CALGARY, ALBERTA -- (Marketwired) -- 07/17/13 -- Crown Point Energy Inc. (TSX VENTURE: CWV) ("Crown Point" or "the Company") is pleased to provide an operational update for its 25.78% interest Las Violetas Exploitation Concession in the Province of Tierra del Fuego and for its 100% interest Neuquen Basin, Cerro de Los Leones Exploration Concession in the Province of Mendoza.
Tierra del Fuego, Austral Basin
Crown Point and its partners are currently reviewing several drilling rig options and negotiations are underway to obtain and import a drilling rig into Tierra del Fuego to conduct a multi-well and multi-year drilling program on its 25.78% interest Las Violetas Exploitation Concession in the Province of Tierra del Fuego. Drilling operations are expected to commence in the fourth quarter of 2013. The initial program of 8 wells is part of a multi-well drilling campaign to exploit the predominantly gas charged Springhill sandstones on its concessions in the Province of Tierra del Fuego in particular the Las Violetas Concession. Capital expenditures for Crown Points' capital program are expected to be funded using Crown Point's existing resources and cash flows.
The initial eight well phase of the Las Violetas Exploitation Concession drilling program is a low risk development program. These wells are expected to take 20 days to drill and case (including rig up and rig down), and completion and tie-in are expected to take an additional 30 days per well.
The locations are fully defined with 3D seismic and are either infill locations or low risk pool step-outs. Additionally, Crown Point and its partners have identified a number of high reward exploration and exploitation locations on the Las Violetas Exploitation Concession. If any future drilling activities at these locations is successful, it could further add to the present drilling inventory.
It is anticipated that production increases resulting from the drilling program will qualify for improved gas pricing under the New Gas Incentive Program, announced by the Argentine government in January 2013. Crown Point has applied for participation in the New Gas Incentive Program. The government of Argentina has extended the negotiation period until August 15, 2013
As previously announced, Crown Point and its partners recently received all necessary governmental approvals for 10 year extensions of the Las Violetas Exploitation Concession, as well as the Rio Cullen and Angostura Exploitation Concessions, in which Crown Point also holds a 25.78% interest and which are also in the Province of Tierra del Fuego. The following are the key terms of the extensions:
Las Violetas Exploitation Concession
-- Cash payment: US$5 million (gross) (net $1.3 million) paid in three equal installments commencing immediately and subsequently in 180 day successive periods;-- Base royalty: increase from 12 to 15%;-- Variable royalty: 0.5% to a maximum of 2.5% (in 0.5% increments) with increasing oil and gas prices;-- Minimum total development investment commitment: US$46.9 million including 18 wells (gross) (net US$12.1 million) to be expended over the remaining life of the concession;-- Minimum total exploration investment commitment: US$5.0 million (gross) (net US$1.25 million) to be expended over the next 60 months.