(1) Financial and operating results for the three month period ended February 29, 2012 do not include results from the Tierra del Fuego area as the Company's interests in the area were not acquired until May 28, 2012.
TIERRA DEL FUEGO, ARGENTINA
The Company's 25.78% working interest in the Tierra del Fuego ("TDF") area of Argentina covers approximately 489,000 acres (126,000 net acres) in the Austral Basin and includes the Las Violetas, Angostura Sur and Rio Cullen exploitation concessions. The primary term of all three concessions expires in November 2016; however, the Company and its partners have negotiated a ten year extension (to November 2026) with the provincial government authorities of TDF. The extension and its terms are currently awaiting ratification by the provincial legislature.
Crown Point's TDF concessions are high quality natural gas weighted assets possessing the capability to deliver increased levels of production and reserves in an expected increasing natural gas price market.
NEW GAS INCENTIVE IMPACT ON CROWN POINT
On January 18, 2013, the Government of Argentina issued a resolution to increase the price to US$7.50/MMbtu (approximately US$7.75/Mcf) for natural gas production in excess of a "base" production rate determined for each company (the "New Gas Incentive"). The New Gas Incentive provides that participating companies will receive, on a payment basis to be determined from the National Government, cash compensation equal to the difference between US$7.50/MMbtu (approximately US$7.75/Mcf) and the price received for gas produced in excess of the base production rate. Certain details are still pending to fully clarify how the New Gas Incentive will be implemented. The implementation of this program or one similar may have a significant and positive impact on Crown Point's capital programs and its financial netbacks from production from the TDF concessions.
In the event that Crown Point and its joint venture partners participate in the "New Gas" program, it is likely that the TDF capital spending plans would be revised to include additional drilling and 3D seismic acquisition designed to accelerate growth in production and reserves.
DEVELOPMENT AND DRILLING PLANS
Development and drilling operations will commence in TDF after the ten year extension to 2026 has been approved.
The Company plans to acquire additional 3D seismic on the Las Violetas, Angostura Sur and Rio Cullen concessions starting in 2014. The proposed Las Violetas 3D seismic program is designed to fully evaluate and identify drilling targets over areas and trends, which have been mapped using older 2D seismic. The Angostura Sur and Rio Cullen seismic programs are following up exploration leads from existing 2D seismic and geological information.
CERRO DE LOS LEONES, NEUQUEN BASIN, ARGENTINA
The Company's 100% interest in the Cerro de Los Leones exploration concession covers approximately 306,646 acres in the Mendoza portion of the Neuquen Basin.
EXPLORATION, DEVELOPMENT AND DRILLING PLANS
Crown Point has completed the Cerro de los Leones seismic programs comprised of 122 kilometers of 2D seismic and 143 square kilometers of 3D seismic. Field recording of both seismic programs has been completed, the processing of data is nearing completion and interpretation of the data has commenced. The total cost of the two seismic programs is estimated to be $6 million.
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