Sherritt Announces the Award of Two New Production-Sharing Contracts in Its Oil and Gas Business
18.12.2014 | Marketwire
TORONTO, ON -- (Marketwired - December 18, 2014) - Sherritt International Corporation (Sherritt) (TSX: S) announced today that it has signed two new Production Sharing Contracts (PSCs) with the Government of Cuba.The new blocks, 8A and 10, are located in Central and Northern Cuba and encompass areas of 967 square kilometres and 261 square kilometres respectively. The PSCs have a 25-year-term and include commitments which primarily include reprocessing existing seismic data and acquiring new seismic data within a two-year period. After the completion and evaluation of the seismic work, Sherritt has the option to continue its exploration work or relinquish the PSCs.
"We are very pleased with the addition of these two Production Sharing Contracts as they are a significant part of our strategy to extend the production life of our energy business in Cuba," said David Pathe, President and CEO of Sherritt. "We are also awaiting final approval on two additional PSCs on the west side of the City of Havana."
The main zone of interest in the two new exploration blocks is the Upper Jurassic-Lower Cretaceous Veloz Group. The Veloz Group currently contains the most important oil-producing reservoirs in Cuba where Sherritt produces approximately 20,000 barrels of oil per day from the Varadero, Puerto Escondido and Yumurí oil fields. Sherritt has both the technical and operational expertise for exploring and developing oil and gas pools in this geological setting which is characterized by complex folded and thrusted carbonate reservoirs.
In June 2014, Sherritt also announced the extension of an existing PSC in the Puerto Escondido/Yumurí area for an additional 10 years to March 2028. The extension applies to all new wells drilled on the lands described in the amended PSC. With respect to existing wells drilled on the PSC, they will revert back to the Cuban state on the original date of March 2018.
Sherritt is the largest independent oil producer in Cuba and currently operates three commercial fields within its two existing PSCs. Sherritt produced an average of 19,710 barrels of gross working-interest oil per day during the nine-month period ending September 30, 2014.
About Sherritt
Sherritt is a world leader in the mining and refining of nickel from lateritic ores with projects and operations in Canada, Cuba, and Madagascar. The Corporation is the largest independent energy producer in Cuba, with extensive oil and power operations across the island. Sherritt licenses its proprietary technologies and provides metallurgical services to mining and refining operations worldwide. The Corporation's common shares are listed on the Toronto Stock Exchange under the symbol "S".
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