Province has SIGNED the decreee Here's my interpretation of the decree / press release of February 13th (see PR below).
We gave 10% of the block to the Province to get the decree signed (I think the Province already had 5%). The deal is we have to frac COV-x2 starting in April, and we get a 1.5 year extension of the block. If we hit oil, then we get a five year evaluation period. If we get good 5 year results, then the province, by legal decree, we get a twenty five year exploitation phase (as producing lots of oil). I think that means the govt would have a hard time stealing the block from us.
So the deal gives us the time we need, AND provides prospective joint venture partners with the land tenure assurance they need to proceed with the substantial investments required to exploit the Vaca Muerta formation.
So I expect that we will be getting news soon as to how we will raise the money to do the frac. I think we will need $5M to $10M to do what we want to do, especially if you include our goals in Columbia. So I think we will be getting news soon about either a JV, or a stock sale. Once we frac COV-x2, there is no reason I know of that we don't start producing oil and getting cash flow. If we raise the money, frac COV-x2, and get good production, with $70 oil, then we should have good cash flow and opportunities for a high value JV. So we should be at the bottom of the unfortunate YPF fiasco.
Feb 15, 2013 Press Release
Azabache Energy Inc. ("Azabache" or the "Company") (TSX VENTURE:AZA) announces that, further to the Company's press release dated December 4, 2012, the Governor of the Province of Neuquén has signed the Decree # 0152/13 (the "Decree") which returns the Covunco Norte acreage in the Province of Neuquén to the Company and which allows for an extended phase of unconventional exploration of such acreage which forms part of the larger Covunco Norte-Sur block.
The Decree provides an extension to the current exploration phase during which the Company must complete fracture stimulation or work over of the COVx-2 well before April 2013. The COVx-2 well was drilled through the Vaca Muerta last May. This fracture stimulation will be the first test of the Vaca Muerta shale on the Company's extensive land holdings.
Under the Decree the Company will have the option to apply for an additional exploration term until April 2014 or a five year evaluation period if warranted by results. There after the Company may enter into a twenty five year exploitation phase. As set forth in the Company's Press Release dated December 4, 2012 the Company has agreed to assign a 10% working interest to the provincial oil & gas company (G&P) as part of the arrangement.
The Company is encouraged by this development as it will allow the Company the time it needs to continue exploration of the block and will provide prospective joint venture partners with the land tenure assurance they need to proceed with the substantial investments required to exploit the Vaca Muerta formation.
The Company has posted on its website www.azaenergy.com the Corporate Presentation given at the annual shareholder meeting by the Company's Chief Executive Officer, Claudio Larotonda and an English translation of the Decree.