PetroLatina has received approval from the Agencia Nacional de Hidrocarburos, for the farm-out agreement entered into with Shell Exploration and Production Colombia, an affiliate of the Royal Dutch Shell group of companies, in respect of the Company's VMM-28 exploration block, the details of which were announced on 15 July 2011.

Under the terms of the agreement, Shell E&P Colombia will acquire an 85 per cent. participating interest in the Company's VMM-28 Exploration and Production contract. The VMM-28 block is currently wholly owned and operated by Petroleos del Norte, PetroLatina's Colombian operating subsidiary.

In accordance with the terms of the farm-out agreement, Shell E&P Colombia agreed to pay a total fee of US$15 million in cash to PetroLatina and the remaining US$12 million is expected to be received shortly. Shell E&P Colombia will be appointed as operator of the contract and will take responsibility for the work programme.

The Company intends to use the proceeds from the farm-out agreement to assist with the part funding of its planned ongoing drilling programme and development commitments in respect of the remainder of its Colombian asset portfolio and for general working capital purposes.

Luc Gerard, Executive Chairman of PetroLatina, commented: 'I am extremely pleased that ANH approval has now been obtained and that we are able to formally welcome Shell E&P Colombia as our partner in respect of the VMM-28 contract. The farm-out agreement provides us with exposure to exploration activity on the VMM-28 block, including the technology and expertise of Shell, whilst enabling us to focus our resources on the development of the other promising assets in our Colombian portfolio, including the Putumayo-4 E&P block.'

Tags: PetroLatina