PetroMagdelana to sell stake in Colombian oil block

PetroMagdalena Energy has signed a letter of intent to farm out 30% of the Santa Cruz block in Colombia, in which it holds a 100% interest.

Under the contract, the company will carry 60% of the first exploratory well and 45% of the second exploratory well.

The firm will begin drilling the first well in the fourth quarter of the year at an estimated cost of $15m on receipt of the environmental permit.

PetroMagdalena will retain a 70% working interest in the block, which is located in the Catatumbo Basin, and will remain as operator.

PetroMagdalena Energy CEO Luciano Biondi said that the farm-out agreement diversifies the firm’s exploration risk and frees up $8m-9m of the funding allocated to the Santa Cruz block in this year’s budget.