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Saudi Arabian private oil company PetroSaudi plans to invest up to US$94.5mn in seven E&P licenses in Argentina held by UK oil companies Patagonia Oil & Gas and Andes Energia (LSE: AEN), according to an Andes Energia statement.
The cash injection will aid the development of the seven blocks in which Andes Energia has a 20% carried, 3% working and 20% royalty interest.
Six of the licences - Confluencia, San Bernado, Pampa Salamanca Norte, Rio Senguerr, Buen Pasto and Sierra Cuadra - are in Argentina's prolific San Jorge basin, where Argentine oil company Pan American Energy recently announced a discovery of 100Mb of new reserves, according to the statement.
The seventh license, Laguana El Loro, is in Argentina's Neuquén basin.
Andes and Patagonia formed a consortium for E&P on the blocks in March 2007. The E&P contracts carry six-year exploration terms and 25-year extendable production terms, an Andes Energia spokesperson told BNamericas.
The Patagonia-Andes Energia JV is completing a 20-well, US$100mn drilling and data acquisition program on the blocks, according to investment documents sent to BNamericas.
PetroSaudi agreed to invest US$39.5mn for the first year of the agreement, with an option to invest an additional US$55mn for the second and third year, according to the statement.
Further terms of the agreement were not disclosed.
Founded in 1995, PetroSaudi is a private Saudi Arabian oil company not affiliated with the Saudi government, PetroSaudi co-founder Tarek Obaid told BNamericas.
Saudi prince Turki bin Abdullah bin Abdulaziz Al Saud is the second co-founder of the company, according to PetroSaudi's website.
"We found Latin America to be a very exciting place and have great relationships there on the ground," Obaid said. "We decided to go forward with a serious investment in that part of the world."
"Technically speaking, we will become a very large company in terms of acreage in Argentina," he added.
The company also is in the process of purchasing stakes in Paraguay with CDS Oil & Gas. "We're going to be putting a lot of assets there to grow that company," Obaid added.
The seven fields PetroSaudi will invest in with Patagonia are not new discoveries, but were abandoned because of the low price of oil in previous years.
"Now with high oil prices, those fields have become a profitable opportunity," Obaid continued. "There's a lot of oil down there."
"We've bought into four of five producing assets in Argentina, and were producing around 50,000b/d in Argentina," Obaid said.
PetroSaudi will most likely end up with interests in 37 fields in Argentina, he added.