Rick Wilkinson
OGJ Correspondent
MELBOURNE, Oct. 5 -- Baraka Petroleum Ltd., Perth, acquired a stake in the La Punta oil field in eastern Colombia through an assignment agreement with Union Temporal Omega, a joint venture that includes TC Oil & Services SA, the technical operator of the field.
The agreement gives Baraka a net 8.28% share from La Punta-1, which is currently producing 1,400 b/d of 37° gravity oil from the Tertiary-age Mirador formation, a key producing horizon in the region.
Baraka also will be entitled to a 25.75% share of the recently begun liquids stripping gas business for the next 5 years, increasing to 50% share in September 2012.
In addition, the company will acquire 8.28% of future production from the Mirador Formation in the planned La Punta-2 well to be drilled at the end of this year.
The appraisal/development well is to be drilled up-dip from the discovery well, the exact location to be based on the data from a 45 sq km 3D seismic survey to be acquired this month.
La Punta-2 will target objectives deeper in the section, and Baraka will obtain a net 25.76% stake in future production from these deep formations.
Finally, Baraka has the rights to participate in future production from any other exploration wells to be drilled in the La Punta block, the timing of which will be discussed by the joint venture following the interpretation of the 3D survey.
Baraka's entry fee into the La Punta program begins with an initial payment of $1.5 million with a further $1.3 million due this month for the seismic program plus an additional cash consideration of $2 million.
A residual payment of $5.7 million will cover the drilling and completion of La Punta-2 and an upgrade of the field's production facilities.
Initial funding will come from cash reserves and cash flow from La Punta-1.
Baraka said the staged transactions enable the company time to structure funding options with minimal impact on cash reserves.
La Punta field is in the central Llanos Basin northeast of Bogotá and east of the Andes Mountains. It was found by Ecopetrol in 1985 but changed hands a number of times and was not brought on stream until 2004. The field is surrounded by other producing fields and a pipeline network delivers the oil to one of the country's refineries.
Managing director Mark Fenton explains the move to South America away from the company's West African roots.
"Most of the available deals in Africa are big and beyond our reach unless we are willing to go into the swamps of the Nigerian Delta. But that region has other problems that we don't want to be embroiled in," he said.
"On the other hand South America has a mosaic of deals of a sort to suit our plans," he said. "Colombia in particular has a string of opportunities. It is a particularly active oil industry location from a business point of view and there are plenty of deals in the US$2-10 million range.
Fenton said, "Baraka has very specific requirements. We want to begin with small programs to create a solid foundation and then gradually build up the portfolio. In 3 years time I would like to have several producing assets with a range of exploration prospects attached."
However Fenton is adamant that the new plans in no way signal a withdrawal from its grass-roots programs in the Taoudeni Basin of interior Mauritania and Mali.