Sagres Energy agreement for El Triunfo interest

2012-08-17 16:46 ET - Property Agreement


The TSX Venture Exchange has accepted for filing documentation pursuant to a purchase agreement between Sagres Energy Inc. and Assam Company India Ltd. whereby Sagres will acquire all of Assam's right to earn a participating interest in the Agencia Nacional de Hibrocarburos hydrocarbon exploration and production agreement for the El Triunfo block in Colombia held by Union Temporal El Triunfo. In consideration, Sagres will pay $1.25-million in cash and assume $1.25-million in payables and indebtedness of Assam related to its Colombian operations. An additional $2.5-million (U.S.) payment is payable in cash or common shares of the company upon declaration by the ANH of a commercial discovery on the block.

Pursuant to the terms of the agreement, two exploration wells must be drilled in the block. The company has entered into a farm-out agreement with UTE whereby the company will earn an undivided 70-per-cent participating interest and assume operatorship in the block by paying all of the costs relating to the first of the two wells, which is expected to be $12-million (U.S.). The company has the right to earn up to an additional 12.5-per-cent participating interest in the block by financing its partner's 30-per-cent share of the work commitment costs associated with the second of the wells. The farm-out agreement is subject to approval by the ANH.