Pacific Rubiales Energy Corp., Toronto, has acquired a 50% working interest in the Block 116 exploration contract in the Santiago subbasin of the Maranon basin in northeastern Peru.

Under a letter of intent with Les Etablissements Maurel & Prom SA, Pacific Rubiales would become operator of the 6,600 sq km block. The block is in the Peruvian Andean foothills, a structurally complex and minimally explored area that has important hydrocarbon potential in Paleozoic, Cretaceous, and Tertiary rocks, Pacific Rubiales said.

The most recent oil discovery in Peru, the Situche Central-1X well by Talisman Energy Inc., is 100 km northeast of Block 116, and the Oleducto Norperuano oil pipeline crosses the central part of the block. Pacific Rubiales acquired a 49.999% interest in M&P Colombia earlier this year.

Pacific Rubiales will assume a full carry obligation of up to $75 million, which is initially intended to cover the first and second wells, subject to its right to receive a reimbursement through cash flows derived from future hydrocarbon production from the block. M&P will have the right to recover its sunk costs, estimated at $7.8 million, from future cash flows.