Laredo Oil Inc. has signed a non-binding agreement with an undisclosed oil operator in Argentina to assess the commercial potential of utilizing Underground Gravity Drainage (UGD) technology in selected oil fields in the country.
Targeting Mature Oil Fields
This agreement represents the first potential commercial opportunity for Laredo in Argentina, where the company has focused on mature and conventional oil fields. UGD technology is designed to enhance recovery from mature reservoirs, operating through gravity drainage and the high density of oil wells.
Technical and Economic Review
Under this agreement, both parties will evaluate selected areas through technical, legal, financial, and operational studies, including preliminary design and engineering (FEED). If the evaluations are successful, Laredo will proceed to finance and deploy UGD facilities through an Argentine operational entity.
Mark See, CEO of Laredo, stated: "Argentina has an exceptional list of mature and conventional oil fields that are well-suited for UGD technology. This technology is designed to recover from mature reservoirs using gravity and high well density."
He added: "This letter of intent (LOI) provides us with a potential pathway to commercial deployment and establishes a foundation for future expansion across Argentina."
Proposed Structure and Future Steps
The proposed structure is such that Laredo will finance the development costs of the agreed project and recoup its investment from additional oil production related to the deployment of UGD. The parties expect to reach definitive agreements on a production-sharing agreement if the project progresses.
The agreement is primarily non-binding, and any commercial deployment is contingent upon further due diligence, technical and economic evaluations, financing, legal approvals, and the execution of definitive agreements. This agreement includes a 180-day exclusivity period for Laredo's Argentine partner.
