Under the binding offer, CPVEN is expected to provide funding for the construction of the four wells
Oil and gas well services provider CPVEN has provided a binding commercial offer to NGX Energy for gas drilling and services to develop SN-9 in Colombia.
SN-9’s wells are NGX Energy’s 311,353 acre project in the Lower Magdalena Basin of Colombia, which is a prolific hydrocarbon producing region near the Caribbean coast.
Under the binding offer, the two companies will reach a market pricing-based preferred supply agreement to drill and to provide gas well services activities for all phases of the SN-9.
Initially, CPVEN will build and complete four gas wells, along with mobilisation, demobilisation, engineering, drilling and completion, for an aggregate cost of $27.2m.
Subject to adjustments for the activities and volume realised, each well is estimated to cost nearly $6.8m.
CPVEN is expected to provide funding for the construction of the four wells and the financing will include defined monthly instalments for each well depending on the results of the first well.
NGX Energy will have to provide a 25% down payment on the cost of each well and 10% will be played before the commencement of drilling while the remaining 15% will be paid 90 days after drilling is commenced.
The remaining 75% will be paid in monthly instalments, most of which will vary with each well, upon completion of the well.
NGX Energy said: “NGX will be obligated to maintain a monthly balance of US$1 million to pay for CPVEN’s services and which will serve as a guarantee for such payment. This is done under the economic interest the company has in the SN-9 block.”