CEPSA farms into Pan Andean blocks

Pan Andean has agreed terms on which CEPSA, a major international Spanish based oil company, will joint venture Blocks 114 and 131 in the Ucayali jungle of Peru. Previous drilling proved a working oil system in the Blocks. The joint venture is part of the Pan Andean strategy to reduce financial exposure whilst accelerating drilling plans in high potential blocks.

The agreement is subject to the regulatory approval of the Authorities. Once such approval is obtained, CEPSA will reimburse Pan Andean for all costs incurred to date, estimated at US$3m.

Pan Andean will dilute its interest in Block 114 to 30%, in return for CEPSA incurring all exploration costs through the first well and half of the second well.

The new ownership of Block 114 will be 30% Pan Andean, 10% CCP (a local private Peruvian company) and 60% CEPSA. CEPSA will operate the block.

Block 114 is situated in 1.8 million acres of jungle terrain, drained by navigable rivers. Environmental preparation and permitting for seismic and wells are almost completed.