2 firms ink farm-in deal for Cagayan oil search

Aragorn Power Energy Corp., the power unit of listed holding firm APC Group, signed yesterday a farm-in agreement with Monte Oro Resources & Energy Inc. (MORE) for Service Contract 48 in Cagayan Valley.

Monte Oro is headed by Walter Brown, a veteran mining executive who is also into the property business.

The service contract, awarded by the Department of Energy to Aragorn Power in February 2005, covers a total of 748,000 hectares.

“We are confident of a fruitful partnership with MORE in the development of the exploration area. This is part of APC Group’s commitment towards the development of energy resources in the country,” said Aragorn Power chairman and president Willy N. Ocier.

For his part, MORE’s Brown, said: “The area is a gas prone basin based on historical technical data. This alone makes exploration in the basin exciting.”

The Cagayan basin has been previously explored by PODCO, Stanvac, Philodrill, PNOC-EC and recently by South China Petroleum and Alsons Resources.

The exploration of the area has resulted in a gas discovery in the Ipil-San Antonio wells where PNOC has installed a three-megawatt power plant. Published data also indicated that the Cagayan basin is gas prone, although there have been oil seeps reported west of the basin.

Under Phase 1 of the agreement, MORE will pay all expenses involving SC 48 and carry on with the geological and geophysical (G&G) commitments to be completed by August 2007. It shall also pay for Aragorn’s share in the G&G program with a minimum expenditure commitment of $500,000 in exchange for a 30 percent stake in SC 48.

Under Phase 2, MORE will drill one well or conduct an aeromagnetic survey/detailed gravity from August 2007 to August 2008. MORE will pay $1.8 million to $2.2 million for Aragorn’s share in the well or the aeromag/detailed gravity in exchange for an additional 45 percent equity in SC 48.