Brownstone Energy Inc. (Toronto Venture: BWN) has been informed by the operator of Llanos 21 block in the Llanos basin in Colombia, Omega Energy Colombia, that it has commenced drilling the Calacho No. 1 well. The Calacho well is the first well of a planned two well drilling program on the block. The planned second well in the program is the Rocamao No. 1 well.
The Calacho well is being drilled to a planned total depth of 7,000 feet, and drilling is expected to take approximately 30 days. The Calacho well is programmed to test the hydrocarbon potential of the C7 and Une formations. The gross budget for drilling and testing of the well is approximately $4.5-million (U.S.). The Rocamao well is planned to be drilled to a total depth of 6,900 feet and drilling is expected to take approximately 30 days. The Rocamao well is also programmed to test the hydrocarbon potential of the C7 and Une formations. The gross budget for drilling and testing the Rocamao well is approximately US$5.1-million.
Under the terms of the original farm-in agreement, Toronto-based Brownstone was to pay 50% of two wells in exchange for an income production participation of 35%. Under a new arrangement agreed to in the spring of 2012, Brownstone's remaining obligations require it to pay $1,875,000 toward the two wells, following which it will no longer have any rights or interests in respect of the block, subject to an option exercisable by Brownstone following the completion of either the first or second well to acquire a 24.75% income production participation in the block by reimbursing Omega Energy Colombia for 50% of its costs in the first well or both wells, as applicable.
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