TORONTO, Jan. 18, 2012 /CNW/ - PetroMagdalena Energy Corp. (TSXV: PMD),
today provided an update on its ongoing exploration program, cash and
debt balances, and announced its production results for 2011 following
the Company's fiscal year end.
Luciano Biondi, Chief Executive Officer of the Company stated: "We are
entering 2012 with a full exploration and development drilling program
on the back of a challenging but successful year repositioning
PetroMagdalena into a focused junior oil and gas player, operating in
the most prolific basins in Colombia. I am pleased with the discoveries
at Cubiro and Arrendajo which reinforce our focus on finding economic,
near-term production opportunities within our portfolio.
We project approximately $45 million in net cash flow from operations
(after G&A, equity tax installments and debt service) for 2012, based
on an $80 WTI for estimated average annual production of 4,500 boepd
("barrels of oil equivalent per day"). This represents the midpoint of
our previously disclosed range of production guidance of 4,300 boepd to
4,700 boepd for 2012. Together with our December 31, 2011 cash balance
of approximately $15 million and expected proceeds from asset
dispositions, we are fully funded for our planned capital expenditure
program of approximately $50 million to $60 million.
With this capital program, we fully expect to grow our resources and
reserves, add incremental production in 2012 from our core assets and
maximize value from our entire portfolio of assets. The Company has
rigs available and environmental permits are in good standing at all
our exploration targets in 2012."
Discoveries at Cubiro and Arrendajo
Yopo Discovery at Cubiro
PetroMagdalena has discovered a new field with the Yopo 1X exploration
well, which was drilled to explore the prospectivity of the Carbonera
Formation in the Yopo Prospect, located on Polygon B of the Cubiro
Block, where the Company holds a 70% working interest ("WI"). The Yopo
1 well was perforated in the Carbonera C7 sand and it is currently
testing at 970 barrels per day of 39.9 degrees API oil with 4.7% BS&W
("Basic Sediments and Water"), on natural flow over the initial 6.5
hour stabilized period at an average of 385 psi well head pressure,
testing will continue.
The Yopo 1 well was spud on December 11, 2011, drilled to a final depth
of 6,790 feet measured depth ("MD") and logged on December 29, 2011.
The top of the Carbonera C7 sand was found at a depth of 5,871 feet MD.
Petrophysical data show 8 feet of net pay in C7 A, with porosity of 27%
and hydrocarbon saturation of 60%; and 25 feet in C7 B, with porosity
of 28% and oil saturation of 80%. Based on seismic interpretations, the
accumulation discovered by Yopo 1 is a 2 km long structure,
corresponding to the typical exploration play in the Llanos Basin. The
structure is on trend with the Palmarito and Petirrojo fields to the
north and south respectively.
Azor Discovery at Arrendajo
PetroMagdalena has discovered a new field with the Azor-1X exploration
well, which was drilled to explore the prospectivity of the Carbonera
Formation in the Arrendajo Block, where the Company holds a beneficial
67.5% WI, subject to ANH approval. The Azor-1 well was perforated in
the Carbonera C5 sand and it is currently testing at 752 barrels per
day of 35.5 degrees API oil with 1% BS&W, stabilized natural flow over
an initial 8 hour period, at an average of 265 psi well head pressure,
testing will continue.
The Azor-1 well was spud on December 24, 2011, drilled to a final depth
of 7,225 feet MD and logged on January 6, 2012. The top of the
producing Carbonera C5 sand was found at a depth of 6,724 feet MD.
Petrophysical data show 41 feet of net pay in C5, with porosity of 28%
and hydrocarbon saturation of 80%.
The Azor-1 well is located on a structural trend with prospects to the
north and south. This discovery reveals significant potential for
Carbonera C5 in the Arrendajo Block, where there are five additional
prospects to be targeted with future exploration drilling.
2012 Exploration Program
The Company's fully funded exploration program includes 7 exploration
wells in the Llanos basin; the targeted exploration drilling program is
outlined below along with management's volumetric estimates based on 3D
seismic information and analogies to off-setting wells.
2012 Exploration Wells
Well Scheduled to Spud in Quarter
Copa A Norte-1X
San Roque-1X (MBOE)
Santa Cruz Block, Catatumbo Basin: Santa Cruz-1X Exploration well
This well is currently drilling with oil based mud at approximately
8,450 feet MD and making good progress. The well is planned for a
total depth of 13,000 feet MD and intermediate casing is planned for
approximately 11,100 feet MD.
Topoyaco Block, Putamayo Basin: Yaraqui-1X Exploration well
As announced on January 9, 2012, the Yaraqui-1 exploration well in which
the Company has a 50% WI has been suspended by Pacific Rubiales Energy
Corp., which holds the remaining 50% WI and is the operator for the
block. The well was suspended due to uneconomic heavy oil flows. The
Company is now reviewing activity in this block together with the
For a map of all exploration targets, please see the Company's investor
presentation on its website at www.petromagdalena.com.
