Avante Holds Interests in fields covering 11,535 acres in Catatumbo region in northeast Colombia
Avante to invest $2.5 - $5.0 million in La Cortez in connection with the acquisition
La Cortez Energy, Inc. ("La Cortez" or the "Company") (OTC: LCTZ) and Avante Petroleum S.A. ("Avante") are pleased to announce that they have jointly signed a letter of intent for La Cortez to acquire Avante's subsidiary Avante Colombia S.a.r.l. ("Avante Colombia") in exchange for common stock of La Cortez. The purchase will include Avante Colombia's Colombian branch, Avante Colombia Ltd Sucursal.
Avante Colombia currently has a 50% participation interest and is the operator of the Rio de Oro and Puerto Barco exploration and production contracts with Ecopetrol in the Catatumbo area in eastern Colombia. Independent engineering reports on behalf of Avante have estimated a total resource potential of approximately 1.4 MMbbls. (La Cortez has not yet had such reserves audited in conformity with US GAAP.) Under the terms of the letter of intent, La Cortez and Avante will also enter into a joint venture to develop another exploration opportunity in Colombia.
The main terms of the proposed transaction are:
i) La Cortez will acquire 100% of the outstanding stock of Avante Colombia in exchange for 10,285,819 [restricted] common shares of La Cortez, equivalent to 30% of the total shares of La Cortez outstanding after the acquisition.
ii) In addition, Avante will invest a minimum of $2.5mm and a maximum of $5mm in the common equity of La Cortez at a price of $1.75 per unit, with each unit consisting of one share of La Cortez common stock and a three-year warrant to purchase one share of [restricted] common stock exercisable at $3.00 per share.
iii) Avante will have the right to nominate one member to the Board of Directors of La Cortez. Avante currently anticipates that such candidate will be Alexander Berger. Mr. Berger holds an Msc degree in Petroleum Engineering from Delft University and a MBA degree from the Rotterdam School of Management. He worked for Shell International, holding several technical and commercial positions in the United Kingdom and the Netherlands. In 2000, he joined SHV Holdings, as the Commercial Manager of its E&P subsidiary Dyas. He was instrumental in doubling the oil and gas portfolio of Dyas through numerous successful North Sea and overseas acquisitions. In 2007 Alexander was appointed Managing Director of Dyas while at the same time holding several non-executive directorships on behalf of the company. Post leading a consortium composed of Dyas, ONH and Sumitomo which successfully acquired Oranje-Nassau Energie from Wendel, Mr. Berger left Dyas in June 2009 to become the new CEO of Oranje-Nassau Energie (Oranje-Nassau Energie is a privately held independent oil and gas investment company based in Amsterdam, with a portfolio of non-operated positions offshore NL, UK, and Gabon, with a 20MMboe developed reserves base and 6,000boe/d production).
The transaction is subject to legal and financial due diligence by both Avante and La Cortez. The parties have agreed to use their best efforts to sign a definitive purchase agreement by December 18, 2009. If a formal agreement is not signed by the end of the year, the letter of intent will expire unless otherwise extended by mutual agreement of the parties. The letter of intent contains, and the definitive agreement will contain, customary exclusivity provisions and other conditions to closing. It is the intent of the parties to close on or before the end of the year.
Marcel van Poecke, Chairman of the Board of Avante said, "The acquisition of our Colombian subsidiary by La Cortez represents a unique opportunity for our shareholders to further our expansion plans in Colombia, which Avante has long identified as a geographic priority given the country's substantial undeveloped hydrocarbon potential and attractive fiscal and regulatory framework. This strategic transaction with La Cortez allows Avante to partner with a management team and board highly experienced in successfully operating in Colombia. The combination of our existing assets in the highly prospective Catatumbo basin with La Cortez's significant asset base in the Putamayo Basin provides La Cortez with a platform of production and exploration assets. Our confidence in the future of La Cortez and its management team is further underscored by our capital commitment, which will allow La Cortez to aggressively continue to pursue additional development and exploration opportunities."
Andres Gutierrez, President and CEO of La Cortez, commented on the announcement, "We are very pleased to announce this letter of intent, not only for the opportunity to acquire the assets involved and the resource potential to be added to our portfolio, but additionally for the new shareholders that this transaction brings to La Cortez. We expect these very experienced oil and gas executives will provide significant support to La Cortez' continued growth in the region. Avante Petroleum and its shareholders have extensive experience in the oil and gas business globally and in Colombia, and it is the intention of the parties to explore additional joint ventures in the region. We are working to conclude this transaction as soon as practicable."
About La Cortez Energy, Inc.
La Cortez Energy, Inc. is an early 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 branch, La Cortez Energy Colombia, Inc., with offices in Bogotá, Colombia, and recently signed a Joint Operating Agreement for a 50% working interest in the Putumayo-4 block and a farm-in agreement for a 20% working interest in the Maranta block, both in Colombia.
About Avante Petroleum SA.
Avante Petroleum SA is an independent petroleum Exploration and Production Company based in Luxembourg, with corporate offices in Luxembourg and Switzerland, and representative offices in Colombia and Mexico where current operations are based.
For more information, please contact the Company's Investor Relations department at 888-805-(LCTZ) 5289 or by email info@lacortezenergy.com
www.lacortezenergy.com
Forward-Looking Statements
Certain statements in this news release are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995.These statements are subject to risks and uncertainties. Words such as "expects", "intends", "plans", "proposes", "may", "could", "should", "anticipates", "likely", "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. The proposed acquisition of Avante Colombia is subject to a number of conditions which may not be satisfied, and there can be no assurance that it will be consummated, nor can there be any assurance that the Rio de Oro and Puerto Barco exploration and production contracts will be successfully developed.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 identify other corporate acquisition and/or joint venture opportunities in the energy sector in Colombia, Peru and Brazil and, more generally, in Latin America, and to establish the technical and managerial infrastructure, and to raise the required capital, to take advantage of, and successfully participate in such opportunities, future economic conditions, political stability and energy prices. Additional information on risks and other factors that may affect the business and financial results of the Company can be found in filings of the Company with the U.S. Securities and Exchange Commission.
Contacts:
La Cortez Energy, Inc.
Bruce Nurse, 888-805-5289
