Petroamerica Oil Corp. has signed the definitive agreements with Talisman (Colombia) Oil & Gas Ltd. to acquire participating interests in four exploration blocks in the Llanos Basin of Colombia.

As per the agreements, Petroamerica will pay a total cash consideration to Talisman of US$18 million upon signature. Following payment of this cash consideration, Petroamerica will, through its wholly owned subsidiary Petroamerica International Corp., earn a 25% participating interest in the El Porton block and 50% participating interests in the Los Ocarros and El Sancy blocks. Petroamerica will earn its 25% participating interest in the El Eden block, excluding the Chiriguaro-1 discovery, after paying Talisman's 50% share to a cap of US$7.85 million to drill one exploration well at a future date.

The Los Ocarros, El Sancy, El Porton and El Eden exploration blocks occupy an area of more than 441,000 acres gross (1,785 km2) and 165,800 acres net (671 km2) in a prospective trend containing some of the fields discovered in the Llanos Basin to date. In the El Porton block, the Calatea-1 well is currently drilling and results are expected by early 2011. All four blocks are operated by CEPSA COLOMBIA S.A.

This acquisition represents a significant milestone in terms of achieving the Company's strategy to focus its exploration efforts on the prolific Llanos Basin, and furthermore, it targets a previously identified gap in exploration drilling activity at the end of 2010 and the first half of 2011.

Paul Kroshko, President and CEO commented, "This transaction is just one in a series of actions that the Company will undertake to rebalance its portfolio, in order to be better positioned to deliver to shareholders near-term value growth through the exploration drill-bit".

Transfer of rights in all four blocks is subject to approval by the Colombian National Hydrocarbon Regulatory Authority (the "ANH" or "Agencia Nacional de Hidrocarburos").

Tags: Petroamerica Oil Corp