Parex Resources Inc., Calgary, has farmed out its Moruga block in Trinidad and Tobago and has given notice that it will relinquish its Central Range blocks and recognize a $40 million impairment.
An undisclosed farmee earned a 20% participating interest in Moruga after paying Parex Trinidad $2 million. As contract operator, the farmee will earn a further 31% participating interest upon completing several obligations.
The obligations are to pay 100% of Parex Trinidad’s costs to rework and place on production the Snowcap-1, pay 100% of Parex Trinidad’s costs to drill, complete, and test an exploratory well within 9 months of the farmout effective date, and pay 100% of Parex Trinidad’s costs to drill, complete, and test a second exploratory well within 6 months of rig release from the first well.
If all the obligations are fulfilled, Parex Trinidad will transfer operatorship to the farmee and reduce its participating interest to 32.8% from 83.8%.
Meanwhile, Parex Trinidad will give up the Central Range Shallow Block and Central Range Deep Block. The company noted that it has discussed fiscal reform opportunities with the Trinidad & Tobago Ministry of Energy and Energy Affairs for more than a year that would encourage onshore exploration and that the parties recognized that it is not feasible to alter and enhance existing production sharing contracts.
Parex Trinidad noted that those discussions, nevertheless, led to the fiscal terms that will govern new blocks to be awarded in the upcoming Trinidad Onshore Bid Round 2013.
The strategic decision to reduce future exposure to Trinidad capital expenditures enables Parex to focus capital on its large Colombian land portfolio of 1.4 million gross acres and producing assets of 16,200 b/d of oil.