PGR.L Regulatory News (PGR)

25 Feb 2008 07:00

Andes Energia PLC25 February 2008 25 February 2008 Andes Energia Plc ("Andes" or "the Company") Oil & Gas JV update The Board of Andes, the Latin American energy group, is pleased to announce thatit has received notification that the shareholders of Patagonia Oil & Gas S.A.("Patagonia"), its consortium partner, have entered into a funding agreementwith PetroSaudi International Limited ("PetroSaudi"), which could be worth up to$94.5 million. HIGHLIGHTS •Funding agreement between Patagonia and PetroSaudi worth up to $94.5 million. •The cash injection will aid the development of the seven licence blocks in which Andes has a 20 per cent carried interest and a 3 per cent working interest and a 20 per cent royalty interest. •Six of the licence blocks are located in the same basin where Pan American Energy, recently announced a discovery of 100 million barrels of new reserves. In March 2007, Andes and Patagonia entered into a Consortium Agreement toexplore and exploit hydrocarbons in South America. UTEs, consisting of theConsortium and the operator, have been awarded three exploration licences todate covering a total of seven blocks. The development of these licences will now be aided by the cash injection fromPetroSaudi following its funding agreement with Patagonia. Andes has a 20 percent carried interest in the licences, under which it does not contribute to theexploration costs until the licence block is declared commercial and a 3 percent working interest. In addition Andes has a 20 per cent royalty interest onall hydrocarbons produced under the Consortium Agreement. PetroSaudi has agreed to invest US$39.5 million for the first year of theagreement, with an option to invest an additional US$55 million for the secondand third year. As of today the UTEs have already received US$7 million to beapplied to working programme commitments. Six of the seven licence blocks are located in the same basin where Pan AmericanEnergy, which is controlled by BP PLC, recently announced a discovery of 100million barrels of new reserves. The discovery wells are located at 45 degrees 40'54" S and 68 degrees 19'11" W.This is 42 miles (in direct line) to San Bernardo (one of the Consortium'slicence blocks) and 39 miles south of Sierra Cuadrada (another of theConsortium's licence blocks). Luis Alvarez Poli, Chief Executive Officer of Andes commented, "The agreementwith PetroSaudi, an established worldwide player in the oil and gas arena,ratifies the quality of our assets, whilst the recent discovery by Pan Americanhighlights the significant potential of the basin." Enquiries: Andes Energia plcLuis Alvarez Poli, Chief Executive Officer T: 020 7495 5326Nigel Duxbury, Finance Director Arbuthnot SecuritiesJames Steel T: 020 7012 2000Antonio Bossi Bishopsgate Communications LimitedMaxine Barnes T: 020 7562 3350Nick Rome 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 focusis on the Argentinean energy sector, which it believes offers premium assets atundervalued prices. This information is provided by RNS The company news service from the London Stock Exchange