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.
About Crown Point
Crown Point Energy Inc. is an international oil and gas exploration and development company headquartered in Calgary, Canada, incorporated in Canada, trading on the TSX Venture Exchange and operating in South America. Crown Point's exploration and development activities are focused in the Golfo San Jorge, Neuquen and Austral basins in Argentina. Crown Point has a strategy that focuses on establishing a portfolio of producing properties, plus production enhancement and exploration opportunities to provide a basis for future growth.
Certain information regarding Crown Point set forth in this document may constitute forward-looking statements under applicable securities laws and necessarily involve substantial known and unknown risks and uncertainties, including information relating to the following: Crown Point's belief that the 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; the expectation that drilling operations in the Las Violetas Exploitation Concession will commence in September 2013 and the number of wells to be drilled over a three year period; the expectation that successful drilling on certain high reward exploration and exploitation locations on the Las Violetas Exploitation Concession could add additional drilling locations; the expectation that the multi-well Las Violetas Exploitation Concession drill program will target predominantly gas charged Springhill sandstones; the intention to conduct a 3D seismic program on the Angostura Sur and Rio Cullen Exploitation Concessions and the intended target and the timing thereof; and the estimated net capital expenditures in the TDF area for 2013. These forward-looking statements are based on numerous assumptions including but not limited to the following: drilling success, expectations with respect to future production levels, future capital expenditure levels, expectations of cash flow from operating activities, commodity prices, costs associated with capital expenditures, the availability of personnel and equipment when expected, the timely receipt of applicable regulatory and other governmental approvals, and the continuance of existing laws and regulations. The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect.
These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond Crown Point's control, including without limitation, risks associated with the following: oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, environmental risks, inability to obtain drilling rigs or other services, capital expenditure cost increases, including drilling, completion and facility costs, unexpected decline rates in wells, wells not performing as expected, delays resulting from or inability to obtain required regulatory approvals, ability to access sufficient capital from internal and external sources, the impact of general economic conditions in Canada, Argentina, the United States and overseas, industry conditions, changes in laws and regulations (including the adoption of new environmental laws and regulations and changes to tax laws) and changes in how they are interpreted and enforced, political risks (including the risk of the expropriation of the Company's assets), increased competition, the lack of availability of qualified personnel or management, fluctuations in foreign exchange or interest rates, and stock market volatility. Readers are cautioned that the foregoing list of factors is not exhaustive. Crown Point's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that the Company will derive therefrom. Readers are cautioned that the foregoing list of factors is not exhaustive. All forward-looking statements, whether written or oral, attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Additional information on these and other factors that could affect Crown Point's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com ) or Crown Point's website (www.crownpointventures.ca ). The forward-looking statements contained in this document are made as at the date of this news release and Crown Point does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.
TSX Venture Exchange
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Crown Point Energy Inc.
Murray D. McCartney
President & CEO
Crown Point Energy Inc.
Arthur J.G. Madden
Vice-President & CFO
Crown Point Energy Inc.
Brian J. Moss
Executive Vice-President & COO