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March 13, 2012
/PRNewswire/ - Sintana Energy Inc. ("
") (TSXV:SNN) and ColCan Energy Corp. ("
") are pleased to announce that they have entered into a definitive agreement dated as of
March 12, 2012
") providing for a business combination of the two companies (the "
"). ColCan is a private company existing under the laws of
which is engaged in the acquisition, exploration and development of oil and gas properties in
. Sintana is engaged in the acquisition, exploration and development of oil and gas properties in
. The Business Combination is subject to the satisfaction or waiver of certain customary closing conditions, and is currently expected to be completed in the second quarter of 2012.
The principal purpose of the Business Combination is to combine the oil and gas assets presently held by Sintana with those owned or in the process of being acquired by ColCan in
. Thus, it is expected that ColCan will provide the combined entity with working interests in four blocks - three blocks in
Middle Magdalena Basin ("
") and one block in the Llanos Basin ("
"): VMM-4, VMM-15, VMM-37 and LLA-18. Sintana will provide the combined entity with working interests in four blocks - three in Colombia´s Upper Magdalena Basin (Talora, Cor-11 and Cor-39) and one in Peru´s Sechura Basin (XXVII).
The Technical Growth Strategy
The addition of the above noted blocks pursuant to the Business Combination is consistent with Sintana's growth strategy which consists of acquiring blocks and/or working interests in such blocks that: (1) are located in proven oil-prone basins; (2) have prospects that have been previously overlooked or undervalued for specific technical reasons; (3) are in close proximity to infrastructure or the local market; and (4) where possible, have both conventional and unconventional liquid hydrocarbon potential. ColCan´s participation in the three VMM blocks will establish Sintana's strategic position in the VMM basin and will provide both conventional and unconventional resource potential. ColCan's interest in LLA-18 will mark Sintana's entry into
most prolific oil and gas producing basin. The Business Combination will more than double Sintana's Colombian land position, increasing its gross acreage holdings in
from 331,000 acres to nearly 700,000 acres. Total gross acreage of the combined entity, including in
, will be close to 875,000 acres. Working interests for the eight blocks to be held by the combined entity range from 25% to 100%.
In addition to Sintana's Upper Magdalena Valley exploration strategy with respect to its current blocks, the proposed Business Combination would help to further Sintana's desire for exposure in the VMM basin, which is the oldest oil and gas producing basin in
, dating back to the 1918 discovery of the giant La Cira-Infantas field complex (900 MMBO). Historically, only the tertiary section (conventional reservoirs) of VMM has been systematically explored, and approximately 2 billion barrels of oil have been produced in VMM over the last century. Sintana sees considerable, additional conventional resource potential in the tertiary plays in ColCan's three VMM blocks.
Block VMM-37 was evaluated in a National Instrument 51-101 resource report by Petrotech Engineering which shows recoverable conventional resource estimates ranging from 14 MMBO to 201 MMBO.