AIM-listed mining company Clontarf Energy has concluded an agreement on its Peruvian oil and gas exploration blocks, an update issued from the company on Wednesday has shown.
The company reported that Peru Oil and Gas Exploration(POGEL), an energy investment company, would undertake responsibility to put up performance bonds and conduct contractual work on the exploration and development contracts on Peruvian Blocks 183 and 188.
It said that POGEL would also assume the agreed Peruvian liabilities of Hydrocarbon Exploration, a wholly-owned subsidiary of Clontarf Energy.
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POGEL is a strategic investor in Peru and intends to develop thermal power generation, producing electricity from natural gas, Clontarf added.
Under the agreement, Clontarf Energy will convert its interest to an overriding royalty of 3.0% on production from any commercial discovery. The company said that royalty payments would be capped at $5.0m per structure, $10m per block and $20m in total.
David Horgan, of Clontarf Energy, said: "We are delighted to have attracted a strategic investor that recognises the opportunity presented by Peru's large and fast growing gas market. During our work in nearby communities we have experienced power cuts and know that thermal gas-fired power stations offer the best solution to Peru's growing demand for energy.
"POGEL is committed to making quick progress on proving up resources and bringing gas reserves into production. This will benefit all stakeholders, including the local communities, the Peruvian Exchequer, and Clontarf Energy shareholders."
Clontarf Energy's share price was up 6.67% to 2.0p at 11:29 on Wednesday.
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