CEPSA Announces Acquisition of Block in Colombia with 40 Million

Press Release
CEPSA Announces Acquisition of Block in Colombia
with 40 Million Barrels of Crude Oil Reserves
• CEPSA has acquired exploration and production rights from Hupecol
Caracara LLC on a block located in the Los Llanos Basin in central Colombia.
• Once all the required regulatory approvals have been obtained, CEPSA will
assume operatorship of the Block, with a 70% stake, the remaining 30% held
by the Colombian national oil company ECOPETROL.
• This transaction fits into CEPSA’s Strategic Plan, one of the targets being to
slightly raise the Company’s current level of reserves and production.
CEPSA Colombia S.A., a wholly-owned subsidiary of CEPSA, has signed a Purchase and
Sale Agreement with Hupecol Caracara LLC, an affiliated entity of Houston American Energy
Corp., to acquire the Caracara Block, located to the south of the Los Llanos Basin in central
Colombia.
This deal fits into the key targets set out in CEPSA’s 2008-2012 Strategic Plan as regards its
upstream activities, which earmarks roughly $1,800 million in order to slightly raise the current
level of crude oil reserves and production. Specifically, the development phase of the
Caracara Block, with a considerable level of output, will enable CEPSA to offset declining
production in other more mature acreages.
The Caracara Block measures approximately 47,200 hectares and its present output
exceeds 20,000 BOPD, with estimated proven and probable (2P) reserves of 40 million
barrels. This prospect additionally offers significant growth potential through new investments
in both development and exploration.
CEPSA will ultimately become the operator of the Block, governed by an Association
Contract system, in which the Company will have a 70% interest, as soon as all the
regulatory approvals are granted by both the National Hydrocarbons Agency and the stateowned
oil company ECOPETROL, which holds the remaining 30% of the concession.
CEPSA’s focus on oil & gas production is a key component of its strategy to strike a more
equitable balance in earnings contributions from its different business segments to overall
results, assigning between 25% and 30% of its capital expenditures to this area, which
provided 22% of cash flow in 2007.
CEPSA has made a staunch commitment to boost its upstream activities in Colombia in
recent years, which has materialized in the acquisition of stakes in various permits, mostly in
the exploration phase, thereby consolidating an attractive portfolio of assets. The Company
currently has 8 contracts located in the Upper and Middle Magdalena River Valley and in the
Los Llanos Basin, the majority operated by CEPSA.
1/2

Press Release
CEPSA’s production in Colombia amounted to 253,000 barrels in 2007, with attributable
reserves of over 1 million barrels. The acquisition of the Caracara Block will lead to a
substantial increase in the Company’s reserves in Colombia and especially in its production.
The geographical location of the Caracara prospect, near the Los Llanos blocks where
CEPSA already has interests, will deliver major synergies, both in exploration and production.
Furthermore, this deal will provide greater visibility to CEPSA’s operations in Colombia,
through significant production and reserves, creating a solid springboard for future growth.
Madrid, March 24, 2008
CEPSA – Institutional Relations Division
relaciones.institucionales@cepsa.com / Tel: (34) 91 337 63 56 / www.cepsa.com
2/2