The purchase brings Pebercan's ownership of Block 7's Canasi field to 60% and ownership of the rest of Block 7 to 55%. Canada's Sherritt International holds both remaining stakes.

The deal has been approved by Cuban authorities and the respective presidents of the two companies, and awaits only regulatory and stock exchange approval.

Through subsidiary Peberco, Pebercan signed a production sharing agreement (PSA) with Cuba's oil company Cupet in 1993, the strength of which is that it is one contract for five blocks instead of a contract per block. What monies the investors may lose in one block, they have the right to recover in another.

Test production in the Canasi well has varied between 5,500 and 7,500 barrels per day (bpd) in the last week, and an average 6,000bpd eventual production would be a very conservative estimate, the source said.

Regular production will start within a week, when Pebercan would move its drilling rig on to the Seboruco-2 field, where it will reenter an existing well to improve production of the reservoir. Drilling there will be vertical to 500 meters, where the angle will deviate northwards until entering the reservoir horizontally.

Pebercan's acquisition of the additional stakes in Block 7 allow it to better pursue the agreement in entered into with Cuba's government to accelerate petroleum production in Block 7.
BNamericas.com