Suroco Energy to acquire Winchester Oil & Gas

Suroco Energy Inc., Calgary, plans to acquire Winchester Oil & Gas SA for $30 million and 200 million Suroco common shares.

By OGJ editors
HOUSTON, Apr. 23
-- Suroco Energy Inc., Calgary, plans to acquire Winchester Oil & Gas SA for $30 million and 200 million Suroco common shares.

Winchester, a Panamanian company that produces oil and holds blocks in Colombia, will become a Suroco subsidiary.

Suroco’s core assets are in the Putumayo basin, and Winchester’s core assets are in the Llanos basin. Winchester produces 731 b/d and holds interests in six blocks, two of which it operates.

The transaction would yield a combined entity with 1,608 b/d net after royalty of light oil production. It would drill 7 gross wells in 2010 and 10 in 2011.

Winchester will start a drilling program in its operated Yamu Block in May and will target multiple, drill-ready, 3D seismic-supported exploration prospects close to production facilities. Suroco will continue its appraisal and development drilling program on Suroriente block.

Winchester’s holdings are Yamu block 54.5% net working interest in existing production wells and 60-75% in future exploration wells, 40% in Llanos Block 34, La Sierra block 24.5%, Cerrito block 10%, Abanico block 10%, and Arrendajo block 10%. It operates Yamu and Llanos Block 34.

Of Winchester’s production, 501 b/d is operated production from Carupana field on Yamu block. The rest is from Abanico block operated by Pacific Rubiales Energy.

Winchester is shooting extensive 3D seismic on Llanos Block 34 in preparation for exploratory drilling in 2011.

Suroco holds working interests in western Canada and in these oil and gas blocks in Colombia: Alea 1848A block 50%, Alea 1947C block 24.5%, Suroriente block 15.8%, Arjona block 32.5%, and Hato Nuevo block 9.9%. It has an option to acquire a 28% net working interest in Llanos Block 33.

Production from Suroriente block in the Putumayo basin averaged 6,011 b/d in April (875 b/d net after royalty to Suroco). Following a new pool discovery made by the Pinuna-5 well, several appraisal and development wells are to be drilled this year.

In Suroco’s two Putumayo exploration blocks, drilling prospects have been matured with infill 2D seismic and two exploratory wells are to be drilled either in late 2010 or early 2011.

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