Oslo, 10 October 2014 - The National Agency of Hydrocarbons in Colombia (Agencia Nacional de Hidrocarburos or ANH) has informed Interoil Exploration and Production ASA (Interoil) that it is considering to terminate the two licenses LLA-47 and Cor-6 later this year, unless the necessary bank guarantees are provided for its existing exploration commitments on the two blocks.
In relation to LLA-47, Interoil is of the opinion that its Colombian subsidiary currently is compliant with the license terms with the issue of a recent USD 2.5 million bank guarantee. ANH has claimed that the remaining USD 10.5 million bank guarantee will fall due towards the end of this year. Interoil is working with the banks to provide the necessary guarantees, and a process has been initiated with the view to extend this deadline.
In parallel, preparations for drilling the first exploration well in the LLA-47 license in December are progressing well. As previously communicated, this is a potentially high-impact well, which could be key to understanding Interoil's further value potential in Colombia.
In relation to the Cor-6 license terms, ANH is claiming that Interoil is in breach of providing a bank guarantee of MUSD 16 and threatens to terminate the license and claim compensation. As requested by ANH, Interoil is continuing to document that it will be very difficult to comply with the terms of the license, due to the environmental and social situation in the area. The company aims to relinquish the license with little or no penalty.
As previously informed, Interoil signed a sales agreement for the Cor-6 license with Trayectoria in February 2013. Based on advice from Interoil's legal advisors, the company will be claiming Trayectoria for any financial damages that Interoil Colombia suffers in relation to Cor-6.
The current discussion with ANH only concerns the two exploration licenses mentioned above. The Puli C and Altair licenses from which Interoil is producing 1 750 barrels of oil equivalents per day, are not part of the discussions.
For more information, please contact:
Thomas J. Fjell
Interoil Exploration and Production ASA is a Norwegian based exploration and production company - listed on the Oslo Stock Exchange - with focus on Latin-America. The company is operator of several production and exploration assets in Peru and Colombia. Interoil currently employs approximately 230 people and is headquartered in Oslo.