Jun 11 - Black Hills Corporation Subsidiary Finalizing Oil and Gas Concession Contract With Costa Rican Government

Source Press Release
Company Black Hills Corp 
Tags Deals, Upstream Activities
Date June 20, 2011

Black Hills Corp. announced today that its subsidiary Black Hills Exploration & Production, Inc., through its subsidiary Mallon Oil Company, Sucursal Costa Rica, is working with the Costa Rican government to obtain execution of an oil and gas lease concession contract to allow for exploration of approximately 2.3 million acres of land in northern Costa Rica. Black Hills acquired Mallon Resources and its subsidiary Mallon Oil Company in a stock-for-stock merger in 2003. Through that transaction, Black Hills obtained the rights to pursue execution of the concession contract. Recent news reports from Costa Rica have indicated that the concession contract may be executed, necessitating a comment from the company.

"Mallon Oil Company began working to obtain this concession in 1999, and we have continued that effort since acquiring Mallon in 2003," said David R. Emery, chairman, president and chief executive officer of Black Hills Corp. "For years, it did not appear the concession contract would be executed, but now there is a reasonable possibility that the concession contract may be executed by the Costa Rican government this year. Upon successful execution of the concession contract, Black Hills will develop plans regarding the property and disclose more information as appropriate."

In 1998, the Costa Rican government invited all oil and gas companies to submit competitive bids for oil and gas lease concessions within the country pursuant to the hydrocarbon laws of Costa Rica. In 1999, Mallon Oil Company, through its wholly owned subsidiary Mallon Oil, Sucursal, submitted bids for six separate tracts collectively covering approximately 2.3 million acres in the northern portion of Costa Rica. After a thorough analysis of the bid proposals, all six bids from Mallon Oil, Sucursal, were accepted and awarded in 2000 and are subject to execution of the concession contract. Throughout the entire process, Mallon Oil, Sucursal, has met all legal requirements necessary to preserve its rights under the concession while the government of Costa Rica has followed its laws and procedures applicable to execution of the final concession contract.

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