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HONDO FINALIZES COLOMBIAN AGREEMENT WITH AMOCO

 ROSWELL, N.M., Aug. 13 /PRNewswire/ -- Robert O. Anderson, chairman of Hondo Magdalena Oil & Gas Ltd., a wholly owned subsidiary of Hondo Oil & Gas Co. (AMEX: HOG), announced today that Hondo Magdalena has signed a farmout agreement for a portion of Hondo Magdalena's Opon Association Contract in Colombia, South America.
 Anderson said that the company is pleased to be working with Amoco Colombia, a subsidiary of Amoco Production Co., the worldwide exploration and production unit of Amoco Corp. "Amoco Colombia will apply state-of-the-art technology to a complex structure and is initially committed to spend up to $12 million on behalf of Hondo Magdalena. If Amoco Colombia does not exercise its option to withdraw from the block, it could spend up to $35 million on the project," Anderson said.
 Amoco will acquire from Hondo Magdalena a 50 percent interest in the Opon Association Contract, and Hondo Magdalena will retain 30 percent. Amoco will initially pay Hondo Magdalena $3 million and pay the costs associated with the drilling of the Opon No. 3 well.
 The Opon No. 3 well is scheduled to spud by Oct. 15. Parker Drilling Co. has been awarded the bid to drill the Opon No. 3 well using a top drive rig. The Opon No. 3 is a confirmation test of Opon Nos. 1 and 2 wells drilled by Cities Service in 1965 and 1966. The well is targeted to penetrate a full section of the La Paz formation above the gas-water contact. Both the Opon Nos. 1 and 2 wells tested gas and condensate from the La Paz formation on drill stem tests. The Opon No. 3 well is located midway between the earlier wells.
 The farmout agreement provides that Amoco Colombia may withdraw from the Opon Association Contract after drilling the first farmout well by relinquishing its interest. After completion of the first farmout well, Amoco Colombia also may elect to return to Hondo Magdalena a 5 percent interest in the Opon Association Contract. If Amoco Colombia does not elect to withdraw from the contract or return the 5 percent interest, it must pay Hondo Magdalena an additional $5 million. In this case, Hondo Magdalena must contribute up to $2 million to drill the intended second farmout well to the La Paz formation, and Amoco Columbia will pay the remainder of the costs. Amoco intends to conduct additional seismic programs at its expense.
 "We believe the farmout agreement with Amoco is an important step toward realizing the value in the Opon Association Contract for the shareholders of Hondo Oil & Gas Co.," Anderson added.
 -0- 08/13/93
 CONTACT: C.B. McDaniel of Hondo, 505-625-8700
 (HOG) CO: HONDO MAGDALENA OIL & GAS LTD.; HONDO OIL & GAS CO.;
 AMOCO PRODUCTION CO.; AMOCO COLOMBIA


IN: OIL SU: CON ST: NM,

-- LA027 -- X655 08/13/93
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Publication:PR Newswire
Date:Aug 13, 1993
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