The NI 51-101 compliant resource evaluation report prepared by Petrotech Engineering Ltd. provides information regarding conventional and unconventional prospective resources on the Canadian oil and gas exploration company’s VMM 37 Block in Colombia.
For the conventional formation (Lisama) on the Block, in which the company has a 100% private participation interest, Petrotech calculated a P50 best estimate effective July 31, 2012 of unrisked prospective recoverable resources of 51 million barrels of oil.
As to the unconventional zones of interest, Petrotech has assigned a P50 best estimate effective July 31, 2012 of unrisked prospective recoverable resources of 700 million barrels of oil.
As recently announced, and for the purpose of the evaluation, the company has farmed-out a 70% participation interest in the prospective unconventional resources in the Tablazo, Salada and Galembo formations to ExxonMobil Exploration Colombia Limited (NYSE: XOM) who will pay 100% of the exploration costs of the first three wells to drill down to the Tablazo. These wells will likely encounter the Lisama formation (conventional - Sintana 100%) and ExxonMobil will provide the electric logs of this section for evaluation by Sintana at no cost to the company. If hydrocarbons are encountered in the Lisama, the subsequent testing and development of this formation will be borne 100% by the company. In addition, ExxonMobil is to pay $45 million for Phase 2 (initial development phase) of the work program. Once first production is achieved, Sintana will pay back $10 million from 50% of its proceeds.
The P50 best estimate before royalties for the company's remaining 30% interest in the unconventional formations is a prospective recoverable resource of 210 million barrels of oil.