2012 Development Drilling Program
10 development wells including one injection well are scheduled for the
Cubiro Block in 2012. These development wells are targeted for drilling
with 1 well in the first quarter of 2012 and 3 wells in each subsequent
quarter. The development drilling program will be reviewed and
modified with the results of the exploration program and the Company
will provide regular updates to the market.
The Company ended 2011 with a cash balance at December 31, 2011 of
approximately $15 million. In addition, the Company has CA$4.3 million
set aside in a trust account as of December 31, 2011 to be used toward
the first annual principal repayment in May 2012 of the senior secured
notes (TSXV: PMD.DB).
In December 2011, since Ecopetrol's approval for the transfer of the
working interest and operatorship in the Cerrito block remained
pending, the Company transferred its working interest in the Cerrito
block back to Pacific Rubiales Energy Corp ("PRE") for cash
consideration of $7.5 million. The Company had initially acquired the
Cerrito block from PRE in 2008.
At December 31, 2011, the Company's debt position comprised the CA$31.1
million senior secured notes maturing May 2014 and a total of $11.7
million of long-term debt due under three local bank loan facilities
maturing between October 2012 and August 2013.
The Company's annual average gross share of production, before deduction
of royalties, for 2011 was 2,758 boepd. The Company reached 98% of its
target guidance of 2,800 average boepd. The Company's gross share of
production for the fourth quarter of 2011 averaged 3,624 boepd, up 33%
from the third quarter of 2011 and up 44% from the fourth quarter of
2010. The increase in daily production in the fourth quarter reflected
a full quarter's contribution from Copa B-1, which started production
in September 2011, and production from Copa A Sur-1, Petirrojo-2 and
Petirrojo-3, all of which commenced production during the fourth
quarter. The Company exited 2011 at a daily production rate of 4,182
boepd (average for the month of December). Cubiro represented 90% of
total production in the month of December 2011.
PetroMagdalena is a Canadian-based oil and gas exploration and
production company, with working interests in 18 properties in five basins in Colombia. Further information can be
obtained by visiting our website at www.petromagdalena.com
All monetary amounts in U.S. dollars unless otherwise stated. This news
release contains certain "forward-looking statements" and
"forward-looking information" under applicable Canadian securities laws
concerning the business, operations and financial performance and
condition of PetroMagdalena. Forward-looking statements and
forward-looking information include, but are not limited to, statements
with respect to estimated production and reserve life of the various
oil and gas projects of PetroMagdalena; the estimation of oil and gas
reserves; the realization of oil and gas reserve estimates; the timing
and amount of estimated future production; costs of production; success
of exploration activities; and currency exchange rate fluctuations.
Except for statements of historical fact relating to the company,
certain information contained herein constitutes forward-looking
statements. Forward-looking statements are frequently characterized by
words such as "plan," "expect," "project," "intend," "believe,"
"anticipate", "estimate" and other similar words, or statements that
certain events or conditions "may" or "will" occur. Forward-looking
statements are based on the opinions and estimates of management at the
date the statements are made, and are based on a number of assumptions
and subject to a variety of risks and uncertainties and other factors
that could cause actual events or results to differ materially from
those projected in the forward-looking statements. Many of these
assumptions are based on factors and events that are not within the
control of PetroMagdalena and there is no assurance they will prove to
be correct. Factors that could cause actual results to vary materially
from results anticipated by such forward-looking statements include
changes in market conditions, risks relating to international
operations, fluctuating oil and gas prices and currency exchange rates,
changes in project parameters, the possibility of project cost overruns
or unanticipated costs and expenses, labour disputes and other risks of
the oil and gas industry, failure of plant, equipment or processes to
operate as anticipated. Although PetroMagdalena has attempted to
identify important factors that could cause actual actions, events or
results to differ materially from those described in forward-looking
statements, there may be other factors that cause actions, events or
results not to be anticipated, estimated or intended. There can be no
assurance that forward-looking statements will prove to be accurate, as
actual results and future events could differ materially from those
anticipated in such statements. PetroMagdalena undertakes no obligation
to update forward-looking statements if circumstances or management's
estimates or opinions should change except as required by applicable
securities laws. The reader is cautioned not to place undue reliance on
Statements concerning oil and gas reserve estimates may also be deemed
to constitute forward-looking statements to the extent they involve
estimates of the oil and gas that will be encountered if the property
is developed. Boe may be misleading, particularly if used in isolation.
A boe conversion ratio of 6 mcf:1 bbl is based on an energy equivalency
conversion method primarily applicable at the burner tip and does not
represent a value equivalency at the wellhead. Estimated values of
future net revenue disclosed do not represent fair market value.
Neither TSX Venture Exchange nor its Regulation Services Provider (as
that term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this news
SOURCE PetroMagdalena Energy Corp.
For further information:
General Counsel and Secretary
Investor Relations Representative