According to a recent press release, Gran Tierra Energy Inc., a company focused on oil and gas exploration and production in South America, entered into an agreement to farm into Global Energy Development PLC Block 95 in Peru's Marañon Basin. The agreement will give Gran Tierra Energy a 60 percent working interest and operatorship in Block 95.

"This farm-in will allow Gran Tierra Energy to expand and diversify its exploration portfolio while also reducing technical risk given that petroleum resources have already been discovered and tested on the block," said Dana Coffield, president and CEO of Gran Tierra Energy, in a statement. "With this agreement, Gran Tierra Energy will be amongst the largest onshore exploration acreage holders in Peru and will be well positioned to test both existing and new hydrocarbon plays in the region."

Consisting of 1.3 million gross acres, Block 95 is located in north-east Peru, due south of Gran Tierra Energy's existing acreage in the prolific Marañon Basin where over 1 billion barrels of recoverable oil have been discovered to date. The company’s contract area includes the Bretaña-1 well, which was drilled in 1974 and tested 18° API gravity oil on natural flow rates of approximately 800 barrels of oil per day. 

According to the terms of the agreement, Gran Tierra Energy will assume the cost of drilling an exploration well, up to a cap of $15 million, along with its share of past costs incurred in respect of the well. Once the cost reaches the US$15 million cap, Gran Tierra Energy will pay only its pro rata share of costs going forward.

Gran Tierra Energy said it plans to start drilling the exploration well before year-end 2011, once final environmental permits are obtained.  

The transaction is subject to PeruPetro S.A. approval, which is expected to take approximately four to six months.

Recently, Gran Tierra Energy Inc., completed initial testing of the Moqueta-2 delineation well in the Moqueta new field discovery on the Chaza Block in the Putumayo Basin, Colombia. The company has 100 percent working interest and is the operator of the Chaza block.

Rahul Arora is a TMCnet contributor. He has worked as an editor and freelance writer for several reputed organizations in India. To read more of his articles, please visit his columnist page.

Edited by Jaclyn Allard