Petrominerales Announces Guala Oil Discovery on Corcel Block and Provides an Update on Bromelia
Petrominerales Ltd. ("Petrominerales" or the "Company") (TSX:PMG)(BVC:PMGC) is pleased to announce our Guala-1 oil discovery and provide an update on operations.
Deep Llanos Basin (Corcel, Guatiquia and South Block 31), Colombia
As previously announced, we drilled our Guala-1 well to a total measured depth of 12,432 feet. Well logs indicate 47 feet of potential net oil pay, 38 feet in the Lower Sand 1 formation and 9 feet in the Guadalupe formation. After completing the well in the Lower Sand 1, we installed an electric submersible pump and placed the well on production.
Within 59 hours of start-up, the well unloaded all of the completions fluid. With a pump setting of 44 hertz choke full open (61% draw-down), the well reached a stabilized oil rate of 2,046 barrels of oil per day ("bopd") of 17 degree API oil, at a 6 percent water-cut.
In addition, on the north portion of our Corcel Block adjacent to Block 31, we completed the testing program on our Tente-1 exploration well. We tested three intervals and recovered water. We plan to use the Tente-1 well for water disposal purposes or abandon it.
We began drilling our Hungaro prospect on May 20th, and we expect to reach our targeted drilling depth by mid-July. The next well in our Corcel drilling program, Guarana-1 (previously referred to as Lapa-1), will commence drilling in early July.
Foothills Blocks (Block 25, 31, 59 and 15), Deep Llanos Basin, Colombia
At Bromelia on Block 25, we cased the well and we are preparing the well-site for testing operations. We are expanding the flare area and equipment in order to properly test the high-pressure, high-temperature gas zone we encountered while drilling. We have initially identified up to 7 zones to test beginning with the lowermost gas zone near the end of July.
The updated petrophysical analysis of Bromelia, reflecting the new cased hole log data, indicates the presence of 142 feet of net potential pay in six different formations, the largest intervals were the Barco and Guadalupe, compared to the initial petrophysical analysis which calculated 40 feet of net potential pay but was incomplete due to logging tool failures. Logs were not run over the high-pressure, high-temperature gas zone penetrated in the Une formation; however, 14 feet of net potential pay could be inferred as present based on the gas chromatograph readings, the presence of gas in the mud system, and the gamma log. Our planned long-term production test will evaluate the hydrocarbon potential of this prospective interval and help determine if it is connected into a large resource accumulation. We are currently mobilizing equipment to begin testing the Une sand; however, due to the lead times required to assemble the equipment and obtain permits, we expect to begin testing operations near the end of July.
Following Bromelia, we plan to commence drilling our second exploration prospect on Block 25, Canatua.
Block 126, Peru
We have substantially completed construction of the drilling location for our second exploration well, Sheshea-1X. Our rig mobilization for Sheshea-1X is underway, and we have moved over 25 percent of the rig and related equipment to the drilling site. We are on schedule to begin drilling operations on the well in early July, subject to weather conditions. The Sheshea-1X prospect is a potentially large, 10,000 acre, closed structure located approximately 50 kilometres south of our first exploration well, La Colpa-2X. Based on our geological and geophysical analysis, we estimate that the prospect could potentially contain over 100 million barrels of undiscovered petroleum initially-in-place, targeting multiple reservoir formations in the well.
May production averaged 31,602 bopd, three percent higher than April. Production to-date in June has averaged 30,280 bopd, before the addition of our Guala discovery.
Outlook for the Remainder of 2012
We further strengthened our balance sheet with our recent convertible bond issuance by extending the maturity on $289 million of pre-existing convertible debt by four years, while buying back and cancelling 10 percent of our outstanding common shares. At March 31, 2012, our balance sheet included cash on hand of $176 million and a completely undrawn, secured credit facility. Our immediate focus is on executing our high-impact exploration drilling programs in Colombia and Peru. In addition, we are acquiring over 1,000 square kilometres of new 3D seismic, of which 618 square kilometres have already been acquired. We expect these 3D seismic acquisitions to significantly add to our prospect inventory and provide new drilling opportunities for our 2013 program. We are very encouraged by our early results on our first foothills well, Bromelia. With test results on Bromelia expected in the third quarter, five more wells to be drilled in the Corcel area, our second well, Canatua, to be drilled in the Colombian foothills and Sheshea-1X to be drilled in Peru, we are looking forward to updating our shareholders on our progress throughout the remainder of 2012.
Petrominerales Ltd. is an international oil and gas company operating in Latin America since 2002. Today, Petrominerales is one of the most active exploration companies and one of the largest oil producers in Colombia. Our high quality land base and multi-year inventory of exploration opportunities provides long-term growth potential for years to come.
Forward‐Looking Statements. Certain information provided in this press release constitutes forward‐looking statements. Specifically, this press release contains forward‐looking statements relating to the Company's future exploration and development activities and the timing for bringing wells on production. The forward‐looking statements are based on certain key expectations and assumptions, including expectations and assumptions concerning the availability of capital, the success of future drilling and development activities, the performance of existing wells, the performance of new wells, prevailing commodity prices and economic conditions, the availability of labour and services, the ability to transport and market our production, timing of completion of infrastructure and transportation projects, weather and access to drilling locations. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be incorrect. Actual results achieved during the forecast period will vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors. You can find a discussion of those risks and uncertainties in our Canadian securities filings. Such factors include, but are not limited to: general economic, market and business conditions; fluctuations in oil prices; the results of exploration and development drilling, recompletions and related activities; timing and rig availability; availability of transportation and offloading capacity, outcome of exploration contract negotiations; fluctuation in foreign currency exchange rates; the uncertainty of reserve estimates; changes in environmental and other regulations; risks associated with oil and gas operations; and other factors, many of which are beyond the control of the Company. There is no representation by Petrominerales that actual results achieved during the forecast period will be the same in whole or in part as those forecast. Except as may be required by applicable securities laws, Petrominerales assumes no obligation to publicly update or revise any forward‐looking statements made herein or otherwise, whether as a result of new information, future events or otherwise.
Undiscovered Petroleum Initially-In-Place ("UPIIP"). UPPIP, equivalent to undiscovered resources, are those quantities of petroleum that are estimated, on a given date, to be contained in accumulations yet to be discovered. The recoverable portion of UPIIP is referred to as prospective resources, the remainder as unrecoverable. Undiscovered resources carry discovery risk. There is no certainty that any portion of these resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources. A recovery project cannot be defined for this volume of UPIIP at this time.