25 Mar 2011 07:00
Andes Energia plc
("Andes" or "the Company")
Acquisition of Interest in Vega Grande and
Option to acquire up to 100% of
Vega Grande, La Paloma and Cerro Alquitran
The Board of Andes (AIM: AEN; BCBA: AEN), the Latin American energy group, is pleased to announce the conditional agreement to acquire certain interests in oil and gas licences in Argentina.
HIGHLIGHTS
·; Acquisition of 24% working interest in Vega Grande;
·; Part exercise of option to acquire a further interest in Vega Grande resulting in a additional 10% working interest; and
·; Option held by Andes to acquire the remaining 66% interest in the producing block Vega Grande and a 100% interest in the development blocks La Paloma and Cerro Alquitran.
Vega Grande
Andes is pleased to announce that it has conditionally agreed to acquire a 24% working interest in Vega Grade in exchange for the issue of 10,250,000 Andes ordinary shares ("Ordinary Shares") and to acquire a further 10% working interest for a consideration of approximately US$1.7 million, as a result of part exercise of the option granted to Andes on 27 November 2007. Consideration for this additional 10% interest has already been satisfied at the time of the issue of the option to Andes in November 2007 and no further consideration for the acquisition of this interest remains payable by Andes.
As part of the agreement, Andes now has the option to acquire the remaining 66% of Vega Grande and 100% of La Paloma and Cerro Alquitran.
Vega Grande is a producing asset located in the Mendoza province, with 4.3 MM Boe 1P/2P, accumulated production of 1.6 MM Boe and a daily production of 120 bpd. Approximately 172km of 2D seismic has been shot over the licence, which Andes considers to be under explored.
A reserves report was produced by Oilfield Production Consultants (OPC) Ltd for Andes, which shows P50 recoverable reserves of 4.3 million boe and 3.7 BCF of gas.
Vega Grande Reserves
P90 | P50 | P50 | |
Oil MMm³ (MMb) | 0.35 (2.2) | 0.69 (4.3) | 1.18 (7.4) |
Gas MMm³ (BCF) | 49 (1.7) | 104 (3.7) | 184 (6.5) |
Vega Grande Contingent Resources
P90 | P50 | P50 | |
Oil MMm³ (MMb) | 0.33 (2.1) | 0.56 (3.5) | 0.90 (5.7) |
Gas MMm³ (BCF) | 55 (1.9) | 110 (3.9) | 190 (6.7) |
Luis Alvarez Poli, Chief Executive Officer, commented, "We are delighted to be able to complete these transactions through which we are becoming owners of proven reserves, oil producer and operator. With the acquisition and exercise of the option, Andes has also taken operational and management control of the block for which it will be compensated with a management fee of 5% of total production. Vega Grande is an under-exploited and under-managed field with high potential. We are acquiring reserves and production at very competitive prices compared to other larger transactions, like Sinopec, CNOOC and Pluspetrol, that have recently taken place in Argentina".
Qualified Person Review
In accordance with AIM guidance for mining, oil and gas companies, Mr. Juan Carlos Esteban has reviewed the information contained in this announcement. Mr. Juan Carlos Esteban, an Officer of the Group, is a petroleum engineer with over 20 years of experience and is a member of the SPE (Society of Petroleum Engineers).
Application for Admission, Completion of the Acquisition and Total Voting Rights
Application will be made for the 10,250,000 new Ordinary Shares to be admitted to AIM. Completion of the acquisition is expected to occur on admission to AIM of the 10,250,000 new Ordinary Shares, which is expected to become effective on 1 April 2011.
Following admission of the 10,250,000 ordinary shares, the total number of issued ordinary Shares will be 133,390,195 Ordinary Shares. The Company does not hold any Ordinary Shares in treasury. This figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the Financial Service Authority's Disclosure and Transparency Rules.
Enquiries:
Andes Energia | Luis Alvarez Poli, CEO Nigel Duxbury, Finance Director
| T: 020 7495 5326 |
Arbuthnot Securities | Antonio Bossi Ed Groome
| T: 020 7012 2000 |
Note to Editors:
Andes is a Latin American energy group, with electricity distribution, hydro-electric power and oil and gas interests in Argentina. The Company's focus is on the Argentinean energy sector, which it believes offers premium assets at undervalued prices.