OGpar: Agency fails to approve OGX Colombian sale; contracts canceled

By Caroline Salls

Pittsburgh, July 14 – Oleo e Gas Participacoes SA (OGpar) said the oil and gas regulatory agency from Colombia has not approved the proposal for the sale of OGX Petroleo e Gas SA’s Colombian assets in the Cesar Ranchería Basin and the Low Magdalena Valley Basin, according to a news release.

As a result, the company said the agency has canceled the technical evaluation contracts related to the blocks in the Cesar Rancheria Basin and has exercised the $24 million of credit letters pledged as collateral.

According to the release, the rejection is connected to the investments allocation related to exploration commitments contained in the proposal.

OGpar said the blocks in the Cesar Ranchería Basin have difficulty in performing any exploration works because they are in an area characterized by social and environmental complexities, including the presence of indigenous communities and environmental protection areas.

Also, the company said the economic analysis in this area revealed an inappropriate risk versus return profile. For this reason OGpar said it decided not to contest the agency’s decision on the cancellation of the contracts, but it is studying strategies to reduce other possibly required penalties.

However, the company said OGX and the offeror signed a new $30 million agreement on July 10 in order to present a new proposal to the agency regarding the sale of the remaining assets located in the Low Magdalena Valley basin.

OGX is an oil and natural gas company based in Rio de Janeiro.

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