Interoil signs deals to boost production prospects in South America

Interoil Exploration and Production has signed two agreements in Colombia and Argentina to boost its production prospects in the regions.

The Norwegian exploration and production company has signed a farm-out agreement with SLS and Quantum Resources for the drilling of the remaining committed exploratory well (Mazorca) in the Altair block located in Colombia.

Interoil estimates Mazorca’s future resources to reach 1.5 million barrels with a 36% Probability of Success (PoS).

Subject to commercial discovery and production of the well, Interoil will allocate 100% of the net oil operating income to repay the investments.

Upon closing the investment payments, net operating income is planned to be divided according to Interoil’s 78% stake.

For its part, Interoil also signed a deal with Velitec in Argentina to invest in the reopening of 15 wells in the Mata Magallanes Oeste (MMO) oil field.

This includes renewal of the nearby transmission battery in Las Mesetas # 3 (LM#3), located within the YPF-owned field treatment plant.

The firm plans a downhole intervention in two wells in MMO, as well as refurbishing the surface facilities in LM#3.

Interoil said in a statement: “The gas produced will then be used to fuel surface facilities (production and treatment equipment) for the re-opening of oil production from an initial 15 wells aiming at reaching around 120 bopd, up from the current 17 bopd.”

Interoil CEO Leandro Carbone said: “We are very enthusiastic about these agreements, which squarely position the company for organic growth in a prolific hydrocarbon area in Colombia, unlock valuable oil production in Argentina, and further strengthen Interoil’s financial flexibility.”

Last year, Interoil acquired an 8.34% stake in five mature producing exploitation concessions (Santa Cruz Sur Assets) in the Argentinean Austral Basin.

Said to be highly prolific area with well-developed oil and gas infrastructure, the Santa Cruz Sur Assets comprise 12 oil and gas fields with significant production from Upper Jurassic Tobifera and Lower Cretaceous Springhill.