Bear Creek, Mera talk with 2 possible Salinas buyers

Tuesday, July 29, 2003

Canadian oil company Bear Creek (formerly Millenium Energy) and its partner Mera Petroleum are talking to two possible buyers for their combined 100% interest in the Salinas natural gas block in northern Colombia, Bear Creek CFO Alan Steel told BNamericas.

"We have two parties we're dealing with right now, but whether something will come out of that I'm not sure," Steel said.

The companies cannot meet their commitment to a US$2mn drilling program that must be completed by early October, Steel said. Bear Creek has a 66% stake in the block, and Mera owns the remaining 34%.

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Bear Creek and Mera have reprocessed 300km of existing seismic studies, but must complete a horizontal re-entry on an existing well by October. If they don't, Colombia's state oil company Ecopetrol can cash in a US$500,000 letter of credit, Steel said.

"We have zero expertise down there, we're not interested in following anything international at all as Bear Creek," Steel said.

Bear Creek management plans to focus on its Canadian operations, and Colombia does not fit into its strategic portfolio, he added.

Millennium and Mera bought their respective stakes in Salinas, in Guajira department, in January 2000, and were previously seeking a drilling partner.

Finding a partner has proven difficult because "the climate [in Colombia] today is different from what we had envisaged less than two years ago," former Millenium spokesperson Alan MacDonald said.

"We expected to see more deregulation and if anything it's become more regulated," he added.

Millenium completed its merger with fellow Calgary-based oil and gas company Crossfield on July 24 to create Bear Creek.