U.S. NEWS WIRE
SERVICES OR DISSEMINATION IN THE UNITED
STATES/
VANCOUVER, May 3, 2017 /CNW/ - PMI Resources Ltd.
("PMI" or the "Company") (TSXV: PMI), is
pleased to provide an update on the acquisition of 100% of the
shares of Patagonia Oil Corp., a company incorporated and existing
under the laws of the British Virgin
Islands ("Patagonia").
Trading in the common shares of the Company has been halted in
accordance with the policies of the TSX Venture Exchange (the
"Exchange") and will remain halted, until such time as all required
documentation has been filed with and accepted by the Exchange and
permission to resume trading has been obtained from the
Exchange.
After completing the PentaNova Energy Corp RTO on April 4, 2017, PMI anticipates to complete the
Patagonia acquisition in late May, early June. The size and
terms of the concurrent financing have not been negotiated with the
agents, but the financing is anticipated to close shortly before
the Patagonia acquisition.
About Patagonia
Patagonia is a private corporation focused on oil and gas plays
in Argentina. Patagonia has now entered into binding
agreements to acquire certain oil and gas exploration, development
and producing assets in Argentina (the "Assets"),
as described below.
I. ASSETS
A. LLANCANELO EXPLOITATION ASSET (50%)
The Llancanelo area is located to the north of the Neuquén
Basin, in a basin-edge position in the province of Mendoza, 37 km
south of the city of Malargüe. The Llancanelo field was discovered
by YPF in 1937 after drilling two exploratory wells that tested oil
in the Tertiary levels. In 1965, the discovery well was drilled for
the Neuquén Group from the Cretaceous period. Crude oil production
from the area, as of December 31,
2016, was 1,736 bopd, from 32 active wells, with no gas
reported. (Audit of Hydrocarbon Reserves Attributable to Roch
S.A. for Designated Properties in Argentina as of December 31, 2016) ("Roch NI 51-101") Minor
amounts of gas are produced with the oil that are not reported and
do not justify commercialization. Thirteen deviated wells were
drilled in 2016 into a large heavy oil body which YPF has estimated
to hold 1.7 billion barrels of oil (OOIP) on the block.
B. LLANCANELO "R" EXPLORATION ASSET
The Llancanelo "R" area is located to the north of the Neuquén
Basin, in a basin-edge position in the province of Mendoza, 37 km
south of the city of Malargüe. The area contains the extension of
the producing formation from the Llancanelo area. There is no
current production for the Llancanelo "R" area.
C. RIO CULLEN – LAS
VIOLETAS – LA ANGOSTURA ASSETS (24.286%)
The Las Violetas, Angostura and Río Cullen areas are located in
the Tierra del Fuego Province in the Austral Basin. These three
areas cover about 497,211 acres (2,013 km2). Las
Violetas has six productive fields, Angostura has five productive
fields and Río Cullen has two productive fields. Most of the oil
and gas is produced from the Springhill formation at depths around 2,100
and 2,200 m MD, respectively. The Springhill formation is the most important
petroleum system in the basin. The production as of Dec 31, 2016 was 824 bopd of liquids and 30 MMcfd
of gas. Production is from 49 active wells in 14 gas fields. (14
PUD's and 15 Probable locations). (Roch NI 51-101) The
blocks have 29 drill ready prospects an additional 30 prospects and
leads have been identified on the block.
D. ANTICLINAL AGUADA BANDERA ASSET ("AAB")
(75%)
The Anticlinal Aguada Bandera ("AAB") Block is located in the
southwest productive trend of the San Jorge Basin. The AAB Block is
comprised of 106,500 acres, including a producing AAB Field,
discovered on September 6, 1983 in a
structural-stratigraphic trap. The oil formation is the Bajo
Barrial at a depth of 639 metres. Between 1963 and 2008, a
total of 17 wells were drilled in the AAB Block area. In 2005, the
production of this field was temporarily shut-in. 162
km2 of 3-D seismic survey was conducted, two exploratory
and four appraisal wells were drilled after Quintana farmed into
the AAB Block. The AAB.a-1001 well confirmed the southern structure
and the AAB.x-1002 explored the central structure in 2013. 380
km2 of 3D seismic was conducted and four additional
successful exploration wells were drilled in 2014 to appraise the
central structure. Currently, there are seven producing
wells, with cumulative oil production of 321,000 bbl oil and
146,288 Mcf of gas. Production as of Dec
31 2016 was 170 bopd. ( The report titled:
Evaluation Of The Interests of PentaNova Energy Corp. In The
Anticlinal Aguada Bandera
Field In The Golfo San Jorge Basin Argentina which
satisfies the requirements of NI 51-101 and the COGE Handbook).
E. SUR RÍO DESEADO ESTE PRODUCTION ASSET
(58.1%)
The Sur Río Deseado Este area is located in the Santa Cruz province (Golfo San Jorge Basin),
in the zone known as the Southern Flank. The Sur Rio Deseado area
covers approximately 76,000 acres (308 km2) and includes
two viscous oil fields towards the east of the area (Estación
Tehuelches and La Frieda - La Frieda Oeste) plus a gas well
(PBa.x-1 (Punta Bauza)) also in the east. The production permit
covering 12,000 acres (50 km2) covers these three oil
fields. The gas field is currently not in production. The area is
under development and has exploration potential for heavy oil. 3D
seismic was acquired by Roch S.A., covering the full production
permit. The production mainly comes from the Tertiary, Mina del Carmen and Baquero formations at depths
between 800m and 900m.
F. SUR RÍO DESEADO ESTE EXPLORATION ASSET
(52.4%)
The Sur Río Deseado Este Exploration Asset neighbors the Sur Río
Deseado Este and includes the right to exploit, carry out
complementary exploration and develop hydrocarbons located in a
concession with an area of 255 Km2.
G. KM8 ASSETS (100%)
The Km8 block is located north of the city of Comodoro Rivadavia
in the Province of Chubut. The block covers 4,585 acres and
consists of two production zones associated with drilling. Shallow
drilling activity began in 1915 and continued until the late
1960's, with 671 wells in the Salamanca formation draining 600 mbbp
(the first sandstone production from the basin of the San Jorge
Gulf, with cumulative production of 4,500,000 m3 (28.3
mmbbl). From 1970 until 1997, 58 deeper wells were drilled, with
cumulative production of 1,500,000 m3, (9.5 MMbbl). In
total, production has averaged 164 m3 (1,032 bopd)
throughout the history of the site. Today there are only 11
producing wells. The Km8 Assets include: 4 properties known as "San
Jorge", "Sol de Mayo", "German Burmeister" and "George Stephenson";
land property rights over approximately 405 hectares within the
area; and certain infrastructure and equipment related to such
properties. Production as of Dec 31
2016 was 80 bopd. (Historic data has been verified from records of
the Province of Chubut)
H. ESTANCIA LA MARIPOSA, LOMITA DE LA COSTA AND CERRO
MANGRULLO (18%)
These assets include small gas prone blocks jointly operated in
the center of the San Jorge basin. Estancia La Mariposa (ELM)
covers 27.9736 km2, Lomita de la
Costa (LDLC) 10.22 km2 and Cerro Mangrullo (CM)
covers 50 km2. The exploitation permits were
granted in 2008. Production comes from the ELM property, with 5 new
wells being drilled between 2014 and 2015.
II. DESCRIPTION OF THE ACQUISITIONS
1. LLANCANELO EXPLOITATION ASSET
Patagonia is acquiring a 50% participating interest in the
Llancanelo Asset as follows: (i) a direct 10% participating
interest through the Roch Acquisition, (ii) an indirect 29%
participating interest through the Alianza Petrolera Acquisition
and (iii) a direct 11% participating interest in the Llancanelo
Asset through the YPF Acquisition.
2. LLANCANELO "R" EXPLORATION ASSET
As part of the agreement with YPF for the Llancanelo
Exploitation Asset, Patagonia has acquired the rights to negotiate
a farm-in with YPF in the surrounding Llancanelo "R" area, which
includes the right to make a matching offer if YPF receives any
other offer. The detailed terms and conditions of the
negotiation have not yet been defined.
3. RIO CULLEN – LAS VIOLETAS – LA ANGOSTURA
ASSETS
Patagonia is acquiring a total 24.286% participating interest in
the Rio Cullen, Las Violetas and La Angostura Assets as follows:
(i) a direct 20.286% participating interest through the Roch
Acquisition, and (ii) an indirect 4% participating interest through
the Secra 96% Acquisition and the Secra 4% Acquisition.
4. ANTICLINAL AGUADA BANDERA ASSET
Patagonia is acquiring a total 75% indirect participating
interest in the Anticlinal Agua Bandera Asset through the Quintana
Acquisition.
5. SUR RÍO DESEADO ESTE PRODUCTION ASSET
Patagonia is acquiring a total 58.1408% participating interest
in the Sur Río Deseado Este Production Asset as follows: (i) a
direct 54.1408% participating interest through the Roch
Acquisition, and (ii) an indirect 4% participating interest
through the Secra 96% Acquisition and the Secra 4% Acquisition.
6. SUR RÍO DESEADO ESTE EXPLORATION ASSET
Patagonia is acquiring a total 52.4% participating interest in
the Sur Río Deseado Este Exploration Asset as follows: (i) a direct
7.920% participating interest through the Roch Acquisition, (ii) an
indirect 0.48% participating interest through the Secra 96%
Acquisition and the Secra 4% Acquisition and the Quintana
Acquisition, and (iii) an indirect 44% participating interest
through the Quintana Acquisition.
7. KM8 ASSETS
Patagonia is acquiring from vendors, as described below, 100% of
the Km8 Assets and 100% of the equity interests of the operator of
the Km8 Assets.
8. ESTANCIA LA MARIPOSA, LOMITA DE LA COSTA AND CERRO
MANGRULLO
Patagonia is acquiring an 18% indirect participating interest in
the Estancia La Mariposa, Lomita de la
Costa and Cerro Mangrullo Assets through the Alianza
Petrolera Acquisition.
III. ACQUISITION TERMS
Total aggregate purchase price for the acquisitions consists of
a purchase price of $104.6 Million
USD, additional payments to be made out of production
revenues in the amount of $12 Million
USD and the agreement to complete work programs in the
Llancanelo field for the amount of $54
Million USD over three years.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this release.
The securities of the Company have not been and will not be
registered under the U.S. Securities Act of 1933, as amended, or
under any state securities laws, and may not be offered, sold,
directly or indirectly, or delivered within the United States of America and its
territories and possessions or to, or for the account or benefit
of, United States persons except
in certain transactions exempt from the registration requirements
of such Act and applicable state securities laws. This press
release shall not constitute an offer to sell or a solicitation of
an offer to buy securities in the United
States.
Forward-Looking Information
Except for the statements of historical fact, this news
release contains "forward-looking information" within the meaning
of the applicable Canadian securities legislation that is based on
expectations, estimates and projections as at the date of this news
release. The information in this news release about the
completion of the transaction described herein, and other
forward-looking information includes but is not limited to
information concerning the intentions, plans and future actions of
the parties to the transactions described herein and the terms of
such transaction.
Factors that could cause actual results to differ materially
from those described in such forward-looking information include,
but are not limited to, risks related to the Company's or
Patagonia's inability to satisfy a condition precedent to the
completion of the transaction (including obtaining necessary
regulatory approvals), other risks related to completion of the
transactions and risks related to the inability of either of the
Company or Patagonia to perform their respective obligations under
the transactions.
The forward-looking information in this news release reflects
the current expectations, assumptions and/or beliefs of the Company
based on information currently available to the Company. In
connection with the forward-looking information contained in this
news release, the Company has made assumptions about the Company's
ability to complete the transactions and Patagonia's ability to
complete the acquisition of the Assets. The Company has also
assumed that no significant events will occur outside of the
Company's normal course of business. Although the Company believes
that the assumptions inherent in the forward-looking information
are reasonable, forward-looking information is not a guarantee of
future performance and accordingly undue reliance should not be put
on such information due to the inherent uncertainty
therein.
Any forward-looking information speaks only as of the date on
which it is made and, except as may be required by applicable
securities laws, the Company disclaims any intent or obligation to
update any forward-looking information, whether as a result of new
information, future events or results or otherwise.
SOURCE PMI Resources Ltd.