Repsol YPF SA (REP) on Wednesday said that it has signed a farm-in agreement with Vinccler Oil and Gas, a wholly-owned subsidiary of PetroFalcon Corp. (PFC.TO) on the Cardon IV Block in the Gulf of Venezuela.
Repsol and Vinccler recently signed a letter of intent whereby Vinccler will acquire a 25% working interest from Repsol in the offshore natural gas license for the Cardon IV Block. Under the deal, Repsol will keep a 25% interest.
Eni SpA (E), an Italian integrated oil and gas company, holds the remaining 50% interest, and Petroleos de Venezuela, S.A. or PDVSA, the Venezuelan state-owned oil and gas company, retains the right to acquire up to 35% of the project after declaration of commerciality.
The transaction is subject to the approval of Eni and the Venezuelan Ministry of Energy and Petroleum, as well as the negotiation and signature of a binding sale and purchase agreement.
Repsol and Eni were awarded the Cardon IV Block with the high bid of US$34 million in the second phase of the Rafael Urdaneta Project in 2005.
The company said that Cardon IV Block covers an area of 924 square kilometers and is located in relatively shallow waters, 30 kilometers west of the Paraguana Refinery Complex.
The acquisition of 700 square kilometers of 3D seismic data over the Cardon IV Block was completed in February 2007. The company said that the data is now being interpreted, and a drilling decision for an exploration well is expected in mid-2008, with a likely spud date in early 2009.
A jack-up rig is being secured with a multi-operator group from adjoining blocks in the Gulf of Venezuela. If successful, first commercial production of natural gas is expected in 2011, the company noted.
REP is currently trading at $34.15, up 23 cents. PFC.TO is currently trading at C$1.08, up 2 cents or 1.89%. E is currently trading at $69.59, down $1.18 or 1.67%.
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