Quetzal & Brownstone Enter Agreement on Llanos Block 27

Source: www.gulfoilandgas.com 12/3/2009, Location: South America

Brownstone Ventures Inc and Quetzal Energy Inc are pleased to announce that they have entered into a definitive participation agreement (the "Participation Agreement") with Montecz S.A. ("Montecz") and NCT EG Energy Group C.A. ("NCT") governing their interests in the Block LLA 27, in the Llanos Basin, Colombia (the "LLA 27 Block").

As announced on October 5, 2009 and further to the terms of the letter of intent, the Participation Agreement enables Brownstone and Quetzal to earn a net 68.5% (Brownstone 34.25%; Quetzal 34.25%) participating interest in the 16,470 hectare LLA 27 Block, by paying 100% (Brownstone 50%; Quetzal 50%) of the costs associated with the work program prescribed by the Colombian Agencia Nacional de Hidrocarburos ("ANH").

Brownstone and Quetzal will be entitled to 90.55% (Brownstone 45.275%; Quetzal 45.275%) of any net revenue until they have fully recouped costs spent on fulfilling the work commitments on the LLA 27 Block, following which the parties will assume their working interests being Brownstone 34.25%, Quetzal 34.25%, Montecz 19.5% and NCT 12%. Work commitments over the first 36 month phase total approximately US$6.48m and includes completion of 144km of 2D seismic and the and drilling of an exploratory well.

Brownstone and Quetzal have also each posted inpidual letters of credit with the ANH in the amount of US$1,620,000 (US$3,240,000 in the aggregate), representing 50% of the required work program.

The LLA 27 Block is surrounded by producing oil and gas fields (including La Punta, Entrerrios, Santiago and Estero), and is on strike with the La Punta Block 2244 oil field which has historic production of over 3.7 MMBO and total recoverable field reserves estimated between 6-9 MMBO and July 2009 production rate in excess of 3,600 BOPD of 34 degree API oil from 2 wells (Ministerio de Minas Y Energia, Forma 9).

Having completed the Participation Agreement on the LLA 27 Block, Brownstone and Quetzal are optimistic that they will shortly complete similar participation agreements for the Llanos 21 and Llanos 36 Blocks as set out in the October 5, 2009 press release.

Pending receipt of all applicable regulatory approvals, Brownstone and Quetzal plan to complete the payment to the assignor of the interests in the LLA 27 Block, Fenix Energy Inc., by making payments of (1) US$150,000 and the issuance of 600,000 common shares of Brownstone for Brownstone's interest and (2) the issuance of 3,000,000 common shares of Quetzal for Quetzal's interest, all as set forth in the press releases of Brownstone and Quetzal dated October 5, 2009. The Participation Agreement remains subject to the final approval of the TSX Venture Exchange.

Brownstone and Quetzal are also in the process of completing the registration processes with the ANH and anticipate being able to commence the seismic program on the LLA 27 Block early in the new year.

Quetzal also provides the following correction to its November 13, 2009 press release, noting that in connection with the private placement, the final tranche of which was completed by Quetzal on November 13, 2009, Quetzal has paid finder's fees in the aggregate amount of $301,443 to certain qualified registrants assisting in the offering (representing 7% of the gross proceeds raised by such finders), and issued an aggregate of 2,756,057 compensation warrants ("Compensation Warrants") to such finders (representing 8% of the aggregate number of Units sold by such finders). Each Compensation Warrant entitles the holder to acquire one common share of Quetzal at an exercise price of $0.125 per share for a period of two years from the date of issuance.


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Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 


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