CALGARY, ALBERTA -- (Marketwired) -- 07/03/13 -- Crown Point Energy Inc. (TSX VENTURE: CWV) ("Crown Point" or "the Company") is pleased to announce that the Company and its partners have received all necessary governmental approvals for a 10 year extension of the Las Violetas, Rio Cullen and Angostura Exploitation Concessions (the "TDF Concessions") in the Austral Basin in the Province of Tierra del Fuego ("TDF"), Argentina until November, 2026.
Crown Point's TDF Concessions, in which it has a 25.78% working interest, are high quality natural gas weighted assets possessing the capability to deliver increased levels of production and reserves in an increasing natural gas price market.
Crown Point and its partners are now making preparations for a multi well drilling campaign on the Las Violetas Exploitation Concession. Drilling operations are anticipated to commence later this year.
Concession Extension Terms of Grant
Las Violetas Exploitation Concession - the key terms of the extension are the following:
-- Cash payment: US$5 million (gross);-- Base royalty: increase from 12 to 15%;-- Variable royalty: 0.5 % to a maximum of 2.50% (in 0.5% increments) with increasing oil and gas prices; and-- Minimum total investment commitment: US$46.9 million including 18 wells (gross).Rio Cullen and Angostura Exploitation Concessions - the terms of theextensions are the following:-- Exploration commitment Rio Cullen: US$3.3 million (gross), Angostura: US$3.8 million (gross) which in both cases includes seismic and drilling-- Base royalty: increase from 12 to 15%;-- Variable royalty: 0.5 % to 2.50% (in 0.5% increments) with increasing oil and gas prices; and-- After fulfillment of the exploration commitments there is an additional minimum total additional investment commitment on each concession: $1.8 million (gross)
DEVELOPMENT AND DRILLING PLANS
Drilling operations and development work is expected to commence in TDF later this year. Crown Point and its partners expect to drill a minimum of eighteen wells on the Las Violetas Exploitation Concession over three years. 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. Successful drilling at these locations could further add to the present drilling inventory. The multi-well drill program will target predominantly gas charged Springhill sandstones. It is anticipated that production increases resulting from the drilling program will qualify for improved gas pricing under the New Gas Program, announced by the government in January 2013.
The Company and its partners plan to acquire additional 3D seismic on the Las Violetas, Angostura Sur and Rio Cullen Exploitation Concessions starting in 2014. The proposed 3D seismic programs are designed to fully evaluate and identify prospective leads over areas and trends that have been mapped using older 2D seismic.
Recently, the Corporation negotiated a revision to the loan agreement which was signed on December 20, 2012, with HSBC Bank Argentina S.A. for a development loan in the amount of ARS$26,800,000 (Cdn$5.2 million). The loan will bear compensatory interest at 15.25% and is repayable in 24 monthly installments commencing 396 days after the funds have been drawn on by the Corporation. The use of the loan is restricted to the acquisition of capital assets and/or the building of facilities necessary for the production and/or commercialization of oil and natural gas from the TDF Concessions. The provisions of the revised agreement require that the loan now must be drawn in one lump sum on or before November 30, 2013.