PRESS RELEASE
Contact:
Daniel Drum, Investor Relations
Seven Seas Petroleum Inc.
713-622-8218
www.sevenseaspetro.com
SEVEN SEAS PETROLEUM INC. LOGO
FOR IMMEDIATE RELEASE
SEVEN SEAS TO SELL PRODUCING PROPERTIES
December 14, 2002 - HOUSTON, TEXAS - Seven Seas Petroleum Inc. (AMEX: "SEV")
announced that its Colombian subsidiaries entered into an Asset Purchase
Agreement with Sociedad Internacional Petrolera S.A. ("Sipetrol") for sale of
the subsidiaries' interest in the shallow Guaduas Oil Field, inclusive of the
40-mile Guaduas-La Dorada Pipeline effective December 13, 2002.
Sipetrol Agreement
Sipetrol has agreed to purchase the combined 57.7% participating interests
and related assets of Seven Seas Petroleum Colombia, Inc., GHK Company Colombia
and Petrolinson S.A. in the shallow Guaduas Oil Field. Sipetrol is currently a
32.9% owner of participating interest in the shallow Guaduas Oil Field and is a
party to a Joint Operating Agreement with the subsidiaries. The basic terms are:
|X| The purchase price is $20 million subject to certain adjustments and taxes
|X| The effective time is 7:00 am on December 13, 2002
|X| The Closing is contingent on obtaining governmental approvals from both
Chile and Colombia and the consent of Chesapeake Energy Corporation
pursuant to the Note Purchase and Loan Agreement between Chesapeake and the
Company, among other things
|X| The Closing is expected to occur in late January or early February
|X| GHK Company Colombia will continue to operate the shallow Guaduas Oil Field
pending Closing
Auction Process
The Company engaged CIBC World Markets ("CIBC") to provide financial advice
in late September, 2002. CIBC commenced an auction process to sell the producing
interests in the Guaduas Oil Field. This included establishing data rooms in
Houston and in Colombia and soliciting interests from fifty companies. Nine
companies went through the data rooms. Bids from several prospective buyers were
received in mid-November and this process resulted in the agreement with
Sipetrol today.
Remaining Assets and Operations
After the sale, the only material assets of the Company and its
subsidiaries will be the rights associated with the Deep Dindal association
contract and certain Colombian tax assets. Neither the Company nor its
subsidiaries will have sufficient cash to conduct any additional exploration
activities.
The Company has been actively seeking to secure additional financing or
find a partner to participate in the completion of the Escuela 2 well and test
the commercial potential of the Deep Dindal prospect. To date, the Company has
been unsuccessful in these efforts; however, the Company is continuing its
efforts to find a third party to provide the necessary financing to test the
Escuela 2 well. Even if tested, there are no assurances that the Escuela 2 well
would be productive and provide additional value.
After December 15, 2002, the Company may be in default under the 12-1/2%
$110 Million Senior Subordinated Notes. Now that the financial circumstances of
the Company are more clearly defined, the Company will accelerate its
discussions with representatives of the Senior Subordinated Noteholders.
The Company has received notice from Chesapeake that it is currently in
default under its 12% $45 Million Senior Secured Notes ("$45 Million Notes").
Chesapeake, as the collateral agent for the $45 Million Notes, holds a lien on
the stock of all of the Company's subsidiaries and its cash accounts.
AMEX Listing
As previously announced Seven Seas has been notified by the American Stock
Exchange ("AMEX") that the Company fails to meet specific listing standards. The
Company previously submitted a plan to the AMEX to remedy these deficiencies;
however, based upon the present circumstances, the Company cannot satisfy the
AMEX standards.
Seven Seas Petroleum Inc. is an independent oil and gas exploration and
production company operating in Colombia, South America.
Statements regarding anticipated oil and gas production and other oil and gas
operating activities, including the costs and timing of those activities, are
"forward looking statements" within the meaning of the Securities Litigation
Reform Act. The statements involve risks that could significantly impact Seven
Seas Petroleum Inc. These risks include, but are not limited to, adverse general
economic conditions, operating hazards, drilling risks, inherent uncertainties
in interpreting engineering and geologic data, competition, reduced availability
of drilling and other well services, fluctuations in oil and gas prices and
prices for drilling and other well services and government regulation and
foreign political risks, as well as other risks discussed in detail in the Seven
Seas Petroleum Inc.'s filings with the U.S. Securities and Exchange Commission.