BOGOTA, Colombia, Sept. 4, 2012 /PRNewswire/ -- La Cortez Energy, Inc. ("La Cortez" or the "Company") (OTC: LCTZ) announced the transfer of its private rights and obligations under the Joint Operating Agreement covering the Putumayo-4 Block (the "Putumayo-4 JOA") to Petroleos del Norte S.A. ("Petronorte"), a subsidiary of PetroLatina Energy Limited. Petronorte is the operator of the Putumayo-4 block and the other party to the Putumayo-4 JOA.
Pursuant to the terms of the transaction, La Cortez Energy Colombia, Inc., a subsidiary of La Cortez and a private party to the Putumayo-4 JOA, transferred its 50% participation right in the joint venture to Petronorte and received cash in the amount of $4.1 million. The cash proceeds represent payments previously made by La Cortez to Petronorte under the Putumayo-4 JOA plus the release of $2.67 million in restricted cash (plus interest) held to support a portion of Petronorte's guarantee in favor of the Agencia Nacional de Hidrocarburos (the "ANH").
In anticipation of the transfer of its interest in Putumayo-4, La Cortez implemented a corporate reorganization that the Company believes will significantly reduce future administrative overheads. Employee headcount has been reduced, and, effective August 1, 2012, managerial oversight of the Company's operations was transferred to Upside Energy & Mining Services ("Upside"), a company in the business of providing consulting and project development services in the energy and mining sectors. Upside is based in Bogota, Colombia (www.upside-ems.com), and its staff, which includes Jose Fernando Montoya, currently a member of the Board of Directors of La Cortez, is experienced in all aspects of the oil and gas industry in Colombia. The Company pays Upside a monthly fee for the services rendered, which the Company expects will be significantly lower than prior administrative expenses. Upside is familiar with the operations of La Cortez, which is expected to provide continuity of operations. In addition, the Company has elected not to renew its office lease in Bogota effective September 1, 2012, and will utilize the facilities of Upside to conduct its operations in the future.
Subsequent to the resignation of Andres Gutierrez on July 31, 2012 as the CEO and President of La Cortez, Nadine C. Smith was appointed President of La Cortez. She continues to serve as Chairman and interim Chief Financial Officer of La Cortez.
Further, on June 29, 2012, La Cortez filed a Form 15 with the Securities and Exchange Commission (the "SEC"), which initiated a process of deregistration of the Company's shares under the U.S. Securities Exchange Act of 1934. Upon filing, the Company's obligations to file periodic reports with the SEC (that is, Forms 10-K, 10-Q and 8-K) ceased. The deregistration will be effective, if not delayed by the SEC, ninety days subsequent to the date of filing of the Form 15 (or September 27, 2012). As a result of this deregistration, La Cortez will cease to be a reporting company with the SEC, and future audit, accounting and legal expenses should be significantly reduced from historical levels.
Proceeds from the Putumayo-4 transaction will be used, in part, to fund La Cortez's share of the costs of the previously announced Agapanto-1 well that is currently drilling on the Maranta block. The 2013 work program for Maranta and the determination of whether to enter into a second phase of commitment under the terms of the exploration license covering the Maranta block is expected subsequent to evaluation of the drilling results of Agapanto-1. If the Company decides to enter into a subsequent Phase 2 additional exploration commitment (an option under the current form of agreement), the parties will be required either to acquire 120 km of 2D seismic or drill a well. The second phase of the exploration license covering the Maranta block, if extended, expires August, 2014.
Nadine C. Smith, President of La Cortez commented on the Company's recent activities:
"Our strategic objectives going forward will focus on maximizing cash flow from operating activity and continued development of our interest in the Maranta block. Together with our partner Vetra Exploracion y Produccion Colombia S.A., we will also be actively engaged with Ecopetrol in negotiating the terms of a restructuring of the contract covering the two fields we operate through Avante Colombia in the Catatumbo.
"The transfer of our interest in Putumayo-4 has generated significant cash for La Cortez that will be redeployed into our primary producing assets on the Maranta block. The transfer also eliminates significant capital obligations over the next twelve months for the seismic acquisition and drilling work commitments required in connection with the terms of the Putumayo-4 exploration license. Taking into account expected cost savings from the corporate restructuring and reduced legal and accounting expenses as a consequence of deregistration, La Cortez anticipates cash on hand, together with cash flow from operations, will be sufficient to fund the Company's contractual obligations through year-end 2013 Taking the above steps to reduce expenses significantly improves the Company's financial position while capital markets remain challenging. We believe the transaction also makes the Company a more attractive candidate for a potential corporate transaction in the 2012-2013 timeframe."
La Cortez Energy, Inc.
La Cortez Energy, Inc. is a development stage oil and gas exploration and production company currently pursuing a business strategy in the energy sector in South America, with an initial focus on identifying oil and gas exploration and production opportunities in Colombia. To that end, the company has established a headquarters office in Bogota, Colombia, and has entered into several joint venture agreements. These agreements include a joint venture involving a 20% working interest in the Maranta block. The Maranta block is located in the prolific Putumayo Basin in Southwestern Colombia. Assignment of the working interest agreement in the Maranta block is subject to the approval of the ANH. The assignment of the participation interest in the Maranta block is subject to the approval of the Colombian Hydrocarbon Agency - Agencia Nacional de Hidrocarburos (ANH).
In early 2010, La Cortez acquired the 100% interests of Avante Colombia, Inc. in the Rio de Oro and the Puerto Barco fields located in the Catatumbo Basin in Northeastern Colombia. Avante Colombia currently has a 50% participation interest in, and is the operator of, the Rio de Oro and Puerto Barco production contracts with Ecopetrol S.A.
The Company's joint venture agreements have been signed with experienced, established producers in Colombia, including Sinochem (Emerald Energy PLC – Sucursal Colombia) and Vetra Exploracion y Produccion Colombia, S.A. The company is currently producing from both of its two initial exploration wells in the Maranta Block.
For more information, please contact the Company's Investor Relations department at 941-870-5433 or by email at [email protected].
Forward-Looking Statements Disclaimer
Certain statements in this news release are forward-looking statements. These statements are subject to risks and uncertainties. Words such as "expects", "intends", "plans", "may", "should", "anticipates", "potential", "believes" and words of similar import also identify forward-looking statements. Forward-looking statements are based on current facts and analyses and other information and assumptions of management. Actual results may differ materially from those currently anticipated due to a number of factors beyond the reasonable control of the Company, including, but not limited to, the Company's ability to minimize its administrative costs through 2013, maximize cash flow out of the operations of the Maranta Block, successfully negotiate with Ecopetrol regarding our two blocks in the Catatumbo region and successfully find and negotiate a corporate transaction in 2012--2013.
SOURCE La Cortez Energy, Inc.