Andes, the Latin America exploration and production group, has strengthened its industry position after agreeing a deal with Trayectoria Oil & Gas (TOG).
Under the agreement TOG, a Colombian exploration and production firm, will provide cash guarantees of up to $6.2million for three Colombian exploration blocks acquired in the 2012 licensing round. It will also assume the obligation to repay $7million of Andes’ existing debt.
Per the terms Andes also reserved the right to acquire two Colombian producing assets from TOG for $12million. The blocks are thought to have the potential to add an initial net production of 150 boepd for Andes. Shale reserves for the area are estimated to be 60 million boe.
Andes chief executive Alejandro Jotayan said: “With this transaction Andes reinforces its position as a growing South American E&P player. The funding of our guarantees in Colombia, reduction of our debt and the option to acquire reserves and production in Colombia in the future, further strengthens Andes’ cash flow, capital structure and our exploration and development execution capabilities.
“We are delighted to welcome Trayectoria, a well-respected private oil player in Colombia, as a shareholder and look forward to working with them to bring future growth and value creation for the company.